It might happen. We can not say for sure that it will happen. There are so many variables, so many forces acting simultaneously. If Indians plan it well, nobody can stop India
1 Historical Background –
As per studies by renowned quantitative macroeconomics analyst Angust Maddition India was the largest economy in the world from 1 AD to 1700 AD in most of this period contribution of India in world GDP was 24-32 percent. At the beginning of 1800s India was still larger economy than US, UK, Germany and France put together. Post colonization and industrial revolution in west, share of India in World GDP fell drastically. India used to be home to finest cities in the world, testimony about Rajgir and Vijaynagar stands out in history. By the time of independence our share in world GDP shrank to 3.8% and obviously India became home to largest number of poor people living in ghettos, Dharavi still hold the distinction of being the largest slum in the world.
Father of economics, Adam Smith explained how relative position of country in value chain affect the prosperity of the country. India lost out to west during Industrial Revolution. Post liberalization we are making continuous gains and today stand as 3rd largest economy in the world in terms of real GDP.
2 Unique Advantages-
2.1 All Agro Climatic Zones
This gives us advantage of producing everything. India has largest cultivated land in the world. Almost half of total land available is under farming but productivity is low. We can use different zones for most suitable produce using scientific methods.
2.2 Demographic Dividend – While World Is Ageing Demography – Most Opportune Moment
Today 41% of population in India is below the age of 20 while almost 50% is between 20-59 years of age. So we are huge young country. While most of the world is ageing, we are still young, but this opportunity will be lost if we do not encash this opportunity. Such huge population if productively employed can create tremendous value and will be one of the largest market in itself.
2.3 Cheap Labour
Owing to large population we have relatively cheaper labour. Development pattern all over the world has followed the path of Agriculture to Manufacturing to Services (Europe, US, Japan, South Korea, Taiwan etc). Till now we have not sufficiently focused on manufacturing part of it. While agriculture is helping the people survive we can move the people to manufacturing without causing any disruption.
2.4 Large market
Geographic spread and large population makes us huge market. We need to use ready availability of this market to expand the growth.
2.5 Tourism
Every state in India has unique potential for tourism. We can develop infrastructure and make it easy for tourists coming from outside the country. It brings in foreign currency and provide jobs for local population. Potential for internal tourism is also huge. Cultural and religious tourism is also having huge potential. When income levels of the people increase it will increase exponentially.
2.6 Medical Tourism
Lot of people come to India from middle east Asia and African countries. We have relatively cheaper healthcare and expertise. Although we have one of the lowest number of doctors per capita, but we have highly specialized hospitals. Increasing income from outsiders will help us further increase in medical colleges and training of more doctors, it will improve public health and productivity of population in turn. We can learn from countries like Cuba.
2.7 Advantage of English language
We have second largest English speaking population in the world after USA. Today English is language of communication and trade all over the world. Our IT and ITES industry has benefited from this. We can take advantage of it in furthering the economy and trade. Most number of research papers are published in English language and that gives us easy access to scientific knowledge and development across the world.
2.8 Culturally liberal society entrenched in democratic traditions
Historically we accepted everybody, our people believed in वसुधैव कुटुम्बकम (Vasudhaiv Kutumbakam = THE WOLE WORLD IS A FAMILY), accepted the change throughout the history. Our merchants traded throughout the known world, we have Indian diaspora in most of the countries. This gives us a unique advantage in globalized world.
2.9 Availability of all types of raw materials
Theory of critical mass can be implemented. We can develop the industry in and around the areas of availability of raw materials. We have almost everything from salt to thorium. For example huge Thorium reserves can help us in our energy needs of the future and development. We need to develop the knowledge of processing where it is required.
2.10 Critical mass available for almost any business, trade, research
Critical mass is important for any business or trade. It is also needed for pumping sufficient funds in research and development.
3 What we can do-
3.1 Identify areas for different products
Different part offer unique advantages for different industries and produce. Mostly we are aware of these. We just need to focus on right mixes.
3.2 Focus on Education and Industrialization
Till 1985 India was ahead of China (which is going to be our closest competitor in near future) in per capita income as well as real GDP. Today Chinese economy is 4 times the size of Indian economy. China leapt ahead in 80 because of education and industrialization. We can lear from the experience of Europe as well, they took lead earlier with Industrialization. Roman used to complain that we do not have anything to export to India, we can again achieve that distinction
3.3 Infrastructure development – examples of Canada and Australia
Infrastructure is most important for development of any country. There is huge infrastructure gap in India. It helps at all the level. Manufacturing, tourism, transport of goods and economic efficiencies are achieved through Infrastructure. We can learn from the experience of Canada and Australia in this.
In India infrastructure development will be different from the models followed in other countries. We need to provide infrastructure in rural areas so that small industries and enterprises can work from the rural areas. As of now they have to move closer to cities.
3.4 Sustainable development model and push to the eastern part
Today whole world is aware of climate change and sustainability is most important aspect of development going forward. We have huge untapped potential for clean energy which is not only sustainable but saves precious foreign exchange that we spend in buying petroleum and reduces our dependence on global factors.
Eastern part of the country has not yet tasted the fruits of Green Revolution. Now with new studies showing that organic produce can have equally high yields we can do that on war footage in eastern parts of the country. It fetches premium as well along with being sustainable.
3.5 Invest in R&D
To achieve this all we need new and available technologies. All studies shows high correlation between development and spending on agriculture.
- Small countries like Switzerland have huge share in scientific work and that is the basis of their development and high value products they produce.
- Story of Chinese economic development is also the story of increase in share of China in scientific papers produced from 3 to 11 percent between 2001 and 2011.
We still buy mobile phones and laptops from outside. Our productivity in agriculture is very low (less than half in most of agriculture products) in comparison to developed world. Our own experience in space technology and nuclear technology is similar.
3.6 Invest in people
People can be productive when they have proper skills. Most of our population is involved in unskilled or semiskilled work. To move up the value chain we need to invest in our people to develop the skills. Here we can learn from the examples of Japan and Scandinavian countries.
3.7 Environment and policies to enhance productivity to be created
- “Red Tapism” is biggest hindrance for budding entrepreneurs. We need to reduce the regulations to extent possible.
- Technology can be used to shake the corruption and accountability can be ascertained
- Archaic laws – how ease of doing business is improving and can be improved
- Development and cleanliness go hand in hand. Nobody want to live in dirty environment, as we enable our people to have respectable living standards, cleanliness will follow automatically
4 Risks:
While doing all this there are potential risk factors which we need to address continuously.
- Population can be burden
High population does not mean high production and high demand automatically. An unskilled poor population can become burden on society.
- Division of labour degraded into caste system
According to Adam Smith as skills become more complex then economies need to have specialists. India was one of the first country where division of labour was achieved thousands of years ago. Later on it degenerated into caste system and untouchability.
- Corruption is deep rooted
All welfare and development schemes must be implemented in targeted fashion and last mile delivery must be ensured otherwise resources will be squandered without any benefits.
5 Conclusion:
At present we have become fastest growing economy in the world. We are moving in right direction but there are lots of things that can go wrong. World is moving very fast, technology gap that made the most skewed world in late 19th and early 20th centuries is reducing, still we need to close that gap. We have resources, base and demography on our side, momentum is built up. Now it is time to bank upon it.