Every other economist provides his/her silver spoon idea to reach a double digit GDP growth rate for the Indian economy. The IMF have also shown prompted that India could reach a 8% growth after implementation of the GST. The big question present before the political and economic thinkers is about the future of the economy and how rosy it is?
The foundation of the country was laid down by the formation of PSU and government funded agencies which provided jobs to the common man and living to his family. Historically this has led us to be a major consumption economy with such a wide band of middle class. Still a rise in pay commission of the central government employees has the ability to makes the headlines. But with the increasing population and globalization it was foolish to look only inwards, so Mr. Manmohan Singh introduced the reforms of 1990s. The IT sector boom and the phenomena for being “NRI’s” was the after math of the reforms.
Some benefits of the outward look by the country were revoked by the 2008 recession. In the Era of globalization Indians was bickering whereas the Chinese sensed the opportunity and plundered the global market with the deluge of its product from it big factory model. The Modi wave hit the right time when the population was eying for a developed model and competing at the world stage. Modi has promised to double the farmer income and has implemented reforms such as GST ,Demonization against the opposition from vested interests and corrupt government officials. It is common to assume that structural changes will take time to fructify but the people are little anxious and frustrated with there present condition.
This can be seen by household savings entering the mutual funds, the country is willing to pay for new services and use EMIs to buy their dreams which might not be fulfilled easily. Even the outer world is also sync with this Indian transformation, the inward rush of dollars is at a peak, both in financial markets (stocks and bonds) and as direct investment. No wonder the stock market index is at an all-time high. But all this is not visible through the macro data provide by the CSO. The recent quarter growth of 5.7 % is way below the expectation and the rising unemployment among youth coupled with weak private investment are the reality which haunt the finance minster and his answerable.
The selling of assets of PSU’s ,clearing balance sheet by dissolving NPA, increase privatization, arguing with RBI bank to release interest rates are some of the measures taken by government. These steps are focused on fiscal policy to present India as a good looking model, the government should rather also invest in the outward looking mindset to make India a global power. This will require to invest heavily in providing skills which are on par with the globe . The increase in research output from Indian institution and more entrepreneurs which can solve world problems are the need for the next two decades. This should be incompanied by increasing per capita income of the lower segment by good governance.
Lets see it take how many years it takes for India to reach the expectations.