India in 2020 – Really?

It is a known fact that India is currently ranked as the 10th largest economy in the world. There was much speculation since 2002 about the performance of Indian economy which was expected to be at the dawn of two decade mark of the 21st century. Planning Commission under the chairmanship of Mr. S.P.Gupta submitted a report on “India Vision 2020” post which it was speculated that by 2020, Indian economy will become the third largest economy of the world if not so it will get the position of being the fifth largest economy or perhaps the stature of being developed nation.

In reality the fact is that the Indian economy is undeniably one of the largest emerging economies where the development is dynamic in nature. Indian economy faced minimal shocks during the period of recession in 2008 which was seen in the form of contracted exports and depreciation of rupee to a large extent by reaching the levels of as high as 57. Unemployment in this period soared to its highest where the IT sector experienced major job cut. As a result of this the key stock market in India experienced a fall of over 13% as the investors found their money getting contracted. Under such gloomy circumstances, investment has been very fickle all thanks to the internal economic and political environment which was getting worse with every passing day. World’s largest credit rating agency, the Standard & Poor’s reduced India’s credibility by downgrading the economy and giving it a rating of BBB- in 2012.

It is needless to say that if India was to achieve its 2020 targets then investment is regarded to be one of the major growth drivers for the same. In order to drive the investment in the economy it is important to ensure proper environment being created. The recent political turmoil after the announcement of FDI in retail and aviation changed the stir of entire nation which resulted in investors’ hesitation to invest.

Human Development Index

Also one of the crucial criteria above GDP and per capita is the Human Development Index (HDI) which is recognized by the United Nations. It is reported that out of 187 countries globally India ranks at 134^th with HDI value of 0.547 which is quite below the global average of 0.682. Being in 2013 currently India is facing several economical problems due to the low industrial production, high unemployment, rising fiscal deficit, rising gold imports and many more. With only 7 years left to achieve its “2020 Vision”, I am very skeptical of India even becoming 5^th largest economy globally.

i) Indian economy currently requires more accountability and transparency which will help in reducing corruption to a large extent.

ii) Corruption in the political system needs to be reduced so as to build investors’ faith in the economy, which will lead to the inflow of hard cash in the economy.

iii) As per the current population growth of the country, in the coming years India’s population will very well get close to China if not more. The rising population will definitely result in the increasing demand for commodities where it would become mandatory for India to choose the path of sustainable development.

iv) As far as the commodities like Fuel and energy resources are concerned, rising demand would result in drastic increase in the price which will definitely hamper the economic balance and also the development of the economy.

v) As far as the sector performances is considered, with the changing mindset of people, it is more likely that the service sector will prosper the most followed by the manufacturing sector, provided proper manufacturing policy is formulated now and is well implemented across pan India.

vi) As far as the agricultural sector is concerned if proper care is not taken by means of smooth credit facility and greater technological reach for the farmers, India will end up struggling to be a developing nation throughout.

There is a myth that a developed nation is recognized by high GDP, whereas the fact is a developed nation is recognized based on several factors which includes GDP, standard of living and technological transformation. Service sector contributes the maximum to the national income which is likely to increase in the coming years but it will only be regarded as a soft source of income for the nation.

Going by the prediction it is expected that the poverty level in the country is expected to reduce from the existing 30% by 2020. Also an improvement in HDI resulting in overall growth in GDP is predicted however, what I fear is the growing disparity. Under the current scenario, if India improves its political system with greater reforms and capitalizes on renewable resources along with sustainable development, only then its growth can be kept less shaky and intact.