Developed Country: A Status India is Aiming

Syllabus :GS 3/Economy 

In Context

There’s an optimistic belief that India’s economic growth is inevitable .

• But previous countries with similar growth trajectories have often failed to transition to developed status.

India’s Status 

• India’s journey towards becoming a developed nation by 2047 hinges significantly on improving its infrastructure, a cornerstone for fostering liveable, climate-resilient, and inclusive cities that drive economic growth.
  • From 1991 to 2011, India’s poverty rate dropped from about 50% to 20%, lifting 35 crore people out of poverty.
  • While income inequality persists, overall living standards have improved, especially for those at the bottom of the economic pyramid.
• Present Scenario :  

• India’s real GDP is projected to grow between 6.5–7 per cent in 2024-25. The Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID, FY20 levels.
• 
• The World Bank in June 2024  predicted that India is set to remain the fastest-growing major economy globally, though its growth rate is expected to slow.
  • It maintained the GDP growth forecast for India at 6.6 per cent for FY25. 

Challenges

• Agricultural Sector: 46% of India’s labor force is in agriculture, which is low-productivity and contributes only 18% to GDP.
• Female Labor Force Participation: At 37%, this is low compared to other countries like China, Vietnam, and Japan.
• Middle-Income Trap: Many countries fail to progress from middle-income to high-income status.
• There is difficulty in leveraging surplus labour for low-end manufacturing, limiting growth opportunities.
• Indian States face cost disabilities for power, logistics and financing, coupled with low labour productivity when compared to countries such as Bangladesh, China and Vietnam, and a compliance burden that deters new players from entering and the existing ones from expanding
•  India lags behind in HDI rank mainly because of its low life expectancy and per capita income,which can be improved with government spending in the education and health sectors.

Suggestions 

• India’s focus should be  on Manufacturing and To grow, India should emulate successful models like South Korea and Vietnam by focusing on low-skilled, export-oriented manufacturing.
  • Prioritize low-skilled manufacturing sectors like electronics and apparel to create large-scale employment.
• There is a need to avoid protectionism because large tariffs could harm industries dependent on imported components, raising prices and reducing competitiveness.
• The government should develop industrial clusters with modern infrastructure, education, healthcare, and other amenities.
• There is a need to maintain a market-led economy with minimal government interference, improve ease of doing business, and foster private enterprise.
• Track inter-State migration, urbanization, female labor force participation, and the decline of agriculture’s employment share to assess progress.
• With ambitious and forward-thinking strategies, India can achieve its economic goals and fulfil its potential.

Source:TH