Rishihood University Foundation Program PDF

Rishihood University Foundation Program Understanding India Foundation Team Understanding India Week 15. Day 1.  Today’s Vocab ❖ Structural- (in this lecture) refers to aspects of an economy that are related to its underlying framework, institutions, and long-term characteristics ❖ Snippet...

Rishihood University Foundation Program Understanding India Foundation Team Understanding India Week 15. Day 1.  Today’s Vocab ❖ Structural- (in this lecture) refers to aspects of an economy that are related to its underlying framework, institutions, and long-term characteristics ❖ Snippet- a small piece or fragment of information or content ❖ Soviet- primarily related to the political and historical framework of the former Soviet Union ❖ Embodiment- tangible or visible representation of an idea, quality, feeling, or concept ❖ Entail- involve or require something as a necessary consequence or part of a process, action, or situation A quick poll. In which of the following categories, according to you, India can be placed? a: Low income. b: Lower middle income c: Upper middle income d: High income e: Can’t say/No response As per the World Bank, India is at present a lower middle income country. Indian economy since 1947: A brief history How would you formally define an economy? A key term here is the word “scarce”. Because resources are scarce, we can not produce or consume all the goods and services that we need and have to make careful decisions on how these scarce resources are to be allocated. It is the scarcity of resources that underpins the study of the economy. What was the state of Indian economy at time of independence? 1. An abysmal rate of growth of per capita income. 2. Extreme poverty with many Indians living on the verge of starvation. All these are characteristics of 3. Low levels of standard of living. an underdeveloped 4. Little to no industrial development. economy. 5. High level of dependence of the population on semi- feudal agricultural sector which had low levels of productivity. India’s development trajectory since independence: Some positive stories India’s development trajectory since independence: Some positive stories Along with the reduction in poverty, there has been a concomitant increase in household spending and possession of consumer goods. That said, there is no room for complacency as yet, because still a huge number of people 182 million remain in poverty. India’s development trajectory since independence: Some positive stories India’s development trajectory since independence: Some positive stories Yet low weight births, stunting, underweight and anaemia among children remain a cause of concern. There are significant inter- state variations in this regard as well. India’s development trajectory since independence: Some positive stories An unfortunate reality of Indian life was open defecation even after 50 years of independence. Census 2011 recorded that slightly less than half the population (47%) had “access to latrine within (household) premises”. Swachh Bharat Mission launched in 2014 aimed at providing access to toilet to all households at an accelerated pace. Access to toilet facilities is thought to have had a major impact in terms of reduction in Infant Mortality Rate (see next slide). However, future challenges relate to effective and equitable implementation of SBM, sustained and long- term adoption of toilet usage and other hygiene- related practices. India’s development trajectory since independence: Some positive stories Source: Chakrabarti, S., Gune, S., Bruckner, T. A., Strominger, J., & Singh, P. (2024). Toilet construction under the Swachh Bharat Mission and infant mortality in India. Scientific Reports, 14(1). https://doi.org/10.1038/s4159 8-024-71268-8 India’s GDP growth trajectory from 1952- 2019 India’s attempt at socialist pattern of development: 1947- 1991. In the development model envisaged by Nehru, the state had a dominant role as an “all- pervasive entrepreneur and financier of private business”. The industrial policy of 1956 set the objective of the establishment of a socialist pattern of economy as the national objective. ❖ “License Raj” referred to a system where in the private sector was kept on a “tight leash” through a system of licences. “Import substitution” was another policy hallmark during this period. What could be the consequences of “license raj”? License Raj and the “Hindu” rate of growth The rather derogatory term “Hindu” rate of growth was coined by the economist Raj Krishna in 1978 to describe the low rates of growth of the economy between 