Competitiveness Roadmap for India @100


India is set to complete 100 years of Independence in 2047. The journey up to 75 years of Independence has been marked by India overtaking its past colonisers as the fifth largest economy.  Though the fifth largest economy, India is still categorised as what the World Bank would describe as a low-income country. The more significant aim is to make India a High-Income country by 2047, as a century of independence is realised.   The task of laying out a roadmap for India to become a High-Income country by 2047 has been undertaken by the Economic Advisory Council to the Prime Minister (EAC-PM), which is an independent body constituted to provide advice on economic and several related issues to the Government of India and particularly to the Prime Minister. The council offers a neutral point of view on financial problems that the nation might be facing. Comprising eminent economists, the council:
  • Undertakes the analysis of any issue referred by the Prime Minister and provides advice to the PM on that issue;
  • Addresses issues of macroeconomic importance and provides views to the PM on the same;
  • Undertaking any other task if and as desired by the PM.
The EAC-PM, in collaboration with The Institute for Competitiveness, released ‘The Competitiveness Roadmap for India @100’ on August 30, 2022. Chairman of the council, Dr Bibek Debroy, mentioned, “If India’s development trajectory has to emerge faster, higher, and stronger, both government policies and the enterprises and markets functioning in the environment set by the former are of great significance”. The report provides guidelines to different states, ministries and partners in India’s growth to develop sector-specific roadmaps for realising the set goals. Productivity has been specified as the key to sustained prosperity. Emphasis is on region and sector-specific developmental goals, broadly based on the 4S principles: Social progress, Shared throughout the nation, environmentally Sustainable and Strong against external shocks and disturbances.

Understanding the Goal:

The report lays out the roadmap for becoming a High-Income country by 2047. For comprehending the aspects of the report, an essential prerequisite is a clear understanding of the World Bank’s segregation of countries into four groups, viz. Low, Lower-middle, upper-middle and high-income countries. The classifications are based on GNI per capita in the current USD. (GNI stands for Gross National Income, which is the total output produced domestically and overseas by the country’s residents. GNI per capita is calculated by dividing the GNI of a nation by its total population). The classifications are as follows: India is currently a lower-middle-income country.  As of 2021, the GNI per capita for  India was $2170. To increase the GNI per capita to $12695 (the threshold for the High-income category), the required growth rate of GNI can be calculated as  
2047 Population Estimate 1656777045
Required GNI per Capita(as of 2021) $12695 (4.85 times)
Estimate for required GNI per Capita(as of 2047) $ 23150 (10.67 times)
Required GNI in 2047 38,354,388,591,750(~38,354.39 Billion$)
GNI in 2021 3,027,510,000,000 (~3027.51 Billion $)
  Gross National IncomePopulation= GNI Per Capita If we assume that the GNI grows at an annual average rate of ‘R%’considering (Yo) as the base year(2021 in this case); For the first year Y1; GNI{Y1} = GNI{Yo}(1+r) For the second year Y2; GNI{Y2}= GNI{Y1}(1+r) = GNI{Yo}(1+r)^2 Similarly, for the nth Yn; GNI{Yn}= GNI{Yo}(1+r}^n Given GNI{Yn} as 38,354.39 Billion $, GNI{Yo} as 3027.51 Billion $, and n as 26 years (2021-2047), r can be calculated. Estimated Value of R: 100*r = 10.26%. Therefore, as per the population estimate, the average annual GNI growth rate should be 10.26%.

The Hill to Climb: Problem Identification

Logic dictates that to correct something and solve an issue, one must understand it first and comprehend where things are going down the hill (or may potentially go). This assertion is upheld while dealing with economic problems as well. To reverse what might seem like a downward trajectory of the economy, one has to determine and scrutinise the chain of causality and identify the specific events (political, geo-political, natural etc.)  and policy shortcomings that might be the reason behind the economic downfall. Even if the economy isn’t treading a downward trajectory, problems exist pertaining to the common economic intuition that no economy operates at its full potential and there is always room for development. On similar and parallel lines, EAC-PM, while devising the roadmap for India@100, first considered identifying and analysing the problem holding our economy back. These problems can be referred to as ‘3+1’ problems, with regards to the fact that three of these are endogenously rooted, and the remaining one is exogenous. A particular problem with the Indian economy is that its performance is impressive in more sophisticated dimensions of competitiveness,  but it lags in the essential fundamentals. This includes basic infrastructure, availability of a highly skilled labour force and the ease of doing business. Therefore, the business aspects based on sophisticated technology and processes based out of India are doing well on the global front ( majorly the service sector), whereas the parts reliant on basic business processes are lagging, unable to realise their potential. Though essential services are being provided, for example, electricity and education, these qualities is not up to the mark and cannot meet the required standards. Although policy upgradation has taken place appropriately, their benefits to the economy are cut down due to inefficient implementation and the cross-purpose works by concerned individuals. Struggling with fundamental problems and fighting against poverty, malnutrition, insurgency, communal polarisation etc., the Indian approach to the economic bloom often fails to acknowledge and recognise the dynamically evolving reality of the global economy. 3+1 Problems we face: 1. The Challenge of Shared Prosperity: Though India is now the world’s fifth largest economy, the impressive GDP growth has not benefited all Indians equally. Serious income inequality exists in India. The disparity also exists among regions and sections of society. This was highlighted by the fact that post covid recovery of the Indian economy has been a K-shaped curve, with inequalities rising. The benefits of GDP growth not seeping to the lowest level is a concerning factor and will further widen the gap between the rich and the poor. 2. The Challenge of Jobs: India has one of the most impressive and promising demographic dividends globally. With the largest youth population in the world, India’s 66% population is below the age of 35. In contrast to nations such as Japan and South Korea, these figures are a ray of hope for the economy. However, a peculiar problem of ‘ Jobless Growth’ exists. A significant number of the youth do not work, so the nation cannot realise its potential. This problem can be rooted in the inefficient sectoral transformation post-1991. The economy jumped directly from reliance on the primary sector to the tertiary sector, and the manufacturing sector was relatively unequipped to accommodate the less skilled labour released from agriculture. Another problem exists in the participation rate of women. The participation rate of women graduates is less than 25%. Also, the participation rate is lower for educated youth than for uneducated youth. As of 2021, only 23.5% of female graduates are working, whereas the number of male graduates is 72.1%. The worker-Population ratio for the non-literate population is 53.6%, whereas it is just 51.8% for the literate population. 3. The Challenge of Policy Implementation: Though the ambitious policies are based upon relevant principles and targets concerning issues, they lack implementation. Jobs are not being created, and there is a serious mismatch in the demand and supply for jobs. 4. The External Challenges(+1): India is facing a changing geopolitical scenario. The ongoing war between Russia and Ukraine, tensions with China and Pakistan, the economic crisis in the neighbourhood eare tc. all that issues are concerning and may hinder the nation’s economic growth.  The changing global stance on climate change and an unsolicited pressure on developing nations to cut pollution and emission levels also calls for a shift towards renewable energy., These factors too have to be dealt with carefully. As a global recession is speculated, the economy must be made resilient towards it.

