How to eliminate poverty in India
Current situation:
- If India wants to lessen poverty, it must develop its long-term growth strategy.
- The ultimate goal must be to nearly double the per capita income over the next 25 years, which is projected to reach $2,379 in 2022–2033.
- It will make it possible for people to live better lives and abolish poverty.
- But for now, it’s crucial to recognise the obstacles the nation will face in achieving this objective and the measures it must take to overcome them.
The contribution of ICRO to economic development and growth:
- Over the following 25 years, the growth rate must stay at 7%.
- The optimal incremental capital-output ratio (ICOR) of four is taken into account.
- A gross fixed capital formation rate of 28% will be necessary for this.
- However, the widely accepted ratio of 4 is based on increased capital utilisation effectiveness.
- The ratio was low in the early years of the century’s fast growth period. Subsequently, it has grown. The expected average ICOR during the five-year period from 2016–17 to 2022–23 is 4.65 after two outlier years are taken into account.
Among the variables affecting ICOR are:
- Technology is just one of the numerous things that influence ICOR.
- Over the next 25 years, the required investment rate might range between 30% and 32% of GDP.
- Level I will not be difficult for us to go on to as we have already completed level 1.
- The Gross Fixed Capital Formation rate in current prices for 2022–2023 is 29.2% of GDP, according to the most recent NSO data.
- Even though public investment has increased, it is important to underline that corporate and non-corporate business sector investments also need to rise. The makeup of the investment is also quite important.
- Investments must be made in the industries and sectors necessary to foster growth and create jobs.
- Even while it must be promoted, most investments must be done locally, particularly in the swiftly developing technological sectors.
Risks and opportunities for global economic growth:
- The environment must be peaceful for growth.
- Since the confrontation between Ukraine and Russia, it has gotten worse.
- If this disagreement persists, it will have a significant impact on the growing process.
- If the supply of items crucial to their economies, like oil, is disrupted, both industrialised and emerging nations could suffer severely.
- How some nations view international trade is a further issue of global importance.
- The World Trade Organisation (WTO) was established to advance a world without tariffs and restrictions.
- But for a variety of reasons, wealthy nations that once pressured less developed nations to adopt a free trade model are now gradually backing down and tightening import restrictions.
- While this is going on, emerging economies like India are getting ready to join the global economy.
- In order to comprehend their current condition, industrialised countries must consider internal variables like the rising unemployment rate.
There must be a diversified strategy used:
- When it comes to the domestic situation, the development strategy is the most crucial element.
- In 1991, India defied convention and transitioned to a market-oriented economy. By concentrating on exports, many nations saw rapid development over a period of decades, most notably South Korea in the past and China more recently.
- India’s export-led economic strategy might not succeed, especially in view of the altered nature of international trade.
A diversified strategy is required. Attention should be given to:
- farming and similar pursuits.
- both output and exports.
- India has made great progress in the services sector. We must safeguard it as we advance.
- The adoption of new technology is crucial.
- India will have an easier time adjusting to artificial intelligence (AI) and its effects.
- However, that can affect both the industrial structure and the employment situation.
- The effects of AI are still being studied. Contrary to past theories, it is thought that AI may increase output and productivity without necessarily boosting employment.
- For populous countries like India, that is bad news.
- To assist pupils develop the required skills, our educational system needs to be altered.
- The identification of labor-intensive economic activities is also crucial. A lower employment elasticity relative to output must be taken into account.
- The development strategy must also incorporate a basic income guarantee.
- The basic income has a number of problems that need to be fixed. The basic income quantity and beneficiary coverage must be determined in light of a number of normative factors as well as the fisc’s capacities.
- India needs to be ready to reduce most subsidies after basic income is introduced, with the exception of food subsidies. The need for basic income support is even more pressing in an unstable economic climate.
Environmental protection should be taken into account as development is carried out:
- The impact of environmental concerns on production is still another issue. Reduced emissions of pollutants, particularly carbon dioxide, may have an impact.
- It is plausible that industrialised economies, who have badly over-extracted natural resources over the previous 150 years, should take the majority of the credit for the reduction in pollution, as claimed by emerging nations.
- India will still be responsible for some of the costs. It might be necessary in this situation to disregard the high yearly growth rate of 8%.
- India will be able to achieve its various goals, including lowering inequality and poverty, within the context of a 6% to 7% annual growth rate.
Conclusion:
- Over the past 75 years, India’s economy has developed into one that is both quite stable and diverse. India currently has the fifth-largest economy, which is impressive, but in terms of GDP per capita, it will rank 149th out of 194 countries in 2022. India still has a long way to go as a result.
- India has the ability to develop in a way that will help it grow economically. If our strategy is sound and we can build an atmosphere that will draw investment and support economic development, deployment, and employment, we can sustain a stable growth rate of 6 to 7 percent despite the negative external situation.
