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Sansad TV: India to be USD 3.7 trillion economy in 2023- RBI

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Characteristics of a valuable economy:

  • A RBI bulletin said that India will maintain its position as the fifth-largest economy in 2023. It further said that India will become a USD 3.7 trillion economy in 2023 and will continue to maintain its lead on the United Kingdom, stressing that the macroeconomic stability is getting entrenched.
  • First, Indians should feel empowered by the economy.  India is placed very low in the United Nations’ World Happiness Report. Happiness, best understood as a sense of well-being, is directly related to empowerment, or being able to undertake the functionings we value.
  • This is, in the first instance, related to being educated and experiencing good health. We are in India facing an education sector that is broken down and the majority are battling with almost non-existent public health infrastructure.
  • The private sector has some worthy initiatives in these areas but they await an effective public presence on a gigantic scale. So, the first attribute of the valuable economy would be access to quality health and education for all.
  • The second attribute of a valuable economy would be equality of opportunity.
  • For over three decades now income inequality has been rising in India. According to some measures, India is today more unequal than China, itself a society widely perceived as highly unequal.
  • Now some part of inequality of opportunityis related to unequal distribution of income but a part of it is not.
  • Gender inequality manifested as women having less opportunity in life is not going to go away with a re-distribution of income along class lines or across social groupings.
  • India is a serious outlier in this regard, and becoming richer as a society may do little to change the status quo.
  • Concerted public action via education is the means to this outcome. Income transfers, pushed relentlessly by policy entrepreneurs, evade the issue altogether.
  • The article said that the objective in 2023 is to chain inflation therein to align with the target by 2023.

MSMEs play a key role in economic growth, job creation and local development:

  • As per the International Monetary Fund (IMF), India will move into fourth place in 2025 and into third place in 2027 as a USD 5.4 trillion economy. The baseline assessment was a slowdown due to the possibility of a recession affecting the global economy.
  • The sector employs around 11.7 crore people, constituting 40 per cent of the workforce. Around 32 per cent of the total jobs are created in the manufacturing sector, 35 per cent in trade, and 33 per cent in other services.
  • However, MSMEs are not only important for employment, they can also be an engine of growth.
  • The share of MSMEs in GDP was 29 per cent in 2015-16. Contribution of manufacturing MSMEs to manufacturing GVA (gross value added) is about 33 per cent.
  • The banking sector needs to grow in size. Then, even if the share of loans to MSMEs does not go up too much, there are more banks lending to small industries. This can be done by giving out more bank licences.

 Conserving nature: for sustained economic growth:

  • An economy, whatever its size, cannot be meaningfully evaluated independently of the extent of presence in it of natural capital.
  • Till now, by referring to the imperative for growth, to eradicate poverty, any effort to conserve nature has not just been ignored but treated with derision, by both right and left. This is no longer a credible political stance.
  • Two-thirds of the world’s most polluted cities are in India, when we accept less than a fifth of its population. Air pollution shortens lives and lowers productivity, reducing the capacity to earn a living when alive.
  • The poor are the most affected as they cannot afford to live in gated communities that somehow manage to commandeer scarce natural resources. Some part of environmental depletion in India is due to the pursuit of unbridled growth.

Conclusion:

  • The softening of commodity prices and other costs amidst strong revenues appears to have boosted corporate performance
  • India need to carry out the crucial internal reforms that will allow it to be a productive international player, and to take on the leadership roles that so many people across the world hope that it will. But the chances of that happening at the moment are sadly low.
  • Any improvement in the life of the majority would require a re-alignment of the growth process so that it is less damaging. This would very likely require that we have slower growth but the process can be configured to channel more of it towards poorer groups.
  • India could and should aspire to double-digit growth. Without sustained growth at that all levels it has little hope of employing the roughly one million young people who join its workforce every month.
  • And unless it takes advantage of its current, favorable demographics it is never likely to emerge as an upper-middle-income economy with a prosperous and thriving middle class.