Economic Assessment of India by Surjit Bhalla
How many times have we pondered over the question on why India has lagged behind China? China got its independence much later then India. Even after getting independence before China, India hasn’t been able to capitalise on its full growth potential. Answering some of these questions, Dr. Surjit Bhalla held a presentation with fine assessment of India’s conundrum of growth.
Dr. Bhalla with Subir Gokarn, the moderator for the evening
Dr. Bhalla addressed many issues, which lead to the current state of economy and stagnation of growth in recent years. He pointed towards the education sector, which has always lagged behind. After independence India concentrated on higher education showcasing upper class IITs, whereas the rest of the world concentrated on expanding their primary and secondary education. India only expanded education for the rich while most of the developing world expanded education for the poor. Other countries realised that an educated labour force is the key to higher growth.
He then pointed to the lack of reforms in the agriculture sector. He also said that policies prior to 1990 were ancient but even after the reforms in 1991; the agricultural sector didn’t receive the attention it required. To this day, the state intervenes the same degree, some of it may be changing now, but in totality the agriculture remains a state owned entity. It shows up in the growth rate of the sector. From 1950 to 1980 the average growth rate in sector was 2.9 percent; even after the successful ‘Green Revolution’. Ironically, the growth rate ever since that period has been a mere 3.1 percent only. India has not been able to witness an agricultural revolution. On the other hand, most of the countries reformed their agriculture and reaped great benefits. In fact, one of the first focus areas of reforms in China was agriculture.
Dr. Surjit Bhalla pointed at various aspects of India’s growth potential
“It is believed that China did very well and statistics really show that, something which no country in the world has achieved. But the fact remains, that in terms of welfare for the poor, welfare for the large masses of population, it hasn’t been as great as it looks. One major indicator of that is the consumption of GDP. In China, the consumption is only about 36% of the GDP, one of the lowest in the world. In India the consumption is about 60-65%. So, half of the gap disappears when we do comparisons. He also said that if we look that the poverty levels in both the countries, it is almost the same, considering the Tendulkar Committee Report, which is a parameter to define the poverty line in India.
He then moved to the industrial and manufacturing sector, appreciating the ‘Make in India’ initiative by Prime Minister Modi, which he believes, is the need of the hour. India has lacked behind in its industrial growth for several years. From 1960-2011, the industrial growth has been about 6% only, which is far less than the industrial growth of even Pakistan, which got independence at the same time.
The level of Industrial growth across the world
He concluded by saying that India has great potential for growth in the coming decades. If policy makers of the country focus at the right pointers then India should be able to grow at a minimum 9% annually.
Photo Credits: Neel Kamal Pandey,One World News.