Why India Needs A New Economic Model

Despite high GDP growth post-1991 LPG (Liberalisation, Privatisation, Globalisation) reforms, India is facing a severe multidimensional socio-economic crisis stemming from its economic model. 

Crisis Stemming from the Current Economic Model

• Jobless Growth: Despite an 8.2% GDP growth rate, India is experiencing jobless growth. 
  • This is evidenced by thousands of PhD holders and engineers applying for peon positions.
  • 800 million people still require food subsidies, suggesting the benefits of growth are not reaching the masses.
• Disguised Unemployment: 60% of the population relies on agriculture, yet the sector only contributes 15-20% to the GDP, leading to low productivity and farmer suicides.
• Ghost Villages: In states like Punjab and Haryana, youth are selling land to migrate abroad illegally, leaving behind villages inhabited only by the elderly.
• Regional Disparity: Just 10 cities account for 25% of India’s GDP, leading to extreme urban congestion and the breakdown of social bonds among migrants living in slums.
• Harsh Living Conditions: There’s extensive air and water pollution in cities, and the authorities cannot keep up with the increasing demand for municipal services.
  • Example: In winter, the air in New Delhi and many other cities across India is hazardous to people’s health.
  • Traffic congestion and delays are often horrendous, even in cities with Metros.
• Rupee Decline: The 2006 Tarapore Committee plan to internationalise the Rupee remains unimplemented as the currency continues to decline against the Dollar.
• Limited Technological Leadership: On the positive side, India has had considerable success in knowledge-based sectors such as software and pharmaceuticals, but even there, it is not a world leader.
  • During the COVID-19 era, India’s Serum Institute produced vaccines for many countries, but its technology was imported.
  • India has not yet created a single world-class AI/ML app.
  • Further, India does not play a leading role in other emerging world-dominant technologies such as batteries and storage, electric vehicles, new pharmaceuticals, and gene editing, even though it could.

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Conclusion

After about 35 years of the current model, India’s educational institutions, think tanks, and concerned citizens must urgently focus on the features of a new economic model for India. This urgency is critical, as there are only 22 years left until 2047.

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