Can India Achieve a Two-Digit GDP Growth Rate under Modi’s Next Term?
India's growth trajectory under Prime Minister Narendra Modi's leadership has shown promise. With the potential for a double-digit GDP growth rate in the next term, this article explores the possibilities and the necessary conditions to achieve such a significant milestone.
The Seeds of Change
Modi's administration has made significant strides in laying the groundwork for a more robust and less corrupt economy. Demonstrations such as demonetization, the rollout of GST (Goods and Services Tax), the Benami Property Act, and frequent raids by the Income Tax and Commercial Taxation Departments have been pivotal steps in this direction. These measures have not only showcased the seeds of a stronger and corruption-less India but have also laid a firm foundation for future growth. As these seeds take root and bear fruit, the prospects for a two-digit GDP growth rate become increasingly promising.
Path to a Double-Digit GDP
To achieve a consistent double-digit GDP growth rate, India needs to adopt an export-led growth strategy. This strategy requires a world-class manufacturing competitiveness, modern facilities, advanced processes, skilled workforce, productivity, ease of doing business, low-cost credit, and excellent infrastructure. Here's a detailed breakdown of the steps required:
World-Class Manufacturing Competitiveness
India must focus on becoming a manufacturing powerhouse. World-class manufacturing not only supports agricultural productivity and the service industry but also lays the groundwork for sustained growth. A strong manufacturing sector is the starting point, and India must develop its own capabilities in manufacturing technologies, plant machinery, tools, consumables, and other critical aspects. This approach will enhance export competitiveness and, in turn, boost the domestic market and employment.
Research and Development (RD)
Continuous research and development are crucial for sustaining a manufacturing-led growth strategy. India needs to invest heavily in RD to keep up with the best practices in the world. The focus should be on developing new technologies, improving production processes, and enhancing product development. Robust RD capabilities will enable India to produce goods of world-class quality, which can then be exported to international markets, further driving growth.
Supportive Eco-System and Institutional Framework
To achieve a double-digit GDP growth rate, the focus must be on creating an eco-system that is insulated from political influence. This eco-system should be driven by private and public sectors with the right incentives. The government should act as a facilitator, creating a conducive environment for businesses to thrive. An institutional framework that supports technical expertise and innovation is essential. This includes policies that focus on ease of doing business, skill development, productivity, and technological development.
The Role of Governance
The success of this approach largely depends on the governance model. A technocratic approach is crucial to ensure that the economy is managed effectively. While the democratic system must be preserved, politics should be kept at bay as much as possible to avoid populism and vote bank politics. The focus should be on maintaining policy continuity and promoting innovation.
India must move towards a more technocratic economic development, driven by professionals skilled in technology and business. This includes creating an ecosystem where private and public sectors collaborate effectively, with incentives that drive productivity and innovation. By institutionalizing these processes, India can ensure that the country achieves its target of sustained double-digit GDP growth rates.
Conclusion
While achieving a two-digit GDP growth rate is a challenging but attainable goal under Modi’s next term, it requires a robust and inclusive approach. By focusing on world-class manufacturing, continuous RD, and creating a supportive eco-system, India can lay the groundwork for sustained growth. As the seeds of change continue to grow, the prospects for a double-digit GDP growth rate come into clearer view.