Socio-economic goals for next decade

Rahul Mazumdar | Updated on December 31, 2019

India’s backwardness in health, education and industrial competitiveness must assume centre-stage in policymaking

The turn of this decade will not be like the previous two. India remained unscathed both by the Y2K bug in 2000 and to a lesser extent, by the contagion of the global financial crisis in 2010. In 2020, the world has definitely changed in all dimensions. While technology and communications have leapfrogged, the globe today is increasingly being engulfed in a binary polity, an enfeebled economy, and an uncertain trade environment, which perhaps has not been witnessed in recent times.

India is in many ways not immune to this phenomenon. As the country marches towards 2030, it still has the potential to orchestrate the agenda for global discourse, and could be effective here, provided it corrects some of the perennial idiosyncrasies. The aspirations of the working-age population will depend on how we address them.

Social challenges

As the incumbent government leads the country into a new decade, it is blessed with the largest majority in Parliament in the last 35 years, with the wherewithal to bring in changes which could shape India going forward.

A well-educated and informed society would have a profound influence on national outcomes. With more than 1.5 million schools and about 260 million students, India has the world’s second-largest school system after China, but quality remains a concern. India’s student-teacher ratio stands at 24:1, lower than its peers — Russia’s stands at 10:1, and for Brazil and China, it’s at 19:1. Besides this, the higher education sector faces a gap of five lakh teachers — a shortfall of 33 per cent in Central universities, 35 per cent in IITs and 38 per cent in State universities. Another aspect which requires consideration is introducing mandatory vocational education given the increasing skill gap.

A healthy society yields remarkable dividends. The Lancet, a prestigious medical journal, had ranked India’s healthcare system at a dismal 145 out of 195 countries, worse than even North Korea, Syria, the Philippines and Sri Lanka. Government spending on public health is just 1 per cent of the GDP in India. Primary healthcare needs urgent attention. Most PSUs located in Tier-II cities and smaller towns have sound health infrastructure, but utilisation is confined to its employees only. Private sector could work with such PSU hospitals on a revenue-sharing basis and open them up to the public.

Attracting talent is a challenge for rural and backward areas and requires attractive remunerations. To make India’s roots stronger, education and health needs the desired attention in the next decade — or else the country will be left too far behind to catch up.

Economic position

The old-adage still holds true — good economics is, in the long run, good politics. Irrespective of the nature of today’s polity, economic dialogue in India in the ensuing decade needs to be raised. India needs to attune itself to the changing geo-economics, lest it gets dwarfed by the end of next decade by the likes of Malaysia, Vietnam, or even Bangladesh for that matter.

The Indian economy, since liberalisation, had been like a tiger on the prowl, till it entered into a slowdown phase. Succumbing to a new normal of 5.5-6.5 per cent growth will be an economic injustice to a nation with great potential, lest policymakers look at revising certain structural infirmities.

India is enviably at a position where headroom in infrastructure creation is enormous, with a natural spillover positively helping the core sectors. Given the limitations of government funding, innovative PPP models with secure returns to private investors must be created.

More than 65 per cent of the population is rural, and 70 per cent of this depends on agriculture alone. A concerted thrust in the new decade can change the face of Indian economy. Though India is one of the world’s largest producers of fruits and vegetables, only about 4 per cent of the produce is processed. In comparison, China processes 23 per cent of its produce, Indonesia 50 per cent and Brazil 70 per cent. Technology infusion, sustainable practices of produce, storage, and logistics can make India the food capital of the world.

Industrial scenario

Boardroom discussions continue to focus on manufacturing; however, its contribution to the GDP has been languishing at around 15 per cent for years. The emerging economies in Asia are far ahead — China’s is at 30 per cent, Thailand 27 per cent, Malaysia 21 per cent, Indonesia 20 per cent, and Vietnam 16 per cent.

In a free trade environment, deficit per se is not an issue, since everything cannot be produced domestically. But unfortunately, India’s imports are high because it lacks competitiveness. Industries like electronics and machineries show a combined trade deficit of 35 per cent, and have seen a linear increase. But a FDI-led manufacturing ecosystem needs to be facilitated, enabling technology transfer and introducing incentives on attained merits.

India’s merchandise exports boast of a glorious and historic past. To retain it, the country needs to consciously start producing goods that are acceptable globally, and those that are SPS- and NTB-compliant. India’s trade deficit has increased by a whopping 14 per cent in the last three years, while Vietnam’s exports have increased by four times. Despite both countries being traditionally agrarian economies, Vietnam has evolved into a technology exporting hub. The share of hi-tech exports in total Indian exports stands at 6 per cent, whereas for Vietnam it is at a whopping 31 per cent. Such gaps will widen with many other economies also, if the situation does not improve. The ensuing trade policy hopefully will set a realistic vision taking all these into account.

Sustainability is an all-encompassing factor. Any process so undertaken by industry, agriculture, or society and individuals at large need to be conscious of their impact. Climate change is more palpable than ever before in India — shifting temperature and seasons, water crisis in coastal Chennai, floods in Mumbai, sporadic droughts, and depleting water levels in Punjab are few examples. Sustainable livelihood and equity could help the country to emerge stronger and better.

How will India choose to see herself in the future — socially, politically and economically? Hopefully, 2020 will turn the corner for India and be the harbinger of change during the new decade.

The writer is a Senior Economist with EXIM Bank, India. Views are personal

Published on December 31, 2019

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