By Dr Sudhakar Panda :  

India can emerge as a developed economy and a major power in the world by 2020 if it pursues the following measures.

Faster and Steady Growth: India’s economic engine has to move fast to keep pace with world development. We have to boost growth. Performance of the economy in the last quarter of the current year gives us a sense of confidence that we may now expect a higher rate of growth in our GDP in 2015 and thereafter. It may be noted that both the IMF and the World Bank have expressed their optimism about India’s economic growth in that India’s growth rate may rise to 7.5 per cent in 2015.

The lending agencies expect the Indian economy to grow even faster in 2016. The World Bank has put India’s growth rate higher at 7.9 per cent in 2016 as against China’s growth rate of 7 per cent for the same year. Growth rate for India as projected by the IMF stands at 7.5 per cent for 2016 as against its estimate of growth rate of China at 6.3 per cent for the same year.

It may be noted that both the IMF and the World Bank find the prospects of India’s growth more promising than that of China. Given the encouraging performance of the Indian economy we have all the reasons to expect that by 2020, the Indian economy may achieve a growth rate of 9 percent rate per annum. With an accelerated growth rate of 9 per cent per annum we can expect a significant increase in per capita income.

With high growth, we may expect more investments and creation of more jobs in different sectors of the economy. We may look forward to a vibrating Indian economy that will create along with more jobs, new and additional sources of income for the people. With the achievement of high growth rates we may also expect a reasonable improvement in the distribution of income and a significant growth in per capita income.

This can help the economy to eliminate Hunger and Poverty ending the problem of food insecurity. Food insecurity is basically a result of poverty as lack of income leads to one’s inability to buy food grains. Food insecurity should then become a thing of the past.

We are no longer an agrarian economy. We have steadily been moving form a traditional agricultural and subsistence economy to an industry oriented economy and from there to a technology driven knowledge based productive/creative economy that may be expected to provide the necessary impetus to the sustainable growth of the Indian economy.

But given the existing socio-economic inequities in the country, I expect the economic inequities to become more pronounced. In simple language, we may expect a rich Indian economy with entrenched inequities.

Food for All: Food is a must for all of us. Everybody needs it. Food therefore is important. Agriculture that produces food will remain important as well. While agriculture and food security will remain important for all times to come, particularly in food insecure areas public food distribution system has to be targeted towards the poor to strengthen the safety net program for the poor. Development of agriculture is not enough unless there is diversification of agriculture. Production of high value crops like maize, legumes, fruits, livestock and vegetables for both domestic and international markets has to be there.

People in the agriculture sector may not only go for innovative agriculture, they may opt for dairy farming, poultry farming, pisciculture, seed farming and agri-business activities. This brings us to the issue of agri-business as well.

This brings us to the problem of infrastructure in the agriculture sector. Infrastructure development including the provision of assured water to the farms is critical to the village economy. This not only facilitates the creation of jobs in the rural sector but also improves year-round access to markets for the farmers in the Indian villages and provides access to all to education, health and other human development services.

Urbanization: With the net work of roads and railways connecting the villages, the villages with the urban centres and the urban areas with the megacities migration of people particularly the poor to urban area will grow steadily. Awareness of a better life in the cities, many of the young people living in the villages will leave for the cities. It has always been the human urge to move to cities and struggle hard to improve his economic conditions.

The pace of urbanization will consequently increase in India. Not only the big cities will be overcrowded, the small and medium cities will keep on attracting people from the rural sector. Migration and concentration of people in cities like Mumbai, Kolkata, Pune, Hyderabad, Vishakapatnam, Kochi, Tiruantapuram and even in fast growing cities like Bhubaneswar will create urban agglomerations.

We have in India 53 urban agglomerations in India with a population of 1 million. Every day we are adding to that population. We may therefore expect more megacities in India. With the growth in the cities, the states may face new challenges relating to the provision of housing, education, health, safe drinking water, sanitation, gas and electricity. This calls for renewed emphasis on responsive urban administration to tackle these issues.

Integration with the Global Economy: Industrialization of the Indian economy will be speeded up. Given the pro-industry and capital attitude of the government of India, there needs to be regular dialogue between the government and the private sector to sort out the problems which may arise from time to time. If things develop the way we foresee them, India may become a global centre of investment and the hub for global business. In that case Indian economy will be more integrated with the world economy. What will this mean for the Indian economy? This will imply readiness for the country to take advantage of the opportunities that may arise out of India’s moving closer to the world economy.

