• UGI USER
  • Aug 07, 2024
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POWERING UP TO BECOME A $30-TRILLION ECONOMY

Syllabus:

GS 2:

  • Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
  • Inclusive Growth and issues arising from it.

Why in the News?

The editorial talks about the vision and the mission of India where the nation plans to achieve an economic size of $30 trillion by the year 2047. Stressing on the requirement of growth at a faster pace with inclusion provides solutions to many of the problems like increasing income disparity, low Female labour force participation rate and the piece on middle income trap.

Source: UGI

Context And Overview:

  • Current Growth: Achieving a growth rate of over 7%, India is today the fastest-growing large economy in the world and Asia’s third-largest; however, triumphalism requires realism.
  • Avoiding Pitfalls: India needs sustained rates of growth to get to a $30-trillion economy by 2047 and to do this it needs to continue liberalizing the economy and relying more on private enterprise.
  • Focus on Growth: Liberalisation led growth helped about 35 crore people to come out of poverty thus providing the fact that economic growth is the only solution to poverty.
  • Addressing Inequality: Although inequality remains characteristic of the country, more Indians are growing comparatively wealthier due to the economic growth boosting up the living standards.
  • Sobering Realities: As far as the economic reforms are concerned, there is no more mileage left in the 1990s reforms; agricultural productivity and women’s labour force participation rates are big woes.

Potential of India’s Working-Age Population

  • Economic Tool: Economic growth proves to bring down poverty and enhance standards of living, lifted up sharply by the rate of poverty after 1991.
  • Poverty Reduction: India has, over the last two decades between 1991 and 2011 successfully brought down the poverty line from 50 % to a sore 20 % thereby taking millions out of the painfully poor category.
  • Wealth Generation: Out of the above, wealth creation fuels the economic growth of the nation, encourages innovations and improves the standard of lives of the people in the different stations.
  • Labor Force Challenges: India still has suffered from high operating growth in LAC but still, 46% of the labour force is in low-productivity agriculture contributing only 18% to GDP hence required sectoral shift necessary.
  • Female Participation: As for the fourth, female LPAR, India is significantly lower at 37% as compared to 60%-70% in neighbour countries like China, Vietnam, and Japan which indicate a scope of improvement.

The Middle-Income Trap

  • Avoiding Tariffs: The use of tariffs to protect industries often proved to raise cost and hence lessen competitiveness; openness is essential for development.
  • Past Examples: Of the 101 middle-income economies in 1960, only 23 of them have managed to graduate to high income status by 2018 hence proving the conclusion that the middle-income trap is real.
  • Leveraging Labour: India has to develop in the low end employments which are needed as the IT boom has offered a meagre probable growth tract.
  • Value Chain: An elaborate low-tech manufacturing environment is crucial for the improvement of move up the value chain and achieving economies of scale and quality in the higher-tech industries.
  • Factory Perception: Efforts that undermine factory conditions can hamper jobs generation so what is important is better working standards excluding the job hate era handy for the growth of economies.

Cluster-Led Industrial Model

  • Infrastructure Development: To use Beck’s terminology, Amata offers perfect settings of industrial clusters inclusive of world-class infrastructure necessary to attract employers together with workers like the Chinese and Vietnamese models.
  • Cost Disabilities: This paper examines various accounts such as Cost Disabilities in power, logistics and financing that Indian states go through; The rationale of a cluster-led model where regulations are more liberal can be very effective for manufacturing.
  • Private Sector Role: There ought to be a concentration on the low skill activities and on the sector that naturally suits private sector capabilities leading to the production of jobs for the masses.
  • Inter-State Migration: Hike in inter-State migration, urbanization and female labour force participation contributed to the $30-trillion economy goal.
  • Holistic Approach: The amalgamation of education, health facilities, entertainment areas within industrial hubs, increases the production and helps in attracting better talents.
Ministerial Effort for Achieving the $30 Trillion Economy

  • Make in India: Its objectives include the promotion of local production, foreign direct investment, and the rise of industry’s contribution to the GDP to encourage employment and economic development.
  • Digital India: Through strengthening digital resources, encouraging people to appreciate and use technology, and guaranteeing that there is a fast internet connection, this program aims at establishing the knowledge-based economy as well as improving the efficiency of governance.
  • Skill India: This drive aims at creating training and fighting youth unemployment by offering vocational training to millions and ensuring the employment of right skills needed in industries to enhance productivity.
  • Smart Cities Mission: As a project intending to create 100 smart cities, this project focuses on environmental conservation, effective use of resources, and enhanced living standards.
  • Atmanirbhar Bharat: This campaign for achieving ‘Aatmanirbhar Bharat’ focuses on Make in India initiative and reducing import bill by giving subsidies to the startups and MSMEs through financial assistance and policy reforms.

The Path Forward

  • Balanced Growth: Parallelly, the socio-economic issues cannot be overlooked if sustainable growth is to be achieved so as to achieve the $30 Trillion economy.
  • Forward-Thinking Policies: To unlock the full potential of the economy in India, it is necessary to carry out progressive measures in the form of politics.
  • Addressing Challenges: Systemic and targeted changes should be held to eradicate the growth constraints and become a developed economy.
  • Private Sector Collaboration: Engaging the private sector, promoting innovation, and encouraging private sector development will develop the economy and give employment to the citizens.
  • Global Competitiveness: Global competitiveness, therefore, empowers countries to achieve economic milestones the main strategies include, free trade, technology, and supply chain management.
  • Educational Reforms: Education and training should be embraced so that a competent workforce is produced to meet today’s dynamic economy.
  • Infrastructure Investment: Investing in transport networks and communication infrastructures, physical and digital technological and physical facilities for business use and growth and general need for urbanization and enhancement of infrastructure the populace depends on.
  • Environmental Sustainability: The use of sustainable measures and green technologies in industrial and economic development that will not harm the environment currently or in the future.

Conclusion

The government aims at attaining $ 30 trillion economy by 2047, which implies the necessity to address social and economic issues and cooperate with the private sector, as well as to launch innovative policies. The Chinese strategy for India comprises strategic reforms, infrastructural investments particularly environmental reforms for India to become a developed economy and for its economic potential to be realized.

Source:The Hindu

Mains Practice Question

Examine the major issues and prospects for India to realise the vision of a $30 trillion economy by the year 2047. Examine how the country would be able to achieve economic growth, compete in the context of socio-economic disparities and environmental sustainability?

Associated Article:

https://universalinstitutions.com/economic-growth-and-development/