Relevance: Mains: G.S paper III: Indian Economy
Adverse impact of economic growth on different sectors:
The economic growth experience in India in recent decades has shown that growth has had an adverse impact on developmental goals such as education, health and overall human development/human capital formation, employment for all and environmentally sustainable development.
For example, 1% of the wealthiest in India increased their share in wealth from 40% in 2010 to more than 60% in the last five years. if we proceed on the same growth path, the top 10% will take away the lion’s share of the $5-trillion incomes when we reach the target of $5-trillion economy.
Industries:
- industries are declining rapidly— examples are automobile ,diamond cutting and polishing, textiles and garments, and several Micro, Small and Medium Enterprises (MSME).
Agriculture:
- Agriculture is in crisis on account of rising costs of inputs and low prices of produces, and low public investments in this sector.
Education
- The literacy rate has grown very slowly and according to the United Nations, India’s literacy was 71.1% in 2015. India is now far behind many African countries such as Rwanda, Morocco and Congo in terms of literacy.
- The quality of education is far from satisfactory
- Against the norm of 6% of GDP, the government spend is around 4% of GDP on education.
Employment:
- The rate of growth of employment has declined with increasing economic growth causing jobless growth
- With rising labour force, India will soon experience demographic disaster rather than demographic dividend.
Health:
- Decline in malnutrition, particularly among women and children is very slow;
- against the norm of 3% of GDP, the government spends around 1.5% of GDP on health
As a consequence of all these developments, there is a crash in the aggregate demand in the economy.
WHAT WE NEED
- There is an urgent need for a quantum jump in public expenditure on education in order to fill wide gaps in infrastructure, training and retraining of teachers and to ensure a strong follow up on the quality of education
- It would be very difficult to raise the rate of growth to reach $5 trillion in 2024 unless we focus on human capital formation and address the real reasons for the recent slowdown.
- Government must increase public expenditure in investing in agriculture — in infrastructure, inputs, extension, marketing and storage and training — and in providing profitable prices to farmers.
- It should also raise funds for the Mahatma Gandhi National Rural Employment Guarantee Act
- It should raise public employment by filling all vacant sanctioned posts in the Central and State governments, which would be around 2.5 million jobs.
- The government should also regularise contract, casual and “honorary” jobs and make them regular jobs
- The government should focus on promoting labour intensive sectors such as gems and jewellery, textiles and garments and leather goods.
SOME FACTS
- Demographic dividend, as defined by the United Nations Population Fund (UNFPA) means, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older)”.
- In other words, it is “a boost in economic productivity that occurs when there are growing numbers of people in the workforce relative to the number of dependents.