Next 25 years

There is a lot to be pleased about as India celebrates 75 years of Independence. As it moves forward with increasing confidence, this important milestone also gives an opportunity to objectively evaluate the journey so far. This will enable India to build on its strength to overcome weaknesses and improve the quality of life of its citizens. It is likely that in his address from the ramparts of the Red Fort today, Prime Minister Narendra Modi will talk about goals that India should be aiming to attain by the time it celebrates the centenary of its independence. Much of what India would be able to achieve over the next 25 years will depend on how its economy performs. India is celebrating its 75 years of freedom at a critical juncture in the global context. The geopolitical order is witnessing a churn and will throw both challenges and opportunities for India in the coming years.

India has had a decent economic record over the last 75 years, although the first half was marked by low growth, and it’s the second half that saw an acceleration in the expansion of output, largely because of the reforms initiated in the 1990s. The reforms opened up the economy, reduced tariff barriers, focused on infrastructure building, pushed out the government from business, and built institutions that could regulate businesses instead of the government doing everything through inspector raj. However, as India is emerging from a deadly global pandemic and the biggest economic shock in independent history, there are worries that institutions — essential building blocks of India’s democratic system and functioning market economy — have weakened in recent years. India will not be able to attain its true potential with such concerns. One of the biggest objectives in the coming years thus should be to strengthen the country’s institutional structure, which will enable citizens to excel.

In terms of charting the economic future, India’s own past can show the path. It is now well known what was holding back the Indian economy for decades and what led to rapid economic growth for a considerable period. High growth years helped pull a record number of households from poverty. It is thus important that India remains conscious of the obvious linkage between economic reforms and growth. Sustained higher economic growth is an absolute necessity for the country at this stage of development. Therefore, the governments at the Centre and the states must work hard on pursuing reforms with greater zeal and commitment. The economy would demand greater policy attention because growth will need to be equitable and policymakers will have to ensure that it doesn’t come at the cost of damaging the environment.

One of the reasons why the Indian economy underperformed despite the best intentions before the reforms of the 1990s is because it could not adjust to the changing global environment. As India stands at this important juncture, there are fears that governance could again slip back to the old problems of tariff-based protection and discretionary controls. This will affect economic outcomes and India’s ability to provide the desired quality of life to all citizens. Given the ongoing shift in the global order, it’s time for India to strengthen its democracy and leverage democratic values to attract investments and grow at an accelerated pace for the next 25 years.