TECH TALK: India’s Next Decade: India Today

Shekhar Gupta’s column in the Indian Express about “The Hindutva Rate of Growth” asks: what else do you get when Modi’s indispensable, Sinha’s expendable? [Narayan Modi of the BJP is the chief minister of Gujarat where hundreds died in communal riots recently; Yashwant Sinha is the finance minister and his budget has been blamed by elements within the BJP for the party’s poor showing in the Delhi municipal elections.] Writes Gupta (Indian Express, April 19, 2002):

The political debate has now moved out of the realm of reform, development, growth and other such mundane, governance-linked issues. Secularism, real or pseudo, sounds much more like an election slogan than better governance.We now face the prospect of our politics receding into the 1989-90 phase of stagnation when we kept on fighting over mandir and Mandal while an interim government had to airlift gold reserves to prevent a sovereign default.Mercifully, given the momentum reform has given our economy over the past decade, it is unlikely that we will lapse into the old Hindu Rate of growth (2-3 per cent). The band in this phase of bankrupt politics will be 4-5 per cent[think of it as] the Hindutva Rate of Growth.

A 5 percent growth rate takes India nowhere. The latest Fortune (Asian edition, May 6, 2002 issue) has a cover story on India entitled “
India taps into the future (but can it escape it’s past?)
“. Writes Anthony Paul:

Even as India tries to catch up, it is falling further behind. In most Asian countries, the number of young adults is declining. In India the percentage of the population in the 15-to-24 age group is rising 1.6% annually.

That means the economy is headed for a rendezvous with demographic destiny: To keep all those young people employed, it will have to create no fewer than ten million jobs a year between now and 2010. In order to do that, says a recent report prepared for the government by the McKinsey Global Institute, the Indian economy needs to grow 10% a year. The best the country has managed since independence in 1947 is far short of that–7.8% in 1996 and 1997. The current level of growth, 5.4%, translates into just four million new jobs a year.

In principle, McKinsey argues, India can do it–as China, Thailand, and Malaysia have all proved. But reaching and sustaining 10% growth will require an enormous effort, starting immediately. And while a recent visit to the country turned up some reasons for optimism–an $11 billion national highway improvement program, an extraordinary display of information technology, a grassroots microeconomics movement–it also provided plenty of evidence that India won’t make it.

Fortune’s report card on India is telling: Business Climate C-, Jobs D, Productivity D, Infrastructure F, Trade C, Competitiveness C-. Only Inflation merits an A.

Incremental solutions will not do India much good. By moving at the rate we have done in the past will actually put us even further behind. Especially as compared to China.

One country India is invariably compared with is China. As of now, it is a no-contest.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.