View: Rejuvenating India’s growth paradigm

After Narendra Modi’s announcement last week of a gargantuan economic package, India spent hours glued to TV sets as the plan was decoded by the finance minister in five tranches. The math did not quite add up in the end and every calculation, by research agencies and experts, put the economic cost of the package for the government at around 1 per cent instead of the promised 10 per cent. Leaving the details of the package aside, the week showed that India badly awaits a revolutionary step from the government that accelerates economic growth for the coming decades.

It can be argued that India has witnessed sustained economic growth which has lifted millions of people out of poverty during the past decades. The country’s per capita income rose from $575 in 1991 to $2,104 in 2018, registering over 3.5 times increase. But as impressive as this growth trajectory is, it pales in comparison to its East Asian peers during their historic high growth years.

During the same period, China’s per capita income in constant terms galloped from $786 in 1991 to $7,750 in 2019, a jump of almost ten times. It is not only about China. In a similar span of 28 years, the GDP per capita of South Korea rose seven times between 1970 and 1998. Similarly, Japan registered a jump of four times during its high growth years from 1960 to 1998. With the global average per capita income at $10,881 in 2019, the average Indian is five times poorer than the average global citizen. Therefore, there is an urgent need to rethink India’s strategy for ushering rapid economic growth and making a quantum difference.

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