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January 5th, 2015

Top 10 economic and development challenges for India in 2015


Estimated reading time: 5 minutes


January 5th, 2015

Top 10 economic and development challenges for India in 2015


Estimated reading time: 5 minutes

RuthKattumuriRuth Kattumuri reviews key challenges that are of priority for India’s development in 2015, from sustainable growth to social protection to urbanisation. Look out for Raj Verma’s top 10 foreign policy challenges posts later this week.

1. Sustainable growth and development: India requires growth rates of at least 7% to cater to the needs of its large, young and aspiring population. The country’s growth rate is projected to 6.4% for 2015. Stronger economic reforms and greater investments and better resource management in multiple sectors and across the country are necessary to invigorate growth to required levels. The falling oil prices provide an opportunity to decrease energy subsidies and utilise the savings in targeted investments and improve growth prospects.

Inclusion of all people from all economic and social backgrounds to attain their full potential is crucial for India’s sustainable development. India’s growth path should align with the Sustainable Development Goals (SDGs) for ending poverty and reducing inequality; ensuring food and water security; improving health, nutrition and sanitation; providing quality education; enabling gender equality and safety; making cities clean and green; addressing climate change; and promoting peaceful societies.

2. Green growth: Green growth optimises the potential of sustainable economic growth that is efficient, clean and resilient. It thereby enables reduction in pollution, greenhouse gas emissions and environmental degradation. Green growth enables energy security through efficient use of natural resources and reduces dependence on imported fossil fuels. It enhances climate resilience through considered environmental management, maintaining biodiversity, improving health prospects, minimising waste and reduction in climate vulnerability to extreme weather hazards.

Furthermore, it has the potential to offer India tremendous opportunity for sustainable development. Improvements could be made to energy efficiency in industry, transportation, infrastructure and assets. India has already been undertaking significant initiatives to limit expected increase in emissions and greater investment is essential to mitigate risks due to climate change and safeguard her people.

There will be challenges. However, sustainable green growth is certainly achievable with existing and on-going developments in clean technologies and renewable energies but requires strong commitment by central and state governments, corporates, households and individuals.

3. Human development: The working age population is estimated to become over 64% in 2021 with the average age expected to be 29 years. India’s middle class is expected to be 200 million by 2020. These demographic factors provide opportunities as well as challenges. Higher investment is crucial to educate, skill and provide employment and entrepreneurial opportunities to keep pace and stay ahead of the growing demands and attain the potential of her people wealth.

Improving the quality of education is essential. Major gaps exist in quality and availability of teachers, particularly in rural government schools. Encouraging internship opportunities for qualified young people to volunteer in village schools can benefit interns and children. Greater efforts for counselling students and teachers, involving parent teacher associations and NGOs are essential to enhance the performance of Right to Education across public and private schools across the country.

Enhancing employability and employment through enabling opportunities in multiple sectors (including India’s expanding space programme) is essential to fulfil the aspirations of the country’s youth. Technical and vocational training programmes; creating jobs; innovation and entrepreneurship opportunities have to be expanded for working age population.

Reducing gender gaps in human development is required to ensure inclusion and equality; improve health of children and family; enable greater participation in labour force participation. Women and girls can be empowered only when they are safe and free to be able to participate equally in all activities in urban and rural areas. Large scale (through media, involvement of ambassadors, etc.) and community-based programmes to educate men, women and households are essential to improve awareness and change attitudes and behaviours.

4. Social protection: ‘In the keeping of his subjects lies the king’s happiness; in their welfare, his welfare; whatever pleases himself he shall not consider as good, but whatever pleases his subjects’ he shall consider as good’, wrote Kautilya in his Arthashastra. The culture of ensuring provision for the vulnerable has to be enhanced and sustained. Awareness and inclusion of disabled in education and jobs has been improving but requires greater commitment and resources to empower and involve them according to their capabilities.

Some improvements are being made by states in the implementation of public distribution systems using technology and better monitoring to enable all those eligible to access government benefits and prevent access by those who are ineligible. Further improvements are required through regular monitoring and evaluation, creating awareness, empowerment and involvement of local communities and leadership.

