Day 28 – Q 4.Why has double digit growth in GDP remained elusive to India? Is it a serious concern? What are its fallouts? Examine.
4. Why has double digit growth in GDP remained elusive to India? Is it a serious concern? What are its fallouts? Examine.
भारत के सकल घरेलु उत्पाद में द्विअंकीय वृद्धि क्यों नहीं हो पा रही है? क्या यह वाकई चिंता का विषय है? इसके दुष्परिणाम क्या हैं? जांच करें।
Approach:
- Introduction
- Reasons behind
- Why it is a serious concern?
- Steps taken in recent times, Challenges
- Way ahead
Introduction:
India surged ahead to become the world’s fastest-growing major economy in the last quarter of calendar year 2017. While the nation has the potential to hit double digit growth in GDP, it has remained elusive.
Reasons behind:
- Structural issue- With 68% of working population in agricultural sector, the sector contributes only 13.7% to our GDP.
- The contribution of women to India’s GDP is 18 per cent, one of the lowest proportions in the world.
- Issues in manufacturing sector- low ease of doing business, red-tapism, lack of job specific skills.
- Poor investment- Private investment is at its low. Further public sector banks are facing the challenge of NPAs.
Cause of concern:
- It risks converting India’s rich demographic dividend into demographic disaster.
- The demographic window won’t last long.
- Growth less than potential results into unemployment resulting into issues like inflation, social unrest etc.
- It results into economic inequality.
Steps taken in recent times:
- The “Make in India” campaign.
- Skill India mission
- Introduction of the Goods and Services Tax, unifying sales tax across all Indian states.
Challenges:
- Private investment needs to pick up significantly, but the woes in the banking sector may drag it down.
- The external economic environment has deteriorated- The global economy is increasingly looking dubious and a lot uncertain with an imminent threat of trade wars breaking out. In such a scenario, India is unlikely to achieve 20-25% exports growth, which is needed to achieve double digit growth.
- With fourth industrial revolution ongoing, automation is emerging as another major challenge.
Way ahead:
- Service sector and manufacturing sector should be able to absorb the disguisedly unemployed in the agricultural sector.
- An effective structural reform agenda including in land, labour and financial markets is required.
- Banking sector- Its time enough competition is generated by solving the issue of NPAs in public sector banks and encouraging private banks’ participation.
- Rising up in the value chain- Agro-processing industries.
- Gender empowerment- India could add $770 billion to its GDP annually in 2025, or 18% above business-as-usual GDP by pursuing the goal of gender parity.
- To achieve GDP (gross domestic product) growth of 10 percent, India would need the service sector to grow close to 20 percent complemented by four and eight percent growth in agriculture and industrial growth,
Conclusion:
India needs to reap the benefits of its rich demographic dividend. Reforms being taken needs to be implemented in true spirit. Further it must be ensured that the growth is sustainable and environmental concerns are taken into account.
Best answer: Shweta
