Indian economy overview

This is a fairly neat analysis of the current state of the economy, and contains an outline of the essential to-dos in order to maintain the growth rate of the economy at 8%. The issue that most people do not realize is that if the growth rate were to drop to the regular 4-6% because of not meeting the requirements mentioned below, then the large amount of youthful workforce about to join the ranks of the unemployed, will never get absorbed. And the trickle down effect of the economic progress being able to touch the lives of the bottom 30% of the Indian population below the poverty line, will never go through. Some of the things that need urgent attention are the following.

- Simplifying procedures and relaxing entry barriers for business activities. IFC, a World Bank organization, has ranked India at 116 in terms of the ease to establish a new business.

- Relaxing the labour laws. Any decision to lay off more than 100 workers, has to be approved by the State government. This has prevented many manufacturing firms from hiring temporary workers, even though they are willing to pay three times the minimum wage for more than 100 days of employment per year.

- Checking the growth of population. The awareness work being done by grassroots NGOs is indeed very impressive in this regard. All initiatives like microfinance, watershed development, and fair trade practices, have become conduits for pushing techniques and ways of sustainable living to the rural population.

- Boosting agricultural growth through diversification and development of agro processing. Agriculture forms the livelihood of over 60% of the Indian population, and cannot be neglected, especially when sustainable agriculture has to be improved manifold into a second green revolution to feed the growing population.

- Expanding industry fast, by at least 10% per year to integrate not only the surplus labour in agriculture but also the unprecedented number of women and teenagers joining the labour force every year. No amount of software development or BPO services can provide the same amount of employment as the manufacturing industry.

- Developing world-class infrastructure for sustaining growth in all the sectors of the economy. Traffic jams, toll booths, and plain red tapism, have led to an average speed of 11 kmph for most transport vehicles that run on the Indian roads. Not just speed, but poor roads and inadequate penetration into rural areas affect each and every sector of the economy. Privatization is only part of the solution, but the government seriously needs to improve its investment in developing better transportation services. Not just transportation, but energy puts forth an even bigger question mark on whether the growth rates can be sustained.

- Allowing foreign investment in more areas

- Empowering the population through universal education and health care. Primary education forms only 3% of the annual government expenditure. This is certainly a shocking figure, given that education is the primary building block for just about any kind of economic or social progress.