Schemes introduced under the new government have great potential, as long as they are implemented efficiently. For example, the Jan Dhan Yojanan could enhance financial inclusion and improve the distribution of government subsidies, scholarships, pensions, etc.

5. Urbanisation: About 32% of the country’s population currently lives in urban areas. It is estimated that urban population will contribute over 75% of GDP in the next 15 years. ‘Economic Corridors’ and ‘Smart Cities’ need to encourage transparency, planned efficiently; and developed with stronger co-ordination between public and private, as well as national and international collaborations to be drivers of growth and inclusion that is sustainable and enhances quality of life.

The golden quadrangle helped to fast track urbanisation of second tier cities and enabled better connectivity with rural areas. People from rural areas are now commuting for jobs and schools in nearby towns. Rural to urban migration within and between states continues to grow. Public and private sector investments in development of infrastructure and industry – Special Economic Zones, roads and other constructions have been providing alternative non-farm occupations and additional sources of income. About 61% of the rural population (500 million) belong to the working age group of 15 – 59 years (Census 2011). This population will increasingly access services and facilities in urban and peri-urban areas through migration or daily commuting for work, business or education. Public and private services and Infrastructure requirements should be projected, planned and developed in a responsible and transparent manner to be inclusive and meet the growing demands to benefit rural and urban populations.

6. Land reforms: Developing transparent land reforms for Centre and States are crucial for sustainable growth and development. The ordinance passed on 29th December to amend the Land Acquisition Act is a step forward and should reform and promptly secure approval from Parliament. The government should seek to develop feasible reforms that are fair and provide justice and equity to urban and rural landowners, together with meeting development objectives.

7. Strengthening public sector institutions:  Significant human, infrastructure and capital resources already existing in several public sector institutions are accessible to the larger population. It would be resource efficient to scale up existing resources by improving their performance and enhance their potential through regular training, monitoring, evaluation and investment. Salaries for employees in public sector should be commensurate with their work and responsibilities and should provide incentives for good performance and achievements. Greater awareness programmes and disincentives for unethical practises have to be strictly implemented.

8. Centre-State co-operation: The Centre-State and State-State understanding and co-operation have gained significance in recent years. The difference in leadership, governance and cultures between the 29 states contributes richly to India’s democracy. Article 263 in the Constitution should be optimised to promote co-operative federalism. With an efficient co-operative federalism, the achievements in economic growth, governance and social inclusion of any state can easily be replicated in other states to enable equitable growth.

India – A Multitude of People and Cultures (Mosaic) Image Credit: flickr/Dinesh Cyanam CC BY-SA 2.0

9. Federal Republic of India: A beauty of the federation of India is the unity in the vast diversity of its people and places from Kashmir to Andaman Islands and Arunachal Pradesh to Gujarat. Her people comprise of the second largest Muslim population in a country and Christian population higher than the entire population of some countries (e.g. Sri Lanka). India is and will remain uniquely sovereign, socialist, secular, democratic republic, like no other country in the world.

India can become a world leader. What she requires are large-scale reforms for sustainable and inclusive development aligning with technology and developments existing in the 21st century and to become a responsible and transparent democracy.

10. Regional co-operation:  The population of Asia (includes central Asia) is 4.3 billion (61% of world population in 2013). Strong co-operation between countries in the region are essential for economic growth and development. There is a growing awareness of this and occasional surmises regarding the possibility of an ‘Asian Union’ to improve standards and economic integration across the region. Greater commitment, communication and co-ordination are crucial to improve equitable multi-and-bilateral trade, security relations and sharing of resources such as water.

Note:  This article gives the views of the author, and not the position of the India at LSE blog, nor of the London School of Economics. Please read our comments policy before posting. 

About the Author

RuthKattumuriRuth Kattumuri is Co-Director of the India Observatory and Asia Research Centre

Dr Kattumuri is a regular contributor to the India at LSE blog. You can view her previous posts here.

Note:  This article gives the views of the author, and not the position of the India at LSE blog, nor of the London School of Economics. Please read our comments policy before posting. 

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