Will India become an economic superpower? | Business Beyond

this is a critical moment in India's history it now has the world's largest population and one of the youngest it's fast growing economy has vast potential the challenge now is to seize the moment in the mid-1980s India was a top 10 global economy but it tumbled out of that list for more than two decades as several countries powered ahead of it particularly China but India has been growing fast as of 2022 it ranked in the top five for the first time ever it is widely projected that it will be behind only China and the USA by 2030. it is truly a sweet spot so to say right now for India the broad story of Indian growth development poverty is one of improvement sustained Improvement movements that have accelerated in the last 15 years or so added to its growing economic importance India is becoming more prominent on the world stage as the changing Global Order gives it ever more geopolitical significance great Nations and two great Powers cheers but there are huge question marks over whether India will take its chance the real problem with India is that India's human capital whether it is in terms of Education whether it is in terms of Public Health whether it is in terms of training whether it is in terms of participation of women in in the labor force that is extremely poor admission that there aren't enough jobs you don't see that kind of admission or you don't see that attention being paid to unemployment as a problem it's hard for me to overstate how severe the environment is damaged ongoing in India is will this be the Indian Century or could India squander the chance to become a true global economic Powerhouse we'll take a closer look in this episode of business Beyond one of the main reasons for optimism about the Indian economy is its strong GDP growth rates relative to other large economies in 2022 the global economy grew by just over three percent the USA and China grew at roughly the same rate while the EU 27 did slightly better but India outstripped them all achieving GDP growth of seven percent last year by far the biggest figure among the world's 10 largest economies and India has another growing advantage over those countries a vast youth population has other industrialized nations deal with the challenge of an aging population India has a unique demographic dividend India has overtaken China as the world's most populous country it now has a population of 1.425 billion that is projected to rise to 1.7 billion by 2060 by which time it is expected to have close to half a billion more people than China and perhaps the biggest demographic dividend India has to play with is the Youth of its population more than half are under 30. I think it can be in a very strong and positive place I think it has the prerequisites that could put it in that place most of all the very large reservoir of Labor that it possesses you know a young population a large capable fairly well educated population so I think that all those these things are in favor of India becoming uh this Powerhouse strong economic growth in India is not a new phenomenon but many experts believe the country is better placed than it was before to capitalize the rate of growth that we see today is actually lower than uh the rate of growth that we saw in the 2000s for example you know after the 1991 liberalization that's when really the rate of growth picked up and we had several years of growing at eight percent or more India is growing very well uh a lot of the internal issues that had been there have been soda cleaned up a lot of reforms have happened but also balance sheets of the uh Banks and the companies which had been in in some trouble have all been cleaned up now uh so in some sense you know India now stands in a situation which is even better than what it was in 2003 when you know the first wave of this very rapid growth began India has not been shy about talking up its growing economic prowess that was clear when the country's prime minister Narendra Modi visited the US last month for a pageantry-filled four-day State visit Mr Speaker when I first visited the us as a prime minister India but the 10th largest economy in the world Bank today India is the fifth largest economic thank you and and India will be the third largest economy soon one area modi's government has focused on is urban infrastructure such as roads motorways and bridges this year the government plans to plow a record 122 billion dollars into capital expenditure that is a an area of a great Improvement you know Communications infrastructure uh additionally uh amenities at the household level so just basic things including uh you know access to toilets to drinking water to clean cooking fuel to electrification all of that has increased substantially the world's Bank estimates that India needs to spend at least 840 billion on Urban infrastructure over the next 15 years if it's to meet the needs of its population but could India seriously rival long-established economic powers like the USA and China it certainly lags behind both in one key area exports China's modern economic Miracle can largely be explained by its remarkable manufacturing and Export prowess it's the biggest exporter in the world ahead of the USA and Germany you have to go a long way down the list before you get to India the world's most populous nation is only its 18th biggest exporter many point out that comparisons with China and the USA are simply unrealistic we should recognize that the gap between India and China is really massive the Chinese economy is six times in their size Chinese per capita income is twelve thousand dollars per capita India's per capita angle is two thousand dollars per chapter you know China China provides what more than 18 15 to 18 percent of global trade India provides two percent of global trade so you know and the gap between India and China even when China is slowing down and India is going faster has only increased in the in the last decade also China clearly uh has been a manufacturing machine and and very very successful uh I think India is a little different than there India is not that you know manufacturing machine it has not been terribly successful it has had some successes you know in some areas but uh its past has stayed a lot longer with India than it did with China so if manufacturing is not a strength what makes the Indian economy tick agriculture is the main source of work in India more than two and five are in the sector according to the international labor organization Services accounts for a third with around 10 percent employed in public services and while India has done well in some sectors such as textiles and pharmaceuticals manufacturing overall accounts for less than 12 percent of the Indian Workforce let's take a closer look now at that Services sector because one thing within that