Why Did India Lose the Fastest Growing Economy Title: An Analysis
India once held the title of the fastest-growing economy. However, despite significant efforts to adopt major reforms, the country has seen a decline in its economic performance. This article delves into the reasons behind India's loss of the 'fastest-growing economy' tag.The Major Reasons: Reforms and Economic Strategies
According to Mr. Amitabh Kant, CEO of NITI Aayog, the primary reason for India's decline in growth is the implementation of major reforms such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), Real Estate Regulation and Development Act (RERA), and other related initiatives. These reforms aimed to streamline the economy and improve its governance.
Switching Calculation Methods
However, there are deeper reasons behind the slowdown. One of the critical factors is the change in the method used to calculate GDP. This switch has led to a more accurate reflection of the economy's performance but has also contributed to the perception of a decline in growth rates.
Economic Pressures and Market Demands
The economy is experiencing decreasing demand issues as the flow of credit from banks is becoming more limited due to a reduced market demand. This situations calls for urgent corrective measures to regain the 'fastest-growing economy' tag. Similar to the weak budget presented in 2019, such economic pressures have made it more challenging for the government to achieve its ambitious targets of becoming a $3 trillion economy by 2019 to 2020 and a $5 trillion economy by 2024 to 2025.
Backwarding Scenario and Empirical Analysis
The transition from the Planning Commission to NITI Aayog and the implementation of these reforms do not automatically translate to economic growth. The real growth is underpinned by internal factors - economic scenarios within the country and comparative economic analyses. The loss of the 'fastest-growing economy' tag is not merely theoretical but rooted in empirical data reflecting the actual performance of the economy.
The Economic Reality: A Low Base of GDP
India's GDP is relatively low in absolute terms, which means even a modest increase can be exaggerated in percentage terms. For instance, a 250 billion dollar growth in GDP, which is substantial in absolute terms, only represents a 10% increase. In contrast, the U.S. GDP being 20,000 billion dollars, a 250 billion dollar increase would only represent a 1.25% increase. The emphasis on percentages can often obscure the real economic performance.
Strategic Initiatives to Revitalize the Economy
To revitalize its economy, India needs to focus on several strategic initiatives:
1. Population Policy
A sound population policy is essential. This includes measures to control population growth and ensure sustainable development. Proper population management can contribute to healthier economic growth.
2. Skill Development and Unemployment
Focusing on skill development is critical. Unemployment stems from unemployability, and training is needed to bridge the skills gap. This involves providing vocational and technical training to ensure a workforce that can meet the demands of the economy.
3. Valuing Merit
Motivating individuals to strive for merit without reservations is important. This includes providing opportunities for all, regardless of their background. Encouragement and support for a merit-based system can drive productivity and innovation.
4. Quality Education
Investing in quality school education with well-paying, qualified teachers is crucial. A well-educated workforce is the backbone of any economy. Access to quality education ensures that individuals have the necessary skills to contribute effectively to the economy.
5. Retraining Older Workers
Retired skilled individuals should be harnessed to mentor and train younger generations. This provides a tried and tested approach to transferring knowledge and skills, fostering a continuous learning environment.
In conclusion, while India has made strides with its economic reforms, more needs to be done to address the underlying structural issues and ensure sustainable growth. By focusing on these strategic initiatives, India can work towards regaining its status as the fastest-growing economy.