India has the potential to become a developed or wealthy nation by 2047. But it needs to acknowledge its weaknesses in delivering adequate jobs, income growth, and better living standards for the majority of the population and look at changing the pattern of growth so that there is inclusivity in its high growth ambitions, argued leading economists and journalists at a session on “Rich India: Will India become a wealthy nation by 2047?’ at The Hindu Lit Fest 2024 here.

N. Ravi, Director of Kasturi and Sons Ltd, discussed the management of the economy in the current context. While the Government stressed its several welfare programmes, a big push on infra spend, a surge in digital payments, housing, and sanitation schemes, the increasing number of bank accounts, and reforms, such as GST, as indicators of a good economy, critics point to challenges pertaining to a high level of unemployment, malnourishment, and others structural issues such as the growing fiscal deficit, decline in the investment rate, etc, he said.

Economic growth

Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission, pointed out that the criterion to measure economic growth would be per capita income. While we could reach those trillion dollars target, wealth has to be well-distributed, he said.

“We could end up with a high-income economy in which the distribution deteriorates so much that large numbers of people are left out. I’m not saying it will happen, but that’s an issue. We need that 8.5 percent growth to be inclusive,” he said.

Ahluwalia felt that along with inclusive growth, there is a need for the development of public goods, which has to be provided by a caring government, and not the market. States could be enabled for more flexibility in areas like education, health services, and handling climate change.

Future challenges

Cautioning on future challenges, he said achieving GDP growth of 8.5 per cent on a sustained basis for several years would not be easy given emerging challenges in geopolitics and globalisation, rapid technological changes, and Centre-State relations. “We will need to evolve a system of government, in which the public recognizes that it’s the states that must be held responsible for delivery. The center will be responsible for macroeconomic stability, he added.

Stating that India’s current growth rate is fine, T N Ninan, former Editor, Business Standard felt that quality of life would be more important than than economic indicators. He was of the view that India was doing slightly better than China on some indicators. “India is fractionally higher than China. Property prices in China are so high. Nobody can afford a house as the cost of living is enormous. People can’t get married. Because they can’t afford to get a place,” he added.

Manufacturing jobs

To a question on manufacturing jobs by Raghuvir Srinivasan, Editor of Businessline, who moderated the discussion, he said: “I am not a great believer in the proposition that manufacturing will create the number of jobs in sufficient numbers that we need to. Manufacturing is handicapped by the success in services. However, either through tariffs or subsidies, manufacturing can be made to compete and that is what the government is doing through PLI schemes.

Sanjay Kaul, a development policy analyst, and former IAS officer felt that India was doing better on financial capital, but a change in policy trajectory could do wonders on the human capital side.

“By shifting priorities, a lot could be achieved in the areas of healthcare without incurring any additional investments. For eg, the Centre could have used the ₹30,000 crore-odd funds to strengthen 600 district hospitals instead of building 15 new AIIMS. Also, nutritional imbalances among the children required attention and efforts for creating awareness on preventive healthcare,” he said.

Beyond aggregate

Jayati Ghosh, a noted economist, author, and professor, pointed out that a wealthy nation is one that can provide every person in the country with basic needs and the possibility of a decent and dignified life. Per capita income is not necessarily the best indicator. So, it requires a different pattern of growth rather than just the aggregate growth, she said.

Though India had a reasonably higher rate of growth in the past 10 years amid tough global conditions, the real wages for the people in the country have not increased. Median wages are falling for construction workers and several others. It means that the conditions of the vast majority of people have not improved. That’s the real failure of that growth, she added.

Ghosh felt that investments were increasingly led by public investment in infrastructure as the private sector didn’t see a market for products that ordinary people consume. There is a need to create the conditions for private employment. In this, MSMEs have been left by the wayside and sector-wise packages are needed to enable them to survive.

“MSMEs have been badly hit by several events such as demonetisation, GST, Covid and the consequent lockdown. “It is a miracle that a lot of them still exist after going through all these” she added.