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Covid-19 and India’s $5 trillion economy dream
Read more on - Polity | Economy | Schemes | S&T | Environment
- The story: Since the decade of 2000s dawned, India was celebrated as a promising growing economic power of the world. As an economic growth engine of Asia, it was considered to be a manufacturing hotspot, one that could replicate the success of China and South Korea. There even was time when the US considered India as a strong defence counter-balance for China, in Asia. And then, Covid happened.
- Modi's dream: From the moment he took power in 2014, India's PM Modi has been an ardent believer in the nation’s capabilities. From the Red Fort, in his independence day speech(es), he pushed for schemes such as Make in India, Stand up India and Startup India. These calls were aimed at boosting domestic manufacturing prowess, providing it with the much-needed impetus to make a mark in the global arena.
- Pandemic 2020: In 2020, as Covid-19 hit industrial hubs across the globe shuttered down and went into a lockdown mode, Modi strongly pitched for ‘make in India, make for the world’. He also made the clarion call for ‘Atmanirbhar Bharat’ (self-reliant India).
- Modi said, “Our country has plenty of natural resources. It is the need of the hour that we start the value addition of these natural resources and human resources, and to take the country to new heights. How long shall we continue to export raw material to the world? How long will the process of exporting raw material and importing finished goods continue? So, we will have to be self-reliant.”
- In 2019, Modi also advocated for a $5 trillion economy goal. In consonance with it, the Union Minister of MSMEs, Nitin Gadkari, in December 2020, said that the government aims to increase MSMEs’ contribution to GDP to 50% from the existing 30%. He vowed to increase the sector’s share in India’s total exports to India to 60% from the existing 48%.
- The second wave of Covid-19 has demolished many assumptions, and raised serious questions on India’s economic aspirations. As the human crisis deepens and now reaches the deepest parts of rural India, the question being asked is how do such lofty economic ambitions square up with dismal public health situation?
- The idea of prosperity: At the core of this debate lies the reasoning that the idea of prosperous a nation is a measure of several things and economic growth of a nation cannot be seen in isolation. The country’s economic ambitions must be aimed at enabling people to live healthily and to live with dignity. Some experts say that the pursuit of a $5 trillion economy needs to be put in the bin and the focus should be on building a real economy.
- The people matter: Looking at the growth stories of economic powerhouses elsewhere, it’s clear that they pay equal attention to the social wellbeing of their citizens. Globally, nations invested heavily in uplifting social and human development of their citizens. In most cases, the economic wellbeing of a nation follows on its own, if social development is taken care of. For India, an important takeaway of the current crisis remains the fact that it has't invested enough in our citizens and this anomaly could have far-reaching ramifications on the nation’s economic health.
- Trickle down versus Build up: Contrary to the trickle-down approach of aggregated economic empowerment, capability building starts with each individual in focus. It's a philosophy that starts from ensuring access to critical life enablers like education, health, nutrition to social security policies for mandating these to support all the way till individuals meet life opportunities in the forms of volunteering, local problem solving, entrepreneurship and income-earning abilities.
- Lessons: The Covid crisis has taught how critical life-essential services are–healthcare, water, air, etc. Therefore, while coming out of Covid, these priorities have to be attended to. Even if our economic engine does well, and these life essentials are not brought to a basic minimum acceptable level, sooner than later, the economic engine will get hit.
- India’s curious case: In recent years, the country has taken rapid strides on the economic front. However, its socio-economic performance, if seen in totality, presents a curious case.
- India retained its position as the third-largest economy in the world in terms of purchasing power parity (PPP), behind the US and China
- India also jumped to the 63rd position in the World Bank’s Ease of Doing Business 2020 report
- It exhibits similar positive performance at Global Innovation Index 2020, where it climbed four spots on the Global Innovation Index 2020 and is now at the 48th position in the list of top 50 innovative countries
- But India, home to 1.3 billion people, is ranked 94 among 107 nations in the Global Hunger Index 2020 and is in the ‘serious’ hunger category. The UNDP’s Human Development Indicators puts India at 131 out of 181 countries, with 34.7% of children facing malnutrition, stunting (% under age 5). Similarly, the fifth National Family Health Survey (NFHS-5) for 2019-20 shows malnutrition among children has risen in India over the last five years. The period of the survey was before Covid-19 and the fear now is that the situation could have worsened alarmingly.
- India is different, so should be its solutions: Establishing a world-class public health infrastructure remains critical to achieving any long-term economic vision for India. Covid hit India where it was the weakest, i.e.; health care system. India's health care system was always fragile and under-invested over the decades, with governments investing about 3.5% of our GDP in it.
- Summary: India needs to do much better on social and human indicators, and those need economic growth. It is not a luxury, but the only option to improve our lives. India needs to commit resources for the next 10-15 years and continue building irrespective of who is in power. India's strategic priorities cannot be misplaced any more, otherwise it will keep bouncing back to being a vaccine importer, from being a vaccine exporter doing "Vaccine Maitri".
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