What’s the first thing that comes to mind when you think of India? Pollution, poverty, over-population, snake charmers. Actually none of the above are true. Today, India stands as a beacon of hope and economic dynamism. Whereas many economies, advanced and developing, are experiencing a growing sense of economic woes, India is engineering itself to become the next economic juggernaut. The latest International Monetary Fund (IMF) survey has projected a growth rate of 7.7% for this fiscal year.
India is a young gentleman. Two thirds of Indians are below the age of 35. Having a young population is a very healthy sign of economic growth. The youth herald tremendous opportunities. Demographic dividends have been enjoyed by a number of countries in recent decades, most notably the East Asian tigers. Through judicious macro-economic management and careful engagement, young India can provide the necessary economic bellwether to stunning growth potential. ‘Skill India’ is a major policy initiative in the right direction. It is both comprehensive as well as national in character. The skill development initiatives would provide opportunities to young Indians for achieving higher productivity. Furthermore, by providing the requisite skills to these young men will not only make them employable but will also help them secure a decent job. In unorganised sectors as well, this initiatives may indoctrinate greater awareness towards safety, health and environmental concerns. Large scale skill development is thus a powerful initiative for sparkling growth.
It is a deep seated faith that India is a high context society. High context societies believe deeply in values, history and traditions. This cultural richness is key for economic development. What citizens of India want is personal progress. They want better food on the table, better education, better infrastructure, a better house and a better car. Basically the small things. But it is these very small things that are the most difficult things to provide. So what do rogue government/politicians do. They create artificial needs in the minds of people and undoubtedly they abused the system. What happened in the long run is an anarchy for decades without any real progress. Achieving inclusive growth will provide the basis for India to engage economically. The 2016 budget is well geared in fixing the core fabrics of the Indian economy. The focus is on improving and building social infrastructure viz health and education, incremental financial reforms, ease of doing business and rural development.
India’s growth outlook is expected to be favourable, with GDP growth projected to strengthen to above 7.5% in the coming years. However, domestic and global headwinds remained. Domestically, the economic recovery has been uneven. The pick-up in the investment cycle is yet to gain traction. Leverage of the industrial sector is high which results in high interest expense. Subsequently, high cost of capital and subdued demand for credit has resulted in high Non- Performing Assets (NPA’s) for banks especially the public sector banks. The magnitude of bad loans has led to concerns about the strength of this sector. By March 2017, a whole host of banking institutions will see their profits declined considerably due to the Reserve Bank of India (RBI) mandate in cleaning off NPA’s provisioning. It is expected that such regulation will led to improvements in bank capital and liquidity levels, reduced debt as well as considerable increase in the capital that banks hold in order to absorb losses in times of financial stresses. Additionally, further deterioration of global growth outlook could hamper the growth prospects of India.
India stands at a crossroad of economic development. Citizens of India are hungry for change, change in terms of economic management and governance. Consistent economic performance and the ability to meet their enhanced aspirations are the new normal. A nation will be elegant only when people’s aspirations are kept alive. They must see that their life is a possibility. If people lose their aspiration, it is a finished nation.