The recent report by the Finance Ministry and a very ominous prediction by Dr. Rathin Roy (Member of the Prime Minister’s Economic Advisory Council) both point to a slowdown of the Indian economy. Demand is getting saturated including investments. Agricultural as well as industrial productivity are dismal, to put it politely. Dr. Roy in fact went on to predict that India might be heading towards a middle income trap- a theory which suggests that an emerging economy is stuck at a level of growth with greater levels of inequality and poverty, and consequently, increasing crime rates. And these are the early signs that needs immediate attention.
But we have all read and heard this in the news already, what is new? Well, as the country moves towards the last phase of a very long drawn electoral process, the only question that has occupied my mind- why is this not a mainstream election issue? Leaving the politics aside, below are some of the issues that would require the urgent attention of the new government-
Generating Sustainable Employment- With unemployment rate at an all time high, the immediate focus area could be labour intensive manufacturing hubs. Be it cloth production or handicrafts- these involve lesser costs of training (if region specificities are studied well) as the people are given the jobs that they already do best. Taking advantage of the comparative advantage. For example, the Bengal handloom industry has lost its sheen, imagine the jobs that could be created if there is government intervention for proper revival.
Health & Education- With a growing and aspiring middle class, a very young population, if the country still wants to reap the demographic dividend, there has to be restructuring of our education and health policies in terms of investment. There has to be greater investments not only in education but also in much in-demand skills like analytics, artificial intelligence, digital marketing etc. And these need to reach the masses not only the classes. There will be an increasing demand for quality schools, colleges and universities. Could there be e-courses or online training? Is India ready to invest in newer educational technologies? The country also needs to increase her health budget as the non-communicable diseases have started to find newer victims.
Environment and Climate Change- No matter what the rhetoric goes, climate change is as real as it gets. With time, the demand for cleaner resources will only rise but is the system ready to take of this demand? Only time will tell. The need to curb pollution and environmental damage while negotiating industrial progress will be a tricky scale to balance.
Quenching the GDP controversy- The controversies regarding the GDP numbers and other important economic data will need to be quenched with immediate effect. The international community, specially investors look at these figures as a sign of credibility. The nation cannot afford to lose credibility at such crucial times.
Political will to think long term- Even if there is a stable government at the helm of things, the lack of political will derails the plan/s towards progress. As economists have clearly mentioned the risks to the economy at this juncture, it would be imperative for the new government to take the necessary risks, keeping in mind the long term goals.
In sum, whoever comes at the helm of affairs, they will have much greater responsibilities to shoulder, at least in economic matters. As the fate of the nation gets decided, one can only hope for the best.