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Peculiarity of India’s growth story
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Investing in education is a pre-eminent measure for achieving inclusive development
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Mahesh Sethuraman
The early 1990s reforms unshackled the economy and India’s performance in the recent years has been among the best in the world. We are nearly a $ 1 trillion rich economy now and have witnessed unprecedented growth of 8.6 per cent over the past four years.
India can afford to flex its muscles in the world economy, thanks to its established competencies in the areas of IT, ITES, biotechnology and various manufacturing segments. But is this growth as good as it appears?
It has become a common feature for the newspapers to carry editorials every now and then questioning the sustainability of this growth or expressing fears that the economy may be overheated a la East Asian countries’ crisis. There have been enough TV shows debating every move of the RBI and how each of them would act as a stumbling block to growth.
But the more pertinent question for us to ponder is, “Does the 8-9 per cent GDP growth translate into better lives for more Indians?” than questioning the macro-fundamentals behind the growth, which are fairly strong.
Our recent growth has been skewed heavily in favour of the services industry, which accounts for about 51 per cent of the country’s GDP. And much of this is reaped by the educated and people belonging to managerial and professional occupations. So where does it leave the people engaged in the other sectors of the economy? What are the implications of such a skewed growth?
Apart from the skewed nature of the growth in terms of sectors, one can also witness it by comparing the growth rates of different States in India. The rich individuals have experienced faster growth in their consumption expenditure than the poor. Add that to the fact that we are far behind in many of the non-income Millennium Development Goals for maternal and infant mortality rates, or gender parity!
Strategies
Efficient allocation of resources: The policy makers should not be pondering which sector to develop but rather see all the sectors in unison and try to arrive at as efficient a means of allocation of resources as possible by also considering the equality objective.
Create a level playing field: We should move towards common trade and corporate policies, uniform tariffs for infrastructure across States. Taxation policies can be used as an incentive for companies to set up shop floors in relatively backward areas.
Rural-urban linkage and convergence: We have to understand that agriculture growth alone is not sufficient for rural growth but that in combination with urban-rural linkages is the right way forward for India’s rural economy and frame polices accordingly.
We have to spread the services growth to sub-urban and rural areas as well. Also we need to invest in agriculture infrastructure and set up centres of excellence in the field of agricultural research.
Invest in education: Apart from the short and medium term measures, the government should also keep in mind its long-term goals and investing in education is a pre-eminent measure for achieving long-term and, more importantly, inclusive growth.
And this investment should happen at all levels of education — basic, primary, secondary and tertiary in both rural and urban areas and more importantly across all strata and sections of the population.
Politicians and business leaders go around the country and the world propagating the India growth story. It is equally important for them to understand the skewed nature of this growth and the resulting inequalities. The politicians need to look at this situation from the equality of opportunities for people perspective and the business leaders need to view this as a possible bottleneck for the sustainability of their current businesses and establishment of future ones.
And both the government and the corporate society need to act with a great deal of commitment and energy for us to make this growth both sustainable and inclusive. The objective of both the government and corporate fraternity should be to provide fair and equal opportunities for everyone to advance in life and not look to provide equal advancement in life for everyone.
heshrulz@gmail.com
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