 "Growth, economy")
The World Bank’s Spring 2023 India Development Update Report said that the country’s growth has been resilient in the face of a challenging global economic environment. India’s financial sector remains strong with healthier balance sheets and recovering credit growth.
India needs to grow at a minimum 8 per cent per annum to become a High Income Country by 2047. How can India make the shift from 6 to 8 per cent per annum? What will take us on a trajectory that is aligned to the national ambition of being a Developed India by 2047? What are we doing right and what more do we need to do?
The report highlighted the lower than global female work participation rate and assigned importance to the pursuit of a women led work and development strategy to inch closer to the 8 per cent aspiration. However, it did not spell out how this will be made possible. It cautioned against the geopolitical instability, uncertainty of global growth rates improving in the short to medium term, and the 90 per cent plus debt to gross domestic product ratio and its consequences for further public investments.
While pointing out that private consumption was buoyant primarily due to high income earners, it did not spell out how higher domestic demand will be needed to offset subdued global demand. It was also silent on where all savings could be effected to rationalise public spending in favour of higher growth. The report talks about the informal and sub optimal quality of jobs being created, but it has little to offer to understand how more quality jobs with higher wage incomes can be created.
The tag of being one of the fastest growing large economies of the world is a reflection that India has got many things right when it comes to investments in infrastructure, digital public infrastructure, financial regulation and stability, and a meaningful pro-poor public welfare thrust with improved governance to reduce leakages. While we must continue to do what we are doing right, we also need to give a thrust on the following five key areas for attaining 8 per cent growth:
1. More quality employment opportunities with respectable wages and incomes, especially for women and youth
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2 Thrust on removal of human capital deficits and ensuring adequacy of credit for enterprise after skill acquisition;
3 Decentralised governance for quality outcomes in public goods sectors like education, health, nutrition, clean air, good urban and rural infrastructure, effective dispute settlement.
4 Revisit public subsidies in fertiliser, food, system of minimum support price; assess performance linked incentives for manufacturing, among others, to free up resources for quality human capital for higher productivity and growth;
5. Improve ease of doing business in actual practice to give confidence to the private sector to make investments on a much higher scale. Private sector investment must drive growth.
It is time we revisited the context of wage rates. The removal of asset deficits of the poor (electricity, road connectivity, bank account, housing, toilet, clean water, women’s collectives, access to credit, gas for cooking, food grain security, etc.) has surely improved the ability of deprived households to access education, health, nutrition, skills, diversified livelihoods. However, the large infinite workforce leads to the depression of market wages when too many drivers, gig workers, unskilled, under skilled, semi-skilled construction workers, are trying for an inadequate number of employment opportunities. The state must determine the floor.
Pro-poor public welfare hastened the pace of reduction of multi-dimensional poverty. 415 million persons in India came out of multi- dimensional poverty between 2005-06 and 2019-21. This reduced the burden of the chronically poor in India. However, a developed India needs a better trained and skilled workforce. It is time that wage rates in public works that set the floor of wage rates are appreciably increased to make it possible for the poor to live a life of dignity with opportunities for developing their fullest human potential. We need a larger middle class.
Kerala and Himachal Pradesh are success stories of states that prioritised minimum wages for all as a priority. Wages in the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) must go up for higher female labour force participation in employment. Reform MGNREGS for meaningful rural and urban infrastructure with quality employment (and not a dole). Social infrastructure also contributes to growth. Higher wage rates will step up consumption and well-being as well.
Higher wages must always be accompanied by higher productivity through improved skills. Human capital deficits determine investment decisions of many private sector entrepreneurs. The same Hyderabad, Chennai, Delhi, Gujarat, Maharashtra, Bangalore get private investors; public order, infrastructure and human capital determines investment destination!
Our technology adoption offers an opportunity for blended learning in schools and for easier access to health care services. We will still need outstanding human resources for human development – the social sector demands better teachers, doctors, Nurses, Para medics, care givers, and so on. Community Resource persons for livelihood diversification can bridge the last mile gaps in technology access for enterprise. Women’s collectives in rural India have the social capital for a women led development that is sustainable; remove all constraints to credit and provide support for enterprise; the 8 per cent growth route is the pathway to well-being. Women led development is the means to that end. Opportunities for youth to move up the skilling ladder is the route to higher order growth and well-being. Moving up from 6 per cent to 8 per cent growth is possible. Let us not miss the opportunity of a Developed India by 2047.
The writer is a retired civil servant.
These are the personal opinions of the writer. They do not necessarily reflect the views of www.business-standard.com or the Business Standard newspaper.
