India @ 74
What has India achieved?
"At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to new, when an age ends, and when the soul of a nation, long suppressed, finds utterance...”. These were the words of Pdt. Jawaharlal Nehru, the first Prime Minister of India, on 14th August, 1947, just a few hours before India broke the shackles of British Raj and became an independent nation. His words not only signal optimism but also a firm determination to transform India from a country with a shattered soul and a battered economy to a nation which takes pride in itself and has a robust economy. Many different administrations have been in power since then and all have contributed to making the India we see today.
The policymakers at that time realized the importance of being cognizant of the dilapidated state in which Indian people were in and became aware that India’s economic development could never take place had the basic needs of the people not been met first. At the time of independence, eight out of every ten people were below the poverty line, just 1 out of 10 people was literate, and just 1 out of 100 people had access to sanitation; there was a mammoth problem in front of the policymakers.
Given the nascent state in which the country was in, both economically and politically, any step taken could change the fate of India for the better or the worse, and it became crucial to decide the model of economic development India had to adopt. Socio-economic development became an important pillar for building a robust economy, and Nehru rightly chose the socialistic model of economic development – one that proved to be a pivotal decision in the history of India. He took the lessons from Russia to not have a planned economy but also made sure to give the state an important role, something which had to be done to ensure equity and upliftment of the people in the then poor India. He chose to have a mixed economy in India-one in which the state-owned and controlled certain industries but also let the private sector operate.
Prime minister Jawaharlal Nehru’s development model envisaged a dominant role of the state as an all-pervasive entrepreneur and financier of private businesses. “To import from abroad is to be slaves of foreign countries,” the first Prime Minister, Jawaharlal Nehru, once declared. With this in mind, industries producing basic and heavy goods were chosen for investment over consumer goods because the government wanted to reduce the country’s reliance on imports of basic and heavy industrial goods in line with their belief in the goodness of national self-reliance. The economists at that time believed that rapid industrialization could help better resolve the problems of economic growth than just relying on agriculture, which then employed around 75 percent of the country’s workforce. Post-independence India saw a magnificent growth in the steel industry with India alone producing 6,300 tons of steel. India has built historical public enterprises like the LIC, which accounts for over 71 percent market share of the insurance industry.
The Green Revolution in India, led by MS Swaminathan, helped revolutionize Indian agriculture. India used to produce just 55 million tons of food grain at the time of independence, which was insufficient to feed its 340 million people. It was dependent on imports from the U.S.A to meet its food grain requirements which led to the depletion of its Forex reserves. The Green Revolution not only made India self-sufficient in food grain production but also made it capable of exporting food grains. Wheat production increased by more than three times between 1967-68 and 2003-04, and the overall increase in the production of cereals was only two times. India’s foodgrain production has now increased fivefold and has jumped to 297.5 million tonnes from a meagre 55 million tonnes at the time of independence. The green revolution and operation flood have led to a severe reduction in malnourishment in India and have significantly helped in increasing the productivity and income of the farmers.
The 1991 reforms set a solid foundation for the economic boom in the country. The government had probably realised by then that it was the appropriate time to liberalise the business environment and bring in private players to propel India’s growth story forward. It ushered in investment and competition, ensuring efficient and effective utilization of resources. Also, the rapid globalization connected India with the rest of the world and significantly increased the services sector in the country. India, which contributed just 1.78 percent to world trade now contributes 12.4 percent. India has witnessed a sharp jump in Forex reserves from $2161 million to $612 billion. The confidence of the people in the private sector has tremendously risen, which can be seen in the Bombay Stock Exchange’s Sensex rising from 100 in 1978 to now crossing 55,000.
