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Indian Express
31-07-2025
- Business
- Indian Express
To become a developed country by 2047, India needs new economic ideas
Recent developments inimical to India's economic interests, such as China's curbs on the export of rare earths and fertilisers, and the reported withdrawal of engineers and technicians working on Foxconn's iPhone plants, raise the question: How should India respond? Any immediate response will more likely be geared towards ensuring that supply chain disruptions are minimal. Beyond that, however, there is a larger question: Will shifts in the global order, changes to the trading architecture and the weaponisation of trade, the growing economic imbalance between India and China and Delhi's economic and strategic realities, be the trigger for much-needed and far-reaching changes in the policy architecture? Will they spawn a new development compact, one that places growth and development front and centre? Looking back, growth has not always been the top priority. Post Independence, the overriding objective was to ensure the stability of the Union. Partition and the integration of princely states created the grounds for veering towards a strong Centre that prioritised stability. The centralising impulses of the Constitution also flow from this intent. To ensure that this compact held, deals were struck with various pressure groups over the decades. A strong Centre also complemented the overly centralised planning model adopted by governments in matters of economic policy. Sluggish growth over the years did not prompt a rethink of either approach or priorities. While some pro-business policy changes were introduced in the 1980s, increasing economic efficiency was not the predominant objective. As Dani Rodrik and Arvind Subramanian have argued, these changes were less about the economy and more about 'garnering political support from existing business groups'. This framework, however, did not deliver prosperity. Growth was anaemic and poverty was widespread. The crisis in 1991 created the space for a new compact where growth became the overriding objective. Economist Stefan Dercon has argued that the policy shift in the 1990s was a decisive step towards a development bargain. Dercon views development bargain as a commitment by those who wield power — the country's political and economic elite — 'to shape politics, the economy and society to strive for growth and development'. This bargain — formulated at a time when the political system was transitioning away from a period of one-party dominance to an era of coalitions where power was less concentrated at the Centre — had buy-in from parties across the political spectrum. With a broad consensus on the nature of policies to be pursued, subsequent governments stayed the course. The NDA government under Atal Bihari Vajpayee doubled down on the reforms push, and the UPA under Manmohan Singh trod along the path while adding a slew of welfare programmes to ensure the stability of this compact. This period coincided with the high noon of globalisation — a time when the rising tide of global trade lifted all boats. The pace of poverty decline accelerated and new pathways to upward mobility emerged. Investment activities gathered steam, exports surged, capital inflows soared and millions moved out of agriculture. While growth did slow down sharply during the UPA's second term, in large part due to policy mistakes, steps were taken during its final years to arrest the decline. In the run-up to the 2014 election, the overriding concern was to shore up the economic momentum. The BJP's rise to power was largely on the back of a promise to provide good governance and ensure high growth and development. The shift from a coalition era to one where a single party commanded a full majority was also taken as a sign that the pulls and pressures from allies would no longer be a hindrance in fulfilling the compact, which could now be pursued aggressively. The first few years of the new government did see several steps being taken towards this end. There was also a continuity in ideas — ideas that were birthed in earlier governments such as inflation targeting and GST found resonance. Somewhere along the way, however, the growth imperative weakened. The pandemic made matters worse. And as inequality rose and pathways for upward mobility shrivelled, the compact frayed and the political class pivoted towards populism. Cash transfers, tax giveaways and other populist schemes became the norm across political parties and governments as short-term electoral considerations took precedence over longer-term economic benefits. Few fresh ideas were articulated to reinforce the compact. Perhaps the Production Linked Incentive Scheme and the unstated strategy of promoting a handful of private firms as national champions can be considered new ideas. Even then, the limits of both were apparent. This weakening of the consensus around the compact comes at a time of significant changes in the global order. In the Trumpian era, trade, a pathway for many nations — from Bangladesh to Vietnam — to climb the ladder of prosperity has become a casualty. At this time, when the tailwinds of 'hyper' globalisation are no longer available, a strategy to rely just on trade deals with the developed world, but not seek deeper integration with countries at the heart of global supply chains, will limit the gains that are being envisaged. Alongside, the rapid adoption of AI will impact large swathes of IT jobs. Considering that the IT sector has provided millions with pathways to upward mobility — the great Indian middle class grew on the back of this sector — new drivers of growth are needed. This new reality is at odds with hopes that the country will become a developed nation by 2047. That goal, in any case, is a tall order, if the economic history of the world is anything to go by. Only a handful of countries have managed to ascend to the high-income category. And even if India manages to sustain its growth over the coming two decades — per capita income has grown at 5.7 per cent in dollar terms over the past 10 years — then average incomes would be just shy of $10,000 in 2047. The question is whether this or higher growth can be achieved. Growth does not miraculously endure. It isn't easy to sustain the momentum over such long periods without a development bargain and without an elite compact. Unless that happens, the goal of becoming a developed country will remain elusive.