Energy: With growth in industry, agriculture and urbanization, demand for energy will go up. India needs to do everything possible to speed up the production of energy, particularly electricity as demand for electricity will grow by leaps and bounds. It is doubtful if India will be in a position to meet the growing demand for electricity.

Industry and mining, agriculture and the domestic consumers in rural and urban areas have to manage their consumption of electricity efficiently. Companies producing electric bulbs, refrigerators and air-conditioners and electric gadgets may be persuaded to use innovative technologies to produce energy efficient bulbs and machines. Loss of energy at the point of generation and transmission has to be taken care of.

Besides, the state may develop wind and solar power and other alternative sources to generate power. Efficiency in the use of energy will be an important factor in controlling CO2 emissions and in curbing environmental pollution. In the years to come we may experience energy rationing as well as an escalation in energy prices unless we complete the Mega Power Projects we have in hand..

Changing Demand and Transactions: Given the emergence of internet as a big facilitator of business transactions in the world, there may be great change in the shape and style of marketing. We will move from traditional physical marketing and physical stores to selling online.

We may also expect a big change in the composition of demand. With the saturation point reaching in the consumption of basic and necessities, demand for luxury goods will grow. Technology will be playing a greater role in the production of goods and services. People with high income and more leisure will be planning more holidays and travelling. They will also like to spend more on dress. They may prefer to buy and put on fashion and designers’ clothes. Both men and women would also like to spend more on their appearance and on designers’ clothes.

With significant and sustained growth in income, there will be a change in the market behavior. Market has come up and offer more luxury products at higher prices. In other words we will have high income markets for goods and services.

E-marketing will emerge in a big way. In place of traditional and physical marketing people may be shifting to do their marketing by sitting at home and placing their orders through e-mails. We may expect Amazon.com, Snapdeal.com and Quikr to have bigger business transactions.

Climate Change and Development: Climate change as a world issue has been engaging the attention of the world leaders and policy makers. Since 1997 with the beginning of the Kyoto Global Protocol and the United Nations Climate Change Conference in Lima, Peru from December Ist to 12thDecember, 2014 we have been addressing issues relating to climate change and global warming. In India we established a research institute-The Energy And Resources Institute-TERI- (formerly the Tata Energy Research Institute established in 1974) to undertake studies in energy, environment and sustainable development in the context of climate change.
We experience higher levels of global warming every year as we will be delivering higher carbon emissions.

Climate change may be associated with extreme weathers like a long spell of drought, floods and frequent cyclones. But then the dynamics of climate politics keep on shifting. There are three options before us. (i) Can we impose a carbon tax to fight climate change? (ii) Can the industries be asked to switch over to cleaner forms of energy? Generation of electricity from coal is highly polluting. In Australia their government made plans only to be shelved fearing protests from the people. Julia Gillard, Australia’s Prime minister unveiled a plan for a carbon tax. New Zealand has introduced its own carbon price. We have to prepare the blue print on climate change.
In spite of rounds of discussions, the world leaders have not reached an agreement on Climate Change. Hope they will soon come together and find out a way to save the world.

Public-Private Initiatives: The Indian Government has made it clear that it is interested in having less of government and maximum of good governance. This augurs well for private capital and investments as that would mean less of bureaucracy and rules and regulations that create impediments for the faster growth of the Indian economy. Government would play the role of a facilitator. Removal of rules and procedures that have often amounted to harassment of business and enterprise may give the right signal to foreign investors to come forward for investment in India.

Good Governance: All that we have said relating to the development and strengthening of the Indian economy will depend on Good Governance which has to be transparent, accessible and accountable and responsive to the changing requirements of the economy. The governments in India, both the State Governments and the Union Government have to work more as facilitators than as authorities with a rigid approach to things. We cannot afford to have governments that fail the state and its people in developing the economy and ensuring the accrual of developmental benefits to people in terms of quality education, health, sanitation and social justice.

To conclude, by 2020, with all the developments that I have outlined, I foresee India not only as a developed economy but also as a major power in the world. And there will be brighter future for all the Indians.

[Prof. [Dr] Sudhakar Panda is an economist and was the chairman of the third Odisha State Finance Commission.]