Image: People employed under MGNREGA
The innovative and focused policies of GoI since the 2000s, aiming for growth and equity, have led to plausible improvements in the standard of living of the people. The percentage of people below the poverty line has decreased from 80 percent to 21.92 percent, life expectancy has risen by 28 years to 63.96 years, and Infant Mortality Rate has successfully decreased from 145.6/1000 to 32/1000 to name a few. India is now known as the pharmacy of the world, has played a major role in manufacturing Covid-19 vaccines for the world, and has carried out successful immunisation and inoculation programs. The MGNREGA has bolstered rural economic development. India has carried out successful space programs and now is even capable of launching the largest number of satellites in space, including the majority of satellites of international countries. PM Modi’s Swachh Bharat Abhiyan has been a major success in increasing the country’s sanitation coverage from 1 percent at the eve of independence to 94 percent today and reducing the spread of readily transmissible diseases. The innovative mid-day meal scheme has not only decreased the malnourishment of children but has also increased Gross enrollment in elementary education to 96.6 percent from just 32.1 percent after the independence. The overall literacy rate has increased from 12 percent to 74 percent now. This significant improvement in the quality of life of people coupled with economic growth has increased the GDP from Rs 2,939 billion during 1950-51 to Rs 1,40,776 billion in 2018-2019 and India’s share in the world’s GDP has risen from 3 percent to 8.5 percent. There has been a 21 time Rise in Per capita income from Rs 1705 in 1950-1951 to Rs 1,14,530 in 2019-20.
What has India not achieved?
Amidst all the celebratory fanfare surrounding us, as we enter the 75th year of our independence, we must not lose track of the challenges we have overcome and the challenges still remaining in front of us. Despite the operating gargantuan poverty elimination schemes, 84 million Indian citizens reside in abject poverty. The pandemic has undone the efforts of many years by pushing millions into poverty, and large-scale income disparities have emerged. India’s independence came along with scars of blood-stained partition, depletion of immense natural resources at the hands of colonial power, and an unstable political system consisting of several independent princely states. The public health and education system laid in shambles at the onset of independence. India had to face insurmountable challenges at the beginning of her journey as an independent nation. Given the scale of challenges, no one would have given India a chance to usher in development. However, the success of democratic processes coupled with the welfare initiatives taken by successive governments helped India to rise on socio-economic indicators. The pace of this rise, however, remains unsatisfactory. The delivery of education and health services has not kept pace with the rising population. We have witnessed sky-rocketing enrollment rates in Indian primary schools. However, as we talk about this, half the students in 5th standard can’t read a simple text of 2nd standard & 1/3rd of them can’t do simple division. Learning outcomes are surprisingly missing at the primary levels of education. With the usage of technology increasing in all facets of life, we are in a race against time to fix our education system. Female literacy has risen too, but we have not seen that translate into higher enrollment rates at tertiary levels of education. The state of public-funded schools remains pitiable, barring few exceptions. Indian universities still have a long way before they match their western counterparts in research and development.
It is commendable that our public health system has emerged from where it was during independence. India has been highly successful in eliminating fatal diseases, and the extraordinary rise of life expectancy is a testament to this fact. Massive immunisation campaigns actively curtailed mortality rates among infants. The infant mortality rates have been reduced by 75 percent, which in itself is a commendable achievement. But there are caveats attached to these achievements. The primary health centres, which are considered to be the most basic units of public health, haven't delivered exactly on expected lines. India reports the highest number of tuberculosis patients. The COVID-19 pandemic that brought the nation to its knees had forced us to look at our priorities. The progress made in certain health indicators is dampened by the high levels of malnutrition amongst children and women. Despite multiple policies ranging from the Food Security Act to the Mid Day Meal scheme, India’s 94th rank out of 107 countries in the Global Hunger Index is more than a matter of concern. Efficacy of the programs combating malnutrition is a talking point even as India has the highest number of malnourished children in the world. The number of physicians (per 1,000 people) and the number of hospital beds (per 1,000 people) in India are 0.9 & 0.5 respectively. There is less than one physician per 1,000 beds in India & only half a bed per 1,000 people in India. Public health infrastructure is severely understaffed, especially in rural areas. The number of licensed blood banks in India is 3321, which is low according to the high populations. The economically weaker sections still do not have coverage for healthcare insurance. The majority of Indians don’t have access to healthcare insurance. Poorest sections were most dependent on government schemes. Despite being one of the least expensive healthcare centres around the world, the Indian healthcare system suffers from low spending. Improved sanitation and universal availability & accessibility to piped drinking water remain a distant dream.
This largely explains India’s ranking on the Human Development Index. India finds itself amongst the middle human development group after witnessing a subtle increase in HDI score from 0.429 in 1990 to 0.645 in 2020. While India has seen meteoric growth in per capita incomes, the pace of development of living standards remains questionable. India is indeed on the right track in achieving the United Nations Sustainable Development Growth but COVID induced disparities can play a spoiler in the long run. Improving the living standards of Indian citizens will remain a target for the state in this decade.
