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Last Updated : Jan 09, 2019 03:28 PM IST | Source:

DATA STORY | India set to grow at a fast pace but here are its 3 biggest long-term challenges

Here are the three major challenges that lie ahead of the country's future.

Anupa Kujur @AnupaSagarKujur

The recent advance real GDP estimates show that the Indian economy will grow at 7.2 percent in 2018-19, faster than the previous year's 6.7 percent expansion, according to data released by the Central Statistics Office (CSO).

The CSO estimate implies that India is on track to grow at a faster pace and keep fuelling the global economic growth as the fastest growing economy. In 2018, India retained the tag of the world's fastest-growing large economy despite external vulnerabilities arising out of rising oil prices, trade wars between major global trading partners and US monetary tightening.

Opinion | Take the first advance GDP growth estimates with a pinch of salt


While a number of these external vulnerabilities may continue to impact India's growth, here are the three major challenges that lie ahead of the country's future:

1. Skill development and employment for the future workforce

Skill development of the workers and creating jobs for the future workforce is one of the major challenges, according to the Future of Consumption in Fast-Growth Consumer Markets report by the World Economic Forum (WEF).

India is the world's second most populous nation with nearly 1.36 billion people and in the coming decade, the country will supply 1.12 billion workforces, accounting for over 'half of the increase in Asia's potential workforce', according to a report by Deloitte LLP.


India will gain nearly 10-12 million working-age people every year over the next decade, leading to a "working age majority". Currently, about one-third of India's working age population is between 15-64.

DATA STORY: Young India set to replace China as Asia's superpower

With the pace at which the nature of jobs is changing owing to advances in technology, Indian workers will require reskilling by 2022 to meet the talent demands of the future. On an average, they will each require an extra 100 days of learning, according to The Future of Jobs 2018 by the WEF.

Source: The Future of Jobs 2018 Report, WEF.

"These (technological) transformations, if managed wisely, could lead to a new age of good work, good jobs and improved quality of life for all, but if managed poorly, pose the risk of widening skills gaps, greater inequality, and broader polarization," the report said.

While India has in place programmes such as Task Force for Closing the Skills Gap in India, Skill India initiative to re-skill workers, the government may have to work towards better implementation.

DATA STORY: Lack of awareness among 70% youth key obstacle to PM Modi's Skill India initiative

Over 70 percent of the youths in the age group of 15 and 30 are unaware of government-run skill development programs, according to a 'Young India and Work' survey by the Observer Research Foundation and WEF.

The skill development scheme in India has failed to pick up as about three-fourths of the youth in the country have never been enrolled for a skill development program.

Despite a Budget allocation of Rs 3016.14 crores in FY18, the Ministry of Skill Development and Entrepreneurs spent only Rs 1488.44 crore in that fiscal year. While the Ministry conducted 133 training programmes across the country, the number of beneficiaries stood at only 5,426.

Opinion | Can Skill India solve the decline in female labour force participation?

2. Socioeconomic inclusion of rural India

Considering the pace at which demographic shifts are taking place in the country, come 2030, around 40 percent of India's population is likely to reside in cities.

India is projected to add 300 million new urban residents by 2050 and it will need to build climate-friendly cities to address the challenge of accommodating the needs of the growing population, according to a UN report titled World Cities Report 2016 - Urbanisation and Development: Emerging Futures.

Source: Oxford Economic, Euromonitor, PRICE Projections based on ICE 360o Surveys (2014, 2016, 2018). CAGR: Compound Annual Growth Rate.

While a number of these new urban residents would come from the rural, inclusion of the rural population in the country's growth story holds significance as it accommodates over 65 percent of India's population, according to 2017 data by the World Bank.

The development of rural areas means that the residents in these areas should have proper roads and digital connectivity and financial inclusion.

"30 percent of villages with 250 or more persons still do not have access to all-weather roads, while only about 8 percent of total villages in India have all households with reliable access to electricity," according to the Future of Consumption in Fast-Growth Consumer Markets report.

India completed the electrification all the villages under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) through Rural Electrification Corporation by the Ministry of Power in April last year. The achievement, however, brought little cheer as providing electricity to rural areas would increase the demand for power even as the government continued to struggle to get the demand-supply side equation right.

Comment: Why electricity in every village means little

While the government is working towards providing internet connection in rural areas, as per the WEF report, about only 18 percent of rural Indians

have access to the internet, compared to nearly 65 percent in urban India.

Though India had the second highest number of Internet users worldwide last year, by 2021 it is estimated that the country would have 635.8 million internet users. The figure, in a hypothetical situation where India stops procreating, still measures up to 48 percent of the country's population, leaving behind a humongous number of people without internet and perhaps even more dependency.

DATA STORY: India tops list of countries where people 'can't live without the internet'

Similarly, the government has already taken multiple steps such as Pradhan Mantri Jan Dhan Yojana (PMJDY) for financial inclusion of rural residents. However, there is still a need to improve banking infrastructure including ATMs and bank branches.

The recent announcement by Confederation of ATM Industry (CATMi) to shut nearly half of the 2.38 lakh installed ATMs in India quoting 'operations nonviable' would affect 33.24 crore beneficiaries of the PMJDY scheme. The beneficiaries (19.67 crore) at rural and semi-urban may be affected the most as the cost to maintain additional compliance would be higher at far-off places.

PM Modi's Jan Dhan scheme could face trouble after March 2019 — Here's why

3. A healthy and sustainable future

Indian cities are grappling with alarming rates of congestion and pollution. Breathing toxic air and drinking polluted water among others may lead to a fast deterioration in the quality of life of its citizens.

People in India would live an average 4.3 years longer if the country met the global guidelines for particulate pollution, according to a study which found that effect of pollution on life expectancy is worse than HIV/AIDS, cigarette smoking, and even terrorism.

DATA STORY: Living in Delhi can cut 9 years of your life, one breath at a time

Going ahead, India would have to improve overall access to and affordability of healthcare services to deal with the growing non-communicable diseases (NCDs) due to various pollutants. NCDs, which currently account for 63 percent of all deaths in India, are on the rise owing to unhealthy food and lifestyle choices, across both urban and rural areas, and across income segments.

The country may also have to deal with the impending crises in air and water pollution, waste management and urban congestion. Nine of the world's 10 most air-polluted cities are in India, according to a World Health Organization's (WHO) study.

Thus, India needs to deal with these challenges to materialise its positive vision for the future. Solving these issues may also require both business and policy leaders take an inclusive approach to drive India growth story.

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First Published on Jan 9, 2019 03:28 pm
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