Will India Get Rich Before It Turns 100?—A Reality Check Author: Prosenjit Datta Published by Aleph Book Company 138 pages
Will India become a developed country by 2047? What will be the best way to achieve that target? What are the factors in India’s favour, and what are our drawbacks? What should be our priorities? Health or infrastructure? Education or exports? Manufacturing or services? These are the questions this book attempts to answer, in clear, jargon-free prose backed by lucid analysis, drawing on a wealth of resources. The result is a concise, easy-to-read book that explains to the ordinary reader in plain language where we are in our journey towards prosperity and how best to get there.
Books about the Indian economy, in these lamentably polarised times, tend to fall in one of two categories—they are either chest thumping or breast beating. Either they paint a glorious picture of India’s future, with any impediment seen as temporary, to be swatted away; or they echo Ashoka Mody’s “India is Broken” dirge. Prosenjit Datta’s book, in contrast, is a rare find these days—an impartial analysis that weighs the pros and cons carefully and hopes that policy makers have the good sense to make our dream of becoming a developed economy come true in our lifetimes.
But what exactly do we mean when we talk about development? Datta discusses whether India’s rank in the global GDP league tables is what matters, whether per capita income is a better measure of general prosperity, or whether the Human Development Index, which takes care of some of the shortcomings of the GDP yardstick, is more relevant. He points out that India “is a big economy but it is still a poor country.’’ He lists the various GDP thresholds that have been used to denote developed country status, but adds that they keep on changing. He points to the difficulties of measurement, the uncertainties posed by the exchange rate, and the controversies that have bedevilled government statistics in India, adding that good data is essential for good policy. Writes Datta: “Because India has not initiated its census exercise yet, the government does not have any reliable data on everything it is supposed to measure—age of population, decadal variance in population, education, disability, villages by size of population, number of scheduled tribes and scheduled caste populations, and more.”
Datta says, tongue firmly in cheek, that distinguishing a developed from a developing country “is a bit like the legendary comment attributed to US Justice Potter Stewart (and sometimes to his law clerk Alan Novak) who, while deciding on what constituted pornography, was supposed to have remarked: ‘I know it when I see it.’”
Of course, as Yogi Berra said, “It’s tough to make predictions, especially about the future”, and Datta too underlines the tentative nature of economic forecasts, especially about the long-term. But he then looks at the history of countries that achieved rapid growth in East Asia, considers the big advantages that India has in its demographic profile and the attraction of its huge market for goods and services, and concludes that “India, while not growing at over 8 per cent long term, can well have an average growth of between 6 per cent and 7.5 per cent even over two decades.”
But could history really be a guide in these times of massive disruption? Datta points to climate change and Artificial Intelligence as major disruptive forces and says that global warming is a clear threat to India, threatening to bake some regions, flood others, and make the monsoons even more unpredictable. He adds, “the need to grow fast as an economy and the need to reduce emissions are almost antithetical”.
Datta says that while the jury is still out on the impact of AI, there’s no question that AI will transform whole industries. He writes: “To grow rapidly for over two decades, the Indian government needs to understand how things are changing— from manufacturing because of automation and robotics to services because of Generative AI and other Machine Learning algorithms. Many of the ideas that worked well in the past will no longer be relevant. The era of cheap labour being a competitive advantage is on its way out.”
Datta emphasizes that we are no longer in the environment where China took advantage of globalisation and free trade to become the workshop of the world, and the increasingly capital-intensive nature of modern technology, together with automation and robotics, makes job creation in manufacturing a problem. While a focus on services could help mitigate the problem, Datta makes the point that in these times of geopolitical uncertainty, domestic manufacturing is essential for national security, a fact that more and more nations are realising.
The author then asks the crucial question: “The real issue, therefore, is that if the future is so uncertain and unpredictable, how does one prepare for it? How can one even hope to make plans and put the proper policies in place to ensure that we will be a developed nation, or at least close to a developed nation, by the 100th year of independence?” Some of the answers, he says, may lie in a paper presented by David E Bloom, David Canning, and Jaypee Sevilla in 2003, titled ‘The Demographic Dividend: A New Perspective on the Economic Consequences of Population Change’ that, besides discussing the impact of demographics, also concluded that, at the policy level, four areas needed focus before a nation could take advantage of its demographic bulge: 1) public health 2) family planning 3) education, and, 4) economic policies that promote labour market flexibility, higher savings rate, and openness to trade. Datta says that “The two biggest misses of successive Indian governments, though, can be said to be under-investing in public health and education.”
It is not just India that aspires to become a developed country in short order. Xi Jinping’s goal too is to make China into a fully developed and prosperous country by 2049, 100 years after the founding of the People’s Republic. We will have to ensure that we do better than our competitors.
It’s not an easy task, and our policy makers will do well to learn from this book, be nimble and flexible, and cross increasingly turbulent rivers by carefully feeling the stones.
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