Climbing the Hill: Solutions and the Way Forward

The set of solutions for growth revolves around the creation of competitive jobs. These will earn wages for the employees, support livelihoods and provide further opportunities for development. Higher skills would automatically enable higher wages as the replacement cost of the employee to the firm will rise. This calls for reforms on several levels, such as propagation of the required and desired skills to the population,  revolutionising the industry and businesses etc. The next focus will be on generating competitive firms. Jobs have to be created, and more importantly, the jobs created should be sustainable. The business sector has to be reframed to enable the MSMEs to provide sustainable employment. Sector and Region-specific reforms and policies are required to identify unique and typical needs of the concerned sector to develop it and equip it for a higher level of competitiveness. Furthermore, better dialogue and collaboration are required between the public and private sectors. Such partnerships are cardinal in both affordable and high-quality services. India’s ambitions can be integrated and articulated into four dimensions that are:
  • Prosperity growth matched by Social Progress
  • Prosperity needs to be Shared across all the parts of the society and regions of India
  • Prosperity needs to be environmentally Sustainable
  • Prosperity needs to be Solid and resilient in the face of external shocks.
Understanding The 4S Solutions:
  • Social Progress:
The priority concerns that need to be addressed in this aspect include:
  • Childhood Poverty: This long-lasting burden on the national and personal development of the citizens must be eradicated.
  • Childcare Services: These services must be improved, made widely available, accessible and affordable. This would not only benefit the children but also would increase female participation in the workforce.
  • Public Safety: This aspect is particularly essential for increasing female participation in the workforce.
  • Effective and better Education: The education provided should equip the students with skills demanded by the market and the industry.
  • Healthcare system: Better healthcare that is widely available, accessible and affordable is required to improve the situation of human capital, enabling better opportunities in the low-skilled sector.
  • Shared Progress:
The Indians at the bottom must be made self-sufficient, for which it is essential to ensure that the benefits of economic growth also trickle down to the bottom. The focus should be on creating competitive jobs for those currently outside the labour market. Jobs with higher productivity would enable individuals to earn better and become self-reliant. A particular focus is required to bring women into the workforce and increase their participation rate.
  • Sustainable Progress:
Sustainable and renewable energy is the way forward. The private sector is heavily investing in renewable energy, which is turning out to be more cost-efficient than traditional methods. Oil prices also, due to geopolitical reasons, have risen. State governments’ investment in coal-based power plants is unsustainable, and the sector now accounts for 12% of all non-performing assets(NPAs) in the Indian banking system. The coal-based power sector also faces a demand-supply problem because the owners let stock-piles fall when demand was low and could not increase them as demand re-surfaced. Another problem is that some users get subsidised energy, for which other users (industries) have to pay higher prices. Furthermore, Global pressure to reduce carbon emissions and global warming call for a shift toward renewable energy.
  • Solid Progress:
The Indian economy must become more resilient in the face of external shocks. The global economy is undergoing several changes. Geopolitical changes have been in the limelight due to the recent Russian Invasion of Ukraine and increased tensions between the U.S and China, not to ignore the COVID-19 pandemic that shook all the economies. While the global economy is under pressure, opportunities are available for India. The post-pandemic environment can be used in stride to push favourable and desirable reforms. The rising Labour force is a crucial asset, and labour markets of other nations are shrinking. With changes in the Chinese growth model, India should benefit as an exporter of energy and resources. Also, investment in India by global players will enhance the economic situation. Particular focus is required on digitalization, global value chains, Renewable energy, Carbon neutrality etc. Link to the Complete Report: 
Author : Pratham Mutreja : He is an economics enthusiast and student from New Delhi.