Editorial: A picture of contrast

On one hand, there are optimistic projections of economic growth while on the other, there is an undeniable fact of shrinking job opportunities

India is a country of fascinating contradictions where, it is often said, several centuries co-exist. Economy is one area which best exemplifies this inherent contrast. Glitzy prosperity and abject poverty can be found in the same frame. Billionaires grow in numbers and so do the poor. On one hand, there are optimistic projections of economic growth and robust fundamentals despite the volatility of the global economy while on the other, there is an undeniable fact of shrinking job opportunities for the struggling middle and lower-middle class and widening disparities. The latest report of the Reserve Bank of India pegs the economy to grow at around 7.5% in the first quarter of the current financial year, up from 7.1% projection made earlier. For the full year, a growth of 7% would imply that in recent years, the country is growing at around twice the global average. In February, the National Statistical Office revised the growth estimate upwards to 7.6% in 2023-24. While there is a growing sense among a section of economists that India is on the cusp of a long-awaited economic take-off, many don’t share this optimism. Growing unemployment remains a major area of concern. The share of educated youths among all unemployed people increased from 54.2% in 2000 to 65.7% in 2022 according to the International Labour Organization. There has also been no significant growth in real wages in India since 2014. The country risks squandering its ‘demographic dividend’ — the economic growth potential from a big working-age population.

The unemployment problem is a symptom of larger and deeper issues — employability and job creation, and, therefore, also education, ease of doing business and infrastructure. The share of manufacturing as a percentage of the GDP has remained stagnant in the last decade despite a few incentive policies unveiled by the government. A recent nationwide survey found that unemployment is the most important issue for voters in the general elections, followed by price rise. Regardless of one’s voting preference, there is unanimity that two of the biggest policy challenges facing Indians are joblessness and higher prices. Unfortunately, the campaign themes of major political parties focused more on divisive issues but not on the pressing public issues. A large section of the country’s population is still struggling financially. There has been a marginal turnaround when it comes to investment in the economy, but the question is if this can be sustained without a more equitable growth in consumption. Micro, small and medium enterprises, the major job creators, have been struggling for a while now. Despite all the capital expenditure by the central government, overall fixed capital formation has been below earlier levels. Foreign direct investment has shrunk sharply for two years in a row. Overall, private investment has been noticeably lagging. On per capita income, India’s rank is a dismal 125 in the world.

---