Context: 

This article suggests focusing on the need for India’s growth rate to be 7% for the next 25 years and forces that a major part of investments should be raised from within the community.

The Statistics:

Challenges to India’s Growth Rate:

• Global Instability: The Ukraine-Russia conflict has impacted the entire global peace climate. Continued such tensions will be a strong negative factor for growth. 
  • Example: Supply disruptions of critical imports like oil can cause a severe setback not only to developing countries but also to developed countries.
• Trade barriers: Developed countries, which earlier preached for the free trade model, are now imposing restrictions on imports. 
  • These barriers can harm developing countries like India who are reaching the stage of being able to compete in the world market. 
• Less Export-led Growth: Several countries like South Korea earlier and China achieved high growth over several decades by focusing on exports. This export-led growth strategy may not work for India, particularly in the context of a changed global trade situation. 
• Technological disruptions: It is suspected that Artificial Intelligence can result in increasing productivity and output but not necessarily jobs, which is bad news for populous countries like India.
• Environmental Considerations: Addressing environmental concerns can influence the overall output. Achieving a growth rate beyond 6-7% might be challenging with such environmental considerations.

Way Forward:

• Hike in Investment Rate: Focus should be maintained on to increase the Gross Fixed Capital Formation rate by 30-32% of GDP. 
  • Investments by the business sector, both corporate and non-corporate, must increase. 
• Efficient ICOR: Focus should be on to improve the  efficiency in the use of capital.
• Focus on Specified Sectors: Allocation of efficient resources should take place in agriculture, manufacturing, and exports sectors. 
• Review Trade Strategies: With the changing nature of trade in the World, India should need to efficiently work on its  global trade partnerships and apply trade barriers.
• Reduction of Inequality & Poverty: Steps should be taken to reduce the inequality and simultaneously aim for a 6-7% growth.
  • Technological Solutions: Technology should be used with its growing pace to compete with the world, while looking for alternative options to increase employment vacancies to reduce the threat of jobless growth.
• Education and Skill Development: There is a need to make reforms in the education system to make students compatible with relevant skills.
• Increase in Investments: Investment environment should be favorable both for foreign and domestic investors to gain boost of investment & growth.
• Implementation of Basic Income: The level of basic income and the coverage of beneficiaries have to be determined taking into account certain normative considerations and the capability. 
  • Simultaneously, there should be a cut down of few subsidies other than those on food to balance the financial scenario.

News Source: The Indian Express