India has emerged as the fastest-growing major economy in the world. IMF forecasts the Indian economy to grow by 6.9% in 2023-24¹. It overcomes the UK to be the fifth largest economy after it recovered from repeated waves of covid-19 pandemic and projected to be one of the top three in the next ten to fifteen years². The Country’s nominal GDP has jumped more than 700% since 1995³. With more than fifty thousand startups in 2018, India had the third largest startup ecosystem in the world⁴.
GDP, by definition, certainly measure the growth. But it is biased to measure growth [only] in terms of GDP when the citizens are doomed when it comes to their welfare (healthcare, education, and satisfaction). It is imperative to take account of other factors as well, pondering welfare, out of which, is the most crucial. It is vital to go beyond the traditional measures of growth and emphasis on the social issues and welfare of the citizens. Citizens care more about the quality of life, education, and healthcare and protection of their rights.
In India, the richest 1% own 53% of the country’s wealth, according to the latest data from Credit Suisse. The richest 5% own 68.6%, while the top 10% have 76.3%. At the other end of the pyramid, the poorer half jostles for a mere 4.1% of national wealth⁵. With that said, India is the second most unequal country globally⁶. With the population of 1.4 billion, India’s unemployment rate was 8.30% as on Dec 2022⁷. Irrespective of successive governments and apparent economic progress, India’s rank in happiness index has been consistently going down. It ranks 139 in happiness index of World Happiness Report⁸. Citizens care more about the quality of life, education, and healthcare and protection of their rights.
Though, India has splendidly combat the covid pandemic shocks, the government has still numerous to achieve in the field of healthcare. The average life expectancy has seen a consistent increase since 1920s and was 70.15 in 2020⁹. However, it is still lower than the global average. According to the Global Burden of Disease Study (GBD) published in the medical journal The Lancet, India has finished a dismal 154th among 195 countries on the healthcare index¹⁰. The journal lists India among the biggest underachievers in Asia in healthcare access. As per the study, it has performed poorly in tackling cases of tuberculosis, diabetes, chronic kidney diseases and rheumatic heart diseases.
Education also plays a crucial role in a country’s socio-economic development. It upturns the human capital that empowers inventions and discoveries which eventually boosts overall productivity. Several empirical studies have revealed that education is a significant source of economic growth. Education shrinks the income gap and reduces inequality. A country’s ability to adopt sophisticated technologies is aided by a well-educated labor population. The Indian higher education system presently faces multiple challenges for its growth and expansion in the direction of meeting the demands of the country¹¹. Moreover, even though the growth and expansion of higher education institutions have been shaped slowly through fiveyear plans, the progress is not enough to cater the growing need and demand of the society¹². The present gross enrolment ratio (GER) is approximately 26% in respect of students pursuing higher education in India which is quite low as compared to the develop and developing countries¹³. The major concern of present higher education in India is centred around three primary areas—lack of state-of-the-art infrastructure, deficit of funds, and inadequate human resource. In terms of availability of qualified teachers, according to MHRD there is a shortage of faculty to an extent of 25-30% in public higher education institutions. Moreover, the budgetary allocation for education in the last seven years has dropped to 9.5% of the total expenditure from 10.4%¹⁴. Notwithstanding a rapid and massive post-independence growth of higher education institutions, none of the Indian university figures in the list of top 200 world universities in Quacquarelli Symonds World University Rankings (QS-Ranking)¹⁵ or Times Higher Education World University Rankings (THE-Ranking)¹⁶. This is a matter of concern for India in terms of the quality of education being imparted in higher education institutions across the country.
The situation of Indian banks is plus or minus, the same. Bank lending rates are high in India relative to rest of the world¹⁷. Savings are poorly managed and saving rates are lower¹⁸. Those who are really in need of the loan, does not get it irrespective of how good their business idea or how desperately they need that money, but the gates are always open for the filthy rich who might not pay them back. The annual report of Reserve Bank of India showed that the banks frauds of ₹100,000 and above have more than doubled in value to ₹1.85 trillion in FY20, with the number of such cases increasing 28% in the same period¹⁹. Banks should contemplate the middle class and support them so that micro, small and medium businesses would grow as well, that will empower the Total Factor Productivity (TFP) of the country.
A country like India, which is on the cusp when it comes to fighting climate change, ranked 180th among 180 countries in the Environmental Performance Index (EPI) 2022²⁰. According to EPI, India also ranks poorly in terms of rule of law, corruption control, and government performance. Many poor countries, despite lower GDP and less powerful economy than India, enhanced themselves in the field of healthcare and environment. The quality of life means more than just consumption. There are many poor countries that are not growing particularly fast but able to reduce the under-five mortality by focusing on healthcare and welfare²¹.
When it comes to welfare of the people, we do have things to do. The economic growth will eventually stop, as the rich economies, but India can attempt to do things that can make the quality of life better for the citizens. India, with its already available resources, can improve education, health and functioning of banks and build better infrastructure with the better policies that focus more on the bottom 50% and less on the top 4%. Therefore, to truly realize the potential of economic growth in India, it is essential to redefine growth beyond traditional measures and focus on inclusive and sustainable development, which address social issues, create jobs, and ensures environmental sustainability.
Endnotes
1 World economic outlook, IMF
2 www.ibef.org/economy/indian-economy-overview 3 IMF, WEO (2019)
4 www.startupindia.gov.in
5 www.wef.org
6 New World Wealth Report (Johannesburg)
7 www.ceicdata.com
8 World Happiness Report (WHR, 2021)
9 www.statista.com
10 The Lancet: Global Burden of Disease (2019)
11 Nigam Et al., Review of the expansion of higher education in India: Cardinal concerns in the traverse, Journal of critical reviews, vol 7, Issue 2 (2020)
12 Tilak, J B G, (2004), Absence of Policy and Perspective in Higher Education: Economic & Political Weekly, Vol 39, No.21 (May 22-28, 2004), pp. 2159-2164
13 Draft National Education Policy, 2019. Retrieved from https://mhrd.gov.in/sites/upload_files/mhrd/files/Draft _NEP_2019_EN_Revised.pdf
14 Economic Survey (2022-23)
15 Maulana Azad National Fellowship. Retrieved from http://www.minorityaffairs.gov.in/schemesperformance /maulana-azad-national-fellowship-minority-students scheme
16 The QS World University Rankings, 2020. Retrieved from https://www.topuniversities.com/
17 www.tradingeconomics.com/country-list/bank-lending-rates
18 www.tradingeconomics.com/country-list/interest-rates
19 Reserve Bank of India Report (2020)
20 EPI, World Economic Forum (2022)
21 Good Economics for Hard Times (Pg 205)