 "BS Manthan: Education, health key for Viksit Bharat plan, says Rohit Lamba")
India has to bolster its education and health care systems to become a developed country by 2047, said economist Rohit Lamba on Wednesday, calling for growth that is sustainable and not K-shaped.
“We just need to get our basic primary and secondary education right. We are reasonably far away from being able to produce a fit, healthy and able workforce that will allow us to become Viksit Bharat by 2047. In our development path today, the biggest binding constraint is the human capital of our demographic dividend. Currently, this focus is massively missing," Lamba, an assistant professor of economics at Penn State University, said at the Business Standard Manthan 2024 in New Delhi.
“If we don't address the K-shaped economy, if more people don't participate in the growth story, it won't be sustainable,” he said.
Watch the event live here
Watch the event live here
Lamba spoke during a discussion called ‘Breaking the mould – reimagining India’s economic future to becoming a developed nation by 2047’ and hosted by A.K. Bhattacharya, the editorial director of ‘Business Standard’.
India’s economic future
Lamba compared India's per capita gross domestic product (GDP) is $2,500 to that of China ($12,500). A ‘Viksit Bharat’ roadmap can only be achieved by building India as a robust middle income country by the time it turns 100 years in 2047, he said.
He also highlighted the need to “reimagine” India’s labour force. “Agriculture needs to be reimagined big time. However, the pull force might be more efficient getting other sectors of the economy to pull labour out of agriculture.”
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“Even before the Covid-19 pandemic, people started moving back to the agriculture sector. This is disappointing for a developing country. We don't lack great ideas for agriculture but in the medium term, depending on how the political economy plays out, I think the pull factors might be more efficient.”
Problems before India
Lamba listed three reasons for Indian manufacturing’s problems. “India never had a moderately skilled educated labour force like China. As a democracy, it could not suppress wages and market and political forces like China. India’s infrastructure pace could not match that of China’s for many reasons. However, this path holds promise because India is at least in the low skill manufacturing realm already.”
He also noted that the companies are changing their supply-chain strategies due to geopolitical reasons. “The space for India to be another China is shrinking due to this….”
He said the focus also needs to be on understanding the “notion” of final manufacturing. “India is trying to set up chip fabrication plants…a large part of the value added is its designs. India does 20 per cent of chip designs but we don't own intellectual property.”
He cited the example of Apple, which manufactures iPhones and is the world’s most valued company. “In iPhone, the largest value added is the conception and the design and its allied services like the app store. The actual manufacturing has very low value added -- Foxconn is $50 billion in value and Apple is over $2 trillion,” he said, referring to the Taiwanese company that makes Apple’s smartphones.
He said that students coming out of a university in the United States need to be paid about $150,000- $200,000 as a starting salary. However, one can hire someone in India to do 80 per cent of the same job at $40,000 in Bangalore.
“In all of these, India has a head start due to the English language and knowing services industry.”
Addressing the job sector
About creating jobs, Lamba suggested extensive training for the workforce. “Once you capture a large part of the value of products, jobs come,”
He cited studies that say 50 per cent of the labour force that comes out of colleges in India is not employable. He also noted that people needed to give up on the “China fetish” that jobs will only come on factory floors. “
India needs to build its own path for economic growth rather than focusing on beating China. “...we should aspire to reach 10 percent of the global manufacturing trade,” he said.
Finance Minister Nirmala Sitharaman will be at the summit after 3.15 pm.