Dear Reader,
There are many measurements of progress, prosperity and even peace. Every country has its own measurements and then there are globally adopted measurements that quantify economic growth, business prowess, wealth, well-being, and security. In India’s quest for becoming a developed nation by 2047, it needs to stack up high in many such yardsticks.
We can encompass all the measurements at the risk of oversimplifying and say that a developed nation gives its citizens Ease of Living. How do we measure this?
Living standards are easier and convenient if income is elevated and wealth grows. The most popular but narrow gauge is gross domestic product. GDP is the anchor of policymaking across geographies and is often stacked up to calculate which nation can command greater heft in power negotiations. GDP is why we know the United States of America isn’t to be trifled with and that India is winning wallets and hearts with her fastest growing economy.
India recently pipped the United Kingdom to become the fifth largest economy in the world by GDP and a sustained economic growth can ensure a higher place in the coming years. But GDP alone cannot get us the developed nation tag. Its equity markets have been a wealth generating machine since the pandemic and the National Stock Exchange is the seventh largest in the world. On a per capita basis though, we are rather poorly ranked.
In some aspects, GDP growth in India has been a jobless one. Our Chart of the Day shows a slice of this aspect. While we can rejoice that our unemployment rate is low, the labour force participation ratio nationwide for all citizens was 42 in April. Women Labour Force Participation Rate (LFPR) has been very poor, at 26.2 percent. In fact, we rank poorly even against our sub-continent neighbours of Sri Lanka and Bangladesh that have far smaller GDPs and rank nowhere close to India in financial markets. Only one in four women actively seek formal work in India and this must change for us to earn the moniker of a developed economy.
On the bright side, the government is pushing for an increase in domestic manufacturing that would generate jobs. Also, new areas such as green jobs have emerged as an answer to unemployment. Now, it is a matter of skilling and reskilling Indians for future jobs that push climate friendly economic activity. There is also the creative economy where startups can help generate jobs.
That said, the youth of the country are having a hard time finding jobs. The newly fortified Periodic Labour Force Survey shows that in April persons between 15 years and 29 years had a LFPR of 42.7, but an unemployment rate of 13.8 percent.
Also, income inequality in India is stark and one of the measures of this is the Human Development Index (HDI). The HDI is perhaps the closest measure that tracks the extent of a country’s inclusiveness in its economic progress. India’s ranking is not flattering here at all. The latest HDI report ranks India at 130 out of 193 and clubs it with other nations as a country with medium human development. Simply put, we are far better off than many nations, but have a long way to go for truly becoming a developed nation. Read Subir Roy’s column here that explains why low HDI is a matter of concern.
Ease of living entails high income, high employment, easy access to education and healthcare, physical and financial security and high-quality technology and infrastructure that contribute to these. India’s progress in income and wealth generation at the national level is impressive. But equitable distribution and reduction in income inequality must be pursued if we want to find ourselves among the big table of developed economies. For this to happen in two decades, sizeable changes must be put in motion.
As of today, policymakers should opt to measure ease of living that makes them take a bunch of metrics seriously, rather than just keep themselves comforted with GDP growth.
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