Remembering the impactful legacy of wise leadership

/ Editorials, English /

Remembering the impactful legacy of wise leadership

(Source – The Hindu, International Edition – Page No. – 10)

Topic : GS 3: Indian Economy

Context

  • Post-2015 Transformations: Several initiatives aimed at life-changing transformations for ordinary Indians were introduced.
  • Lack of Sustainability: Despite initial promise, these changes were not sustained over time.
  • Challenges:
    • Implementation gaps in policies.
    • Insufficient follow-through and monitoring.
    • Economic, political, and social hurdles.
  • Impact:
    • Limited long-term benefits for citizens.
    • Stagnation in progress for critical reforms.

Introduction

  • Legacy Reflection: Singh’s passing prompts evaluation of the 1991 economic reforms and their lasting impact.
  • Data Analysis: Focus on contrasting the periods of 2004-2014 and the following decade using verifiable government data.
  • Goal: Identify five key outcomes contributing to India’s potential high-income status by the 2040s.

Key Economic Outcomes

  1. Macroeconomic Policies:
  • Savings Rate: Increased since the early 1980s; 23% of GDP by 2003-04.
  • Investment Growth: Jumped from 24% to 38% of GDP from 2004-2010.
  • GDP Growth: Average of 8.5% annually (2004-09); exports grew by 15%-18%.
  1. Sustained Growth (2004-2014):
  • Post-Crisis Recovery: Quick rebound after the 2008 crisis; average growth rate of 7.8% annually.
  1. Sectoral Growth:
  • Job Creation: Non-farm jobs increased by 7.5 million per year.
  • Construction Sector: Jobs nearly doubled from 26 million to 51 million.
  • Manufacturing: Grew by 8 million jobs, boosting modern services as well.
  1. Agricultural Employment Shift:
  • Decline in Agricultural Workforce: First time post-independence the number of agricultural workers decreased.
  1. Rise in Real Wages and Poverty Reduction:
  • Real Wages: Increased until 2015, spurring private consumption.
  • Poverty Reduction: 138 million people rose above the poverty line from 2004-2012.

Policy-Induced Challenges

  • Demonetization and GST: Negative impacts on MSMEs, hindering GDP growth.
  • COVID-19 Lockdown: Resulted in a 5.8% contraction in the economy (FY21).

Unemployment Crisis

  • Rising Unemployment: Increased from 2.2% in 2011-12 to 6.1% in 2017-18.
  • Job Growth Decline: Significant drop in job creation, especially for youth and graduates.

Reversal of Progress

  • Agricultural Workers: 6.7 crore decline (2004-2019) reversed with 8 crore added back to agriculture (2020-2024).
  • Manufacturing Sector: Share in the economy dropped from 17% to 13% by 2022; loss of jobs in labor-intensive industries.

Wage Growth and Employment Shifts

  • Regular Salaried Workers: Decreased from 23.8% in 2019 to 20.9% in 2023.
  • Unpaid Family Labor: Increased significantly, indicating distress-driven employment.

Conclusion

  • Threat to Achievements: Reversals jeopardize earlier progress and raise concerns about realizing India’s demographic dividend by 2040.
  • Challenges Ahead: Growing inequality and constrained demand threaten the vision of a prosperous “Viksit Bharat.”