which is certainly making India tick is Tech Indian export growth has been powered recently by its information technology Services it has also developed a reputation for having a vibrant startup culture in terms of funding it's now number two in the World Behind the US is the CEO of traction an Indian firm which tracks companies in the sector is you know fairly well poised which includes you know large IP companies which are doing a lot of digitalization projects so people have also realized the importance of digitization uh you know globally the second is the whole uh you know the startup sector there are various subsectors within that but uh that is another thing that that continues to grow and there you see a lot more new areas coming up she says India is thriving in the development of digital infrastructure helping to connect the country's vast population to a variety of services so the government has done a lot of things in in having this sort of the digital infrastructure which is boosted uh some of the other things like a boosted money transfer boosted um digitalization of uh cash transfer which happens the percentage of transactions uh digital transactions has increased in the economy right uh it has made that accessible to a lot of people India has also become an important destination for some major Tech Giants Apple has moved some of its iPhone production to the country while Google and Amazon recently vowed to heavily step up their activities in India where foreign investment really particularly direct foreign investment but even Equity uh is is is is very powerful is that it knows where the high returns are uh better than the local Capital does like if Apple comes in for example it brings in with it not only the Apple's Apple technology Apple's management style it also brings in the way of doing things so far we've focused a lot on the positives but there's another side to this story India has come a long way in recent years but the country still faces a vast array of challenges that need to be confronted many of the experts we spoke to say India has a huge problem when it comes to so-called human capital that's focusing on issues such as education health and gender equality in determining overall economic success in his book India is broken Professor Ashoka Modi from Princeton University says that in the 75 years since Indian independence successive governments have failed the people so the Indian economy felt particularly sharply during covering it's bounced back and people are extrapolating that bounce back as some kind of a new normal which it is not because if you look in the last 40 years if you reach the growth out over the last four years including a year before covered India has been growing at about three and a half percent which is nowhere close to the forecast being made he says India's problems won't be solved by looking only at GDP figures in the shadows that the problem is poor job creation for 75 years with no prescription job creation in the coming 20 30 years a huge youthful population emerging into this into this job serious environment poor public goods provision Education Health cities the environment and the judicial system the judicial system is broken the environmental damage is rampant let's focus now on one of the areas he mentions there employment India's huge youth population need jobs but there's a big problem the better educated you are in India the more likely it is that you will be unemployed overall Indian unemployment stands at around seven percent but for those who've been to third level education and Beyond the unemployment rate is more than double that even those with an intermediate or second level education rates struggle to find work more than those with basic or practically no education given that more than 40 percent of Indian employment is in agriculture many of those with low education levels work in extremely poorly paid jobs that's obviously a big problem I lied to the fact that there is not enough adequate work for those with high education levels but the economy has not been able to produce enough jobs to to absorb all of these people I think what sometimes happens is that there is a very narrow top of the Indian pyramid and all of the conversation uh in the Indian media and perhaps even globally circles around this very tiny sliver so there is sometimes a feeling that that there are far more High skill jobs than there actually are while uh you know what's happening uh on the ground is that they just simply Aren't Enough um High skilled jobs to be able to provide to these young Indians another issue that India most grapple with is the role of women in its labor force let's take a selection of countries major economies like China the US and the UK as well as some big developing economies comparable to India such as Vietnam and Indonesia the gap between the amount of women and men in work in all those countries is vastly smaller than the Gap in India just over 20 percent of women in India are officially in the labor force compared to 70 of men any story of Indian growth and of uh you know employment-powered Indian growth should be uh you know cannot really function to its full potential if half of the population is not participating in ways that would be expected at this uh at these levels of growth and development or that are happening elsewhere in the world so yes Indian female labor force participation is among the lowest in the world and it's getting worse not only is the level low what we have observed is in the past few decades that level has actually decreased over time uh so if if we simply go by the fact that India is developing women are getting more educated they have fewer children we would expect the trend to be in the opposite direction so we would expect that women should be more likely to participate in the labor market rather than less India's unusually low female labor force participation rate is often attributed to specific societal factors the gender roles require women to be the primary caregivers within a household they are supposed to be the primary uh a person responsible for taking care of household chores and basically you know this is what we call the reproductive labor that women provide so if women are the ones who have to do this then obviously they will have less time to participate in the labor market Ashwini deshpanda has studied India's inequalities for decades she says that focusing on societal Norms does not give the country's government an excuse for inaction she says simple moves like providing access to cooking gas cylinders would give women more time to participate in the labor force I think here the academic Community also needs to introspect to say I'll be focusing enough on the economic factors that will that will change uh you know women's participation in paper or are we exclusively just going