Scroll.in
15-06-2025
- Politics
- Scroll.in
India's data credibility problem – and why that matters
Eighty-two persons died in the stampede during the Maha Kumbh pilgrimage in Uttar Pradesh's Prayagraj in January – not 37 as the government claimed, the BBC reported on Tuesday. This was not the first time the media has claimed that the actual toll could be much higher than the figure that had been announced. The findings, if accurate, would reinforce concerns about a trend of data published by the Indian government that seems to be false or erroneous. For instance, on May 7, data published by the civil registration system revealed that India had recorded at least 37.4 lakh excess deaths in 2020 and 2021 compared to 2018 and 2019, the two years preceding the Covid-19 pandemic. Excess deaths refers to the difference between the total number of deaths during a pandemic or a natural disaster compared to the number of deaths that would have been expected under normal conditions. The Opposition cited this data to allege that the Narendra Modi government ' systematically underreported ' Covid-19 deaths. While the Indian government claimed 5.3 lakh people died of Covid-19 till date, this would put the real toll seven times higher. Similar questions have also been asked on the economic front for several years. In March 2024, former Chief Economic Adviser Arvind Subramanian said that the government's gross domestic product growth numbers did not add up and were 'mystifying'. However, the concern is not just about deaths being allegedly hidden or data being dressed up. In some cases, the data is outdated or completely absent. One reason for the scarcity of official data in several key areas is that the decennial census that had been held uninterrupted since 1881 did not take place in 2021 because of the pandemic. Curiously, the government postponed the exercise even though elections took place in several states during the pandemic. The 2011 data being used by the world's most populous country to make policy making is long out of date. The government does not accurately know where Indians now live. Several welfare programmes, the public distribution system that provides subsided food to crores of people, and pension and housing schemes rely on census data to reach beneficiaries. By using data collected one-and-a-half-decade ago, millions of persons are being potentially excluded from accessing their entitlements. This leads to another problem. As Scroll highlighted in January 2023, the void left by the scarcity of official statistics has led to privately collected data gaining prominence, even as the government alleges that it is flawed. While the government has said that the census – which will include caste enumeration – will conclude in 2027 after a six-year delay, the full details are expected to be available only nine months after the data is collected. Here is a summary of the week's top stories. Aviation disaster. At least 265 people died when an Air India plane bound for London crashed moments after taking off from Ahmedabad. Only one of the 241 people on board survived and was being treated at a hospital. The aircraft's crash into the hostel building of a medical college also killed at least four students on the ground. While the toll on the ground remains unclear, a police inspector said that 265 bodies have been sent for post-mortem. The crash took place moments after the flight captain issued a Mayday distress call to the air traffic controller, with communication lost thereafter. This is being described as the world's worst aviation disaster in a decade and the first fatal crash involving a Boeing 787 Dreamliner aircraft. Conducive to escalation. The Israeli military launched strikes on what it claimed were nuclear targets and also other sites in Iran with an aim of stalling the country's nuclear programme. Iran retaliated with missile attacks on Israel. The Israeli Defense Forces hit sites in the capital Tehran, Kermanshah and Tabriz, among other cities. Iran's main nuclear enrichment facility in Natanz was among the targets that were hit. Iranian military chief Mohammad Bagheri and Hossein Salami, the chief of the Islamic Revolutionary Guard Corps, were killed in the attack. While other casualties were being reported in Tehran, the numbers were not clear. Claiming that Iran was 'closer than ever to obtaining' a nuclear weapon, Tel Aviv said that it had 'no choice but to fulfil the obligation to act in defence of its citizens'. Iran has for long maintained that its nuclear programme is for civilian purposes. Mumbai's local train woes. Four persons died after falling off a suburban train near Mumbra in Maharashtra's Thane district. Thirteen were injured, according to a surgeon at the district hospital. The incident took place on fast train tracks between Mumbra and Diva. A Central Railways spokesperson said that the accident was suspected to have taken place as passengers travelling on footboards in trains in opposite directions 'got entangled'. Last year, Mumbai's suburban train network recorded 2,468 deaths, or more than six fatalities every day. Also on Scroll this week
