The World Bank has forecast India’s GDP growth rate in the current financial year to be 6.3 per cent, similar to the government’s estimate of 6.5 per cent. This will be lower than last year’s 7.2 per cent as the Covid base effect wanes. In other words, we are back to the 5-6 per cent range of 2011 and after. As the World Bank’s latest India report points out, this puts India among the fastest-growing economies.
A global economic slowdown, especially in China, gives India a sweet spot. All indicators, from inflation to current account deficit to forex reserves, show India is doing well by global standards. The danger with such comparisons is that it can make us complacent.
The World Bank’s India chief said in interviews what the report does not say: India can do a lot better and must chase an 8 per cent headline growth rate if it has to achieve its target of becoming a high-income country by 2050.
There was a time when chasing the GDP growth rate used to be a national obsession. These days we have shifted the goal posts to “5 trillion-dollar economy” or “third largest economy”. Reaching those goals also requires us to excel daily, chasing 8 per cent year on year, consistently.
Let’s talk 8%
There was a time when we thought even 10 per cent was achievable, and we did touch it in some years. Today if we can bring the 8 per cent target back into the national conversation, it would help us get back on track. There should be public pressure on political parties to put forth their ideas on how they can get India back to 8 per cent.
A sense of urgency is required here, as India is not getting any younger. India’s population growth has already reached a replacement rate, and by 2050 or so our workforce will start getting older.
In other words, India today has working-age people whose potential is not being realised because there aren’t enough jobs. Perhaps they could add to service growth by doing odd jobs online, but many have not been educated in English. They could also add to India’s remittances by working abroad, but many are not skilled enough to get overseas jobs.
Women will show the way
Auguste Tano Kouamé, the World Bank’s India chief, has identified the biggest roadblock: the female labour force participation rate. India’s women don’t work outside the home.
So you have a lot of working-age people who don’t contribute to economic growth. Fixing this alone can get us to 8 per cent.
India’s female labour participation rate is just about 25 per cent, which means that only 1 in 4 women work. They are also paid much less than men for the same work.
The Indian government’s recent decision to reserve one-third of seats in national and state legislatures for women is an important symbolic message that we need more women in professional spaces. But this symbolism needs to be taken further into state policy.
Central and state governments must actively devise policies to increase the number of working women at all levels. This will mean pushing industries that naturally employ more women, such as textiles. It will mean drawing up labour policies that incentivise industry to have crèches.
Tax incentives should be given to hire more women. There should be reservations for women in government jobs. Finding new job avenues for women in rural India is particularly important.
Changing the social mindset
Of course, the government has policies to promote the Labour Force Participation Rate (FLPR) on paper, but something’s not working. Many conservative families don’t want women to work, and child-bearing takes many out of the job market. It will take a government public campaign to encourage families to let women work.
Who will take care of the children? Well, there are grandparents of an ageing India; there may be crèches, and working women may be able to hire nannies, thus creating more jobs for women.
A key issue here is safe and affordable public transport. Many state governments have begun to make city bus services free for women. This is a step in the right direction.
India today has more women than men in universities, but the quality of education remains a matter of concern. Government schools should offer English medium education.
Conservative rural families discriminate against the girl child, spending more resources on the male child’s education. The state has a responsibility to step in, giving female students the opportunity to pursue higher education. Schemes giving free smartphones to women, for example, will go a long way. India should take the World Bank’s advice seriously — get women to work to cross the 8 per cent GDP growth rate.
No poor country has become rich without having its women work. It’s the big lesson India needs to learn from China and South East Asia.