inside the household and focusing on some very difficult to change social norms uh then then we are stuck for 200 years ago nothing will change you know inequality is not unique to India it afflicts the world's richest Nations too but many experts say that India's strong economic indicators mask the depth of its social problems we are really talking about a very poor country when you when you spread it across you know across this thing the GDP with a massive country like us the GDP will always be distorted you know it will always be bigger it will always be used because of sheer population and the sheer geographical size the fact is also that India because there are certain sections of Indian science and technology which did very well and also India can send Rockets into space India can do you know all these things which lot of equivalent countries cannot do India can have an aircraft carrier India has these iits these information technology companies Etc makes it very attractive and India is not really at the lowest strong in that sense but it's not really at that level at which many Western commentators think that India is or India is about to uh about to break through Ashoka Modi points to the country's education system as an example of why he believes the country is in his words broken the psychology has set in oh yeah yeah education is important and eventually we will get to it but really is it really that critical data journalist rukmini s says there have been improvements in Indian education particularly around female participation but that there remains huge inequality so it means that a person like me I was able to you know access uniformly excellent quality of Education which then just continues to give you uh steps up in life but what we do know is that from assessments of quality of Education across Indian schools particularly in rural areas children go right up to class three four five grade three four five without being able to read a single line in any language not just in English without being able to do simple uh calculations including addition and subtraction so they are making it to school teachers are there in those schools School structures exist but the quality of Education that they receive and there is extremely patchy and extremely driven and sort of uh mediated by privilege it's not only economic factors which have to work in India's favor in order for it to secure its future one huge concern is the environment Indian cities are among the most polluted in the world a problem which Ashoka Modi says the government is not dealing with and the scale of environmental damage in India is a serious threat to Social and economic progress India traditionally occupies Indian cities traditionally occupy the highest ranks in the world's most polluted cities Indian cities compete with each other in who is going to which which one of them is going to be more polluted than liberal but the really severe problem is with water air can in some sense be clean but the dying Rivers every single River I'm going to assert in India today is done for various reasons over exploitation dumping off waste sand mining of river beds uh and there is zero interest in them another vital issue which many say Narendra modi's ruling Hindu nationalist party have made worse is the question of democratic Decline and the worsening ethnic tensions between Hindus and the country's sizeable Muslim minority many believe this threatens the Indian Republic itself the fact of the matter is that there's been a democratic decline in India India's democracy is not doing that well there's been targeting of religious minorities like Christians and Muslims in India under Mr modi's Hindu regime it's a very Hindu nationalist nationalist regime and that makes countries like the United States and Western European countries extremely uncomfortable if we neglect these problems for too long I think social tensions will rise as they have already started to rise and there is a limit to the divide and Rule kind of policy you can pick one section of the population against the other and you can say immigrants are responsible for your problems or you know and this race is responsible problem of the other race etc etc you know there's a limit to which you can which that Blame Game can take you just that far and no further to say that India finds itself at a decisive moment is an understatement as we have seen it undoubtedly has the potential to be a major economic power rivaled only by the world's richest Nations but can it overcome its problems to achieve this there's a wide range of views the future is very Bleak in my view we are headed to certainly an environmental crisis we are headed potentially to a social with social violence I have faith in the Indian people uh and I think time and again India has shown that yes there have been Dark episodes in our history as in the history of all countries but I think time and again we've shown that you know we are we are we are more democratic than uh sometimes you know you sort of Despair and so I think I have hope that the Democratic Federal plural diverse character of India will sustain itself but I do think that you know economic growth is not going to solve these problems some of the um you know some of the most sort of violent conflagrations that we've seen in in India have been in very economically successful regions of the country so I don't think one means that the other uh is taken care of that is an entirely different and essential conversation that needs to happen in India about just seeing fellow Indians as fundamentally equal and fundamentally Good Will India be in the in frontier's time uh be a power like China I don't think India will be that kind of power in India is a different kind of power I mean if it it is a power it is going to be a very different uh the democratic tradition is is incredibly strong in India uh and uh therefore Its Behavior internationally is going to be very very different it's far too soon to say for sure if this will be the Indian century it's 1.4 billion people face huge challenges that any society should be deeply concerned by but for the first time in its history India has a shot at being one of the most powerful and influential economies on the planet the world is watching its progress that's all from this episode of business Beyond if you're interested in seeing more from us check out our playlist and do look out for our new series transforming business where we take a closer look at the business side of the green transition thanks a lot for watching and until the next time take care [Music] foreign [Music]

Channel: DW News

Views: 763,587

Keywords: DW News, india, usa, china, economy, global economy, economic superpower, BRICS, global order, modi, narendra modi, russia

Id: c_SEBHQTGJw

Length: 23min 43sec (1423 seconds)

Published: Fri Jul 21 2023