What’s in the news?

• The Governing Council of the NITI Aayog met recently. At this meeting, Prime Minister Narendra Modi announced the target of a $5 trillion economy for India by 2024.

Editorial Analysis:

• Having said this, it is necessary to think big when seeking to make a difference, for transformation does not come from modest plans.
• It is hoped that the Prime Minister will also use the drive to growth to place India’s official statistics on a firmer footing, so that we can be sure that economic policy-making is based on reality.
• However, experts point out that getting the numbers right will not ideally end the task.
• There are important questions that emerge as far as plans for growing the economy is concerned. For example, what would we like to see in the proposed $5 trillion economy?
• Moreover, it is important to point out that a quantum leap in the size of the economy is not so easily achieved. It will require design, funding and governance.

Looking back at ‘Make in India’:

• Experts point out that the importance of funding, and to an equal extent, design, may be seen in the failure of ‘Make in India’.
• Though technically applicable to every sector, ‘Make in India’ was clearly focussed on manufacturing.
• Also, ‘Make in India’ was articulated very early on in Mr. Modi’s first term (2014-19), and was accorded a certain prestige in the pronouncements that followed. However, it played out as a damp squib.

(a)    Reasons attributed towards the failure of ‘Make in India’:

• One of the reasons for this was the absence of commensurate investment outlay.
• To raise the share of manufacturing in the economy from its present 16% to 25%, which was an ambition declared by both the United Progressive Alliance and National Democratic Alliance governments, requires a scaling up of investment.However, this did not come about.
• Whether this was due to the corporate sector, Mr. Modi’s chosen vehicle, not having the wherewithal or due to it not being convinced of the plan is beside the point.
• If the private sector is, for whatever reason, not coming forward to invest, then the government must.

(b)   A Brief Look at History:

• The first attempt to make in India was in the 1940s.
• Finance Minister Shanmukham Chetty’s first budget speech had identified increasing “internal production” as the economic priority. And this was achieved quite soon.
• Along with the quickening of the economy as a whole, the share of manufacturing had risen, the mocking epithet ‘Hindu rate of growth’ notwithstanding.
• Experts point out that this had not emerged as part of the moral victory of an oppressed people. The reason was that it had resulted from a surge in investment, led by the government.
• The fact that resources could have been mobilised on such a scale in so short a time in an economy devastated by colonial rule is testimony to the availability of the three ingredients.
• These ingredients are: a) design, b) resources and c) governance.
• These ingredients are necessary when contemplating a move to the next level, which is what aiming at a $5 trillion economy amounts to.

A Look at the wish list:

• While lauding the efforts of leaders of early independent India, however, we would do well to remember their follies.
• Principal among them was the failure to articulate, possibly even adequately imagine, the contents of the economy that was being raced towards.
• If this is repeated now, it would amount to not having learned the lessons of history.
• Experts point out that at least in the 1940s, the priority was to get the economy moving in the first place. This is no longer the issue.
• Today the economy must be evaluated in terms of how much it contributes to the ease of our living. An important question emerges: what would be some of the characteristics of a valuable economy?

Some characteristics of a valuable economy:

• Firstly, Indians should feel empowered by the economy.
• We know that currently they do not feel so.
• India is placed very low in the United Nations’ World Happiness Report.
• Happiness, best understood as a sense of well-being, is directly related to empowerment, or being able to undertake the functionings we value.
• This is, in the first instance, related to being educated and experiencing good health.
• Currently in India, one faces an education sector that is broken down and the majority are battling with almost non-existent public health infrastructure. The private sector has some worthy initiatives in these areas but they await an effective public presence on a gigantic scale.
• Hence, the first attribute of the valuable economy would be access to quality health and education for all.
• The second attribute of a valuable economy would be equality of opportunity.
• It is important to note that for over three decades now income inequality has been rising in India.
• According to some measures, India is today more unequal than China, which itself is a society widely perceived as highly unequal.
• Now some part of inequality of opportunity is related to unequal distribution of income but a part of it is not.
• Gender inequality manifested as women having less opportunity in life is not going to go away with a re-distribution of income along class lines or across social groupings.
• India is a serious outlier in this regard, and becoming richer as a society may do little to change the status quo.
• Shockingly, a sex ratio, which is already unfavourable to women, has shown a secular worsening since 1947.
• Experts opine that inequality in India can only be ended by equalising capabilities across individuals.
• Concerted public action via education is the means to this outcome.
• Income transfers, pushed relentlessly by policy entrepreneurs, evade the issue altogether.

Perspective on Conserving nature:

• Till now, by referring to the imperative for growth, to eradicate poverty, any effort to conserve nature has not just been ignored but treated with derision, by both right and left.
• Experts opine that this is no longer a credible political stance.
• Two-thirds of the world’s most polluted cities are in India, when we accept less than a fifth of its population.
• Air pollution shortens lives and lowers productivity, reducing the capacity to earn a living when alive.
• The poor are the most affected as they cannot afford to live in gated communities that somehow manage to commandeer scarce natural resources.

Concluding Remarks:  

• Some part of environmental depletion in India is due to the pursuit of unbridled growth.
• This implies that any improvement in the life of the majority would require a re-alignment of the growth process so that it is less damaging.
• This would very likely require that we have slower growth but the process can be configured to channel more of it towards poorer groups.
• We may end up in a situation of less tangible goods in the aggregate than otherwise but one in which more people are happier than in the past. Such an economy is more valuable.What a $5 trillion economy would look like