Three charts from Mint in August 2022 highlight the challenge of India’s income growth:
A chart in a column by Niranjan Rajadhyaksha in Mint (June 2022) puts forth the first per capita GDP doubling challenge:
He adds: “In its new Report on Currency and Finance…, the Reserve Bank of India has estimated that India can maintain an economic growth rate of between 6.5% and 8.5% over the medium term. Rapid growth is needed not just to boost our position in international rankings, but also provide economic opportunities to a young population, especially given our failure to create quality jobs in productive enterprises. There are also shocks to consider. Indian output is still below where it would have been if the pandemic had not struck, and is expected to remain below trend for perhaps another decade. (Note: this is about the level of output rather than its growth rate.) A climate shock is on the horizon. This decade may see India narrow its income gap with countries such as the Philippines and Sri Lanka, especially the latter because of its ongoing economic tragedy. India will need more time to reduce the income gap with most of the other countries considered here. A lot will depend on whether we move ahead near the lower or higher end of the potential growth estimate made by our central bank.”
So, how does India transform? Where will India’s jobs come from – government or private, manufacturing or services, domestic consumption or export-led? How does India rise and lift incomes for its people? My take will be very different from the excellent suggestions others have made.
First, let’s take a look at the global backdrop in which India needs to grow.