India’s growth acceleration has been characterized by productivity gains, which is reflected in both, labor and total factor productivity. This is attributed to both within sector gains and to the reallocation of resources to more productive sectors. World Bank’s 2018 analysis highlights that India needs to widen its scope and continued reforms to maintain growth.
“As highlighted by India’s Systematic Country Diagnostic, for the country to achieve middle-class status by 2047, growth rates must be sustained above 8 percent for multiple decades. This requires a reform focused on moving to a more resource efficient growth path.”
Growth should be more inclusive to enhance the effectiveness of India’s public sector. The analysis states that accelerating the growth rate will also require continued integration into the global economy.
- The Weakening of India’s Economy
- Without Black Economy, India’s GDP would have been eight times higher!
- MFIs not given enough funding
- FICCI called for Strong Blue Economy Ties with Pacific Island Nations
“The key for realizing these rates of growth is maintaining macroeconomic stability, providing a definite and durable solution to the cleaning up of bank’s balance sheets, realizing GST’s growth and fiscal dividend, and regaining momentum on the unfinished structural reform agenda.”
American economist Paul Krugman recently pointed out India’s manufacturing sector as being isolated. “India’s lag in the manufacturing sector could work against it, as it doesn’t have the jobs essential to sustain the projected growth in demography.”
Krugman described India’s labor laws as restrictive and discourages businesses from thinking big. Poor infrastructure is also to be taken note of. He bluntly said India’s economic growth has largely been jobless. Statistics show that India’s unemployment rate was at its highest level in 16 months in March 2018 at a mere 6.23 percent.
Latest statistics from the Labour Bureau also show India as the most unemployed nation in the world. India has to keep every sector and its citizens in mind for an all-rounded economic growth. There is no doubt that India is challenged by its fast-growing population, increasing unemployment and inequality.
The government should take these challenges in its stride and address it along the way to being the world’s fastest growing economy.