Image: The Descent of Dissent in India
India’s low ranking in the Economic Freedom Index indicates the inefficiencies that have emerged because of state control over businesses for a long time. Excessive regulations and delays in judicial processes have hampered the prospects of greater economic freedom for Indian citizens. Simplification of investment processes and tax codes have never been significantly on the government agenda for long. The complex structure of Goods & Services Taxes has not been that helpful in simplifying the archaic taxation process. The unwillingness of successive governments to take more bold economic decisions has hurt India a lot. India has so far not been successful in emerging as a society focusing on wealth creation. The interference of the state and bureaucracy in the economic lives of Indian citizens might reach a break-even point soon. The provisioning of public services by the Indian state has not been satisfactory enough. The liberalisation reforms had brought to the nation the benefits of weather creation. A new burgeoning middle and upper-middle-class were a result of these reforms. There has been a tendency observed in recent times with high net worth individuals leaving India for other countries.
The Atmanirbhar Bharat policy, though focussed on self-sufficiency rather than self-reliance (which was the principal goal in the Nehruvian socialist period), has been seen as inward-looking. Tariffs rates have been raised in recent times, reducing the chances of Indian consumers. Structural problems in manufacturing have not been solved at a large scale, as India has been losing its competitiveness in various industries, with the textile industry being a classical example. A liberal trade policy is the need of the hour given that India does not have very high shares in Global Value Chains. India’s decision to not join the RCEP should be re-assessed. The role of the state in controlling the economy should be looked at through a different lens. The state needs to strengthen social safety nets especially in the aftermath of COVID-19. Another matter of concern is abysmally low female labour participation rates, and this has become worse during the COVID times. India fares poorer than most of its South Asian counterparts in this regard. The attention of state governments has been more towards doling out populist political measures more than strengthening the social safety nets. The performance of public-run institutions has been lackluster, barring a few. The simmering NPA crisis has the potential to blow out in proportion unless government attention is diverted towards it. India has not taken up true reforms in the financial sector, and with technology emerging as disruptive in finance, reforms for making the financial sector resilient are due.
Growth has to be efficient, and it has to minimize the inequalities present. The question is not how big the pie is but how it is being distributed. In current times of uncertainty, the need for an all-encompassing policy is more than ever before. While in our journey of 74 years, we have achieved more than expected in few areas, but we have underperformed too, which certainly needs serious introspection and immediate rectifications.
What India needs to do?
With about 1.39 billion citizens nesting in the Indian homeland, our aims and aspirations for the future of the country in 2022-23 are very diverse and challenging. To catalyse the policy action initiatives, India targets an 8 percent steady GDP growth rate, with it further reaching 9 to 10 percent ensuring sustainability and inclusiveness. This becomes a challenging task for a nation whose investment lags at 29 percent of the GDP, which needs to be at least 36 percent for ushering a conducive environment for the investment relative to China’s 43 percent. The tax to GDP ratio still stands at a low at 17 percent, lower when compared to other advancing economies, with China at 22 and South Africa at 27 percent.
Rationalisation of subsidies which is less socio-economic but more political, undermines the fixed capital investment, which stands at only 4 percent of the GDP by the state players, which needs to be ramped up to at least 7 percent when compared to other developing economies. Archaic laws, undue bureaucratic interference further contribute to the deteriorated state of affairs in private and foreign investments as India receives only 10 percent of the USA’s total FDI and 25 percent of China's.
By some estimates, India’s informal sector employs approximately 85 percent of all workers. Also for the period 2015-16, there have been 6.34 crore unincorporated non-agricultural micro, small and medium enterprises (MSMEs) within the country engaged in different economic activities employing 11.10 crore workers. A large majority of those firms are within the unorganized sector. Keeping in mind the state of the workforce in India, reforming labour laws, easing industrial relations, and ensuring fair wages, working conditions, and social security through significant productivity improvements are much needed in the economy. The employability of labour must be enhanced by improving health, education, and skilling outcomes and a huge expansion of the apprenticeship scheme.
