Following up the research on India, Goldman Sachs and Co. economists Jim O’Neill and Tushar Poddar have come up with a report on 10 things the country needs to do to achieve a per capita GDP of at least $20,000 (Rs 8.58 lakh today) by 2050 (from less than $1,000 now).
Ten Things for India to Achieve Its 2050 Potential, is a grim reminder that India has fallen to the bottom of the four BRIC nations (Brazil, Russia, India, and China) in its growth scores, due largely to government inertia. The report states that India’s rice yields are a third those of China and half of Vietnam’s. While 60% of the country’s labor force is employed in agriculture, farming contributes less than 1% to overall growth. The report urges India to improve governance, raise educational achievement, and control inflation. It also advises reining in profligate expenditures, liberalizing its financial markets, increasing agricultural productivity, and improving infrastructure, the environment, and energy use.
Here is the excerpts from the report:
- Improve governance.
- Raise educational achievement. According to our basic indicators, a vast number of India’s young people receive no (or only the most basic) education. A major effort to boost basic education is needed.
- At the other end of the spectrum, India should also have a more defined plan to raise the number and the quality of top universities.
- Control inflation. We think a formal adoption of inflation targeting would be a very sensible move….
- Introduce a credible fiscal policy. We also believe that India should introduce a more credible medium-term plan for fiscal policy. Targeting low and stable inflation is not easy if fiscal policy is poorly maintained.
- Liberalize financial markets.
- Increase trade with neighbors. In terms of international trade, India continues to be much less “open” than many of its other large emerging nation colleagues, especially China… We would recommend that India target a major increase in trade with China, Pakistan and Bangladesh.
- Increase agricultural productivity.
- Improve infrastructure.
- Improve environmental quality. Achieving greater energy efficiencies and boosting the cleanliness of energy and water usage would increase the likelihood of a sustainable stronger growth path for India.
[Source: Goldman Sachs; Global Economics Paper No. 169 and Experts: LiveMint, Businessweek ]