With an all-India installed power capacity of about 334 GW, including 62 GW of renewable energy, India is the world’s third-largest energy consumer; targeting 175 GW of renewable energy capacity in 2022-23 and 450 GW in 2030 looks quite challenging, along with reducing imports oil and gas by 10 percent by 2022-23 whose international price fluctuation has costed a fortune to India. It is so because the energy supply in the country is still dominated by petroleum wherein, we imported approximately 82 percent of crude oil and 45 percent of natural gas requirements during 2017. India’s energy mix is dominated by coal with a 49.6 percent share, with only renewable and clean energy (2.2 percent) and atomic energy (1.2 percent). Indicating an efficiency increase of 22.8 percent, India’s energy intensity declined from 0.158 koe/$(kilogram oil equivalent per USD) in 2005 to 0.122 koe/$ in 2016. The energy intensity of the UK (0.074 koe/$ ) and Germany (0.101 koe/$ ) were very low in the year 2016. It indicates that India still has the potential to improve energy efficiency and hence make power available to all.
Image: Need to focus on the transport and the service sector in India
In the transport sector, the roadways have accounted for the largest share in the movement of both passengers and railways. Aspiring for steady growth in the economy, improved road connectivity, and easy access to vehicle finance is the need of the hour. The current stretch of the NH network is 1.22 lakh km, which still hits a low at 2.2 percent of the country’s total road network of 56.03 lakh km. Ironically, national highways carry 40 percent of India’s total road traffic. Road safety is a major issue in the country, with nearly an average of 400 road-related deaths being recorded daily. In 2013, India had an accident death rate of 18.9 for every 100,000 people, higher than other South Asian countries such as Bangladesh (11.6), Mauritius (12.2), and Sri Lanka (13.7).
The dilapidating state of the power sector is a cause for concern for every developmental activity. India aims to achieve 100 percent electrification of railways by 2022-23, which looks quite paradoxical. Clean energy contributes only 2.2 percent of the total energy produced.
The under-utilized aviation sector needs to ramp up its operations to accelerate growth. The private sector must be given a free hand when the aspiration tends to double the air cargo handled to 6.5 million from the previous 2017-18 levels.
A nation whose 90 percent of external trade by volume and 70 percent are facilitated by ports, its inland water transport carries less than 2 percent of the organized freight traffic. India aims to increase the port handling capacity to 2,500 million metric tonnes by 2022-23. Reducing the turnaround time at major ports, increasing the throughput of inland waterways from 55.20 MMT in 2016-17 to 60-70 MMT by 2022-23, along with augmenting the capacity of inland water transport are some key steps for ahead. Communication is an essential arm to promote growth and development. The minimization of the digital divide and digital literacy to all is aimed as a vision for the future. Cyber security is also the onus of the state for its citizens.
India, in the area of universal access and retention of school education, wishes to achieve zero dropouts along with cent percent enrolment and retention ratios both at elementary and secondary education levels and a robust framework for promoting vocational education. Not only this, addressing the mental health issues becomes an exigent and an integral task with promoting education, as the National Crime Records Bureau shows that student suicides have increased from about 6,600 in 2012 to about 9,000 in 2015. The quality of education is still a challenge, where only China has at least three universities among the top 50 in the QS world rankings while India has none. It has to be complemented with at least 15 percent formally skilled workforce, which was 5.4 percent in 2018.
An estimate by the World Bank indicates that reducing stunting can raise India’s GDP by 4-11 percent. Also, a 10 percent rise in income per capita translates into a 7.4 percent fall in wasting. Thus, increasing per capita incomes through rapid and equitable economic growth is a necessary condition for improving nutrition outcomes. NFHS 4 points that 50 percent of India’s children are anemic at the same time. Ironically, the country is also grappling with the menace of overnutrition, with nearly one-fifth of India’s adult population is either obese or overweight. The challenge is to reduce the prevalence of stunting to less than or equal to 25 percent, underweight to 25 percent, anaemia to 43 percent in children by 2022-23.
India owes her indomitable spirit to her citizens and their unwavering contributions towards nation-building. Despite having faced and still facing multiple challenges collectively, the nation has stood tall. We, as a nation, are striving to ensure all citizens enjoy political, social, and economic freedom in the truest sense, thus fulfilling the dreams of our founding fathers and mothers. We have to build on our past accolades and strive towards ensuring better living conditions for our citizens.