1960s and 1980s. The economic rate of growth averaged around 4%. A related point was that India was performing much worse that her peers in eastern and South- eastern Asia. They were all growing at a much higher rate than India. The 1991 economic crisis and dismantling of the license raj One of the landmark events in India’s What is a BoP crisis? economic history was the 1991 economic crisis which brought down the pillars of Simply put, balance of socialist India. payment is the difference The immediate trigger of the 1991 between income from exports of economic crisis was a severe balance of goods and services (to all the payment crisis. But it was also the countries) and income from of outcome of slow economic growth in the goods and services (from other previous decades. countries). The response to the crisis was not only limited to dealing with the BoP crisis but BoP crisis then arises when a also address the issue of slow growth, country is unable to pay for its which meant initiating economic imports and service its debts. reforms including the dismantling of license raj. The 1991 economic crisis and dismantling of the license raj More on the “Hindu” rate of growth and subsequent reforms Fast forward to key reforms undertaken in recent years Dismantling of the Planning Commission - One of the first steps the Modi government took soon after assuming office in May 2014 was to replace the Planning commission with NITI Aayog. - Planning Commission formulated the five year plans. - NITI Aayog is the government’s think tank. It formulates medium- and long-term strategies and breaks them into year-wise plans after consultation with the states. Pradhan Mantri Jan Dhan Yojana (PMJDY) and the JAM trinity - PMJDY is the largest program of financial inclusion through which the marginalized sections have been given access to banking services. - The Jan- Dhan Aadhar Mobile trinity has allowed the government to directly transfer subsidies to the bank accounts of the beneficiaries; thereby, reducing leakages. Fast forward to key reforms undertaken in recent years GST reforms - Implemented as part of the efforts to improve “ease of doing business” and a “one nation, one tax” regime. Process - Implemented in July 2017. - Despite teething problems and issues of compliance, vs. Structural reforms India is among the few countries to have an indirect tax law that unifies central and state taxes. Sanjeev Sanyal’s YouTube Make in India talk here: - Launched with the objective to transform India into a https://www.youtube.com/w global hub for design and manufacturing. atch?v=VXFDXD581C8&t=4s - Major initiatives taken under Make in India initiative include Production- linked incentive/ PM GatiShakti/ Play from 2:40 to 14:08 Startup India, among others. - Several programs have been initiated under Startup India to build a robust startup ecosystem, support entrepreneurs and transform India to a country of job creators from a country of job seekers. Vision ahead: Goal of a “Viksit Bharat” by 2047 Pronouncement made by PM Modi on August 15, 2022. This is the pledge that India would attain the status of a developed country by 2047. Sanjeev Sanyal’s YouTube There is no standard definition of a developed talk here: country; but moving from a low middle income https://www.youtube.com/w to a high income country according to WB atch?v=3Lgf2WHstBY&list=P standards would require India to raise per capita LyTNXi9t-mAuKmFMVKg5C- income levels from $2,434 last year to $13,845, V38Ce4NAEAA&index=2 based on 2023 prices. Play from 2:58 to 10:18 This in turn calls for a 23 USD trillion economy- an increase in GDP by 6 folds- and a growth rate of at least 8% for the next 25 years. What are the focus areas for a trillion dollar economy? It is evident that the path to a trillion dollar economy requires a multi- pronged approach. The Union Budget of 2024- 25 outlined the following nine areas of focus: 1. Productivity and Resilience in Agriculture 2. Employment & Skilling 3. Inclusive Human Resource Development 4. Manufacturing & Services 5. Urban Development 6. Energy Security 7. Infrastructure 8. Innovation, Research & Development 9. Next generation reforms In each of these focus areas, what should be the specific areas of concern to policymakers? Is a trillion dollar economy only about the economy? https://youtube.com/shorts/GStEkcKD-Ts?si=5yrlNSEdCVBs6jT5 References Kundu, T. & Bhattacharya, P. (2018, August 9). One in three Indians own a refrigerator, a fifth own an AC or cooler: NFHS data. Mint. Link. Somvanshi, K. (2016, May 31). World Bank to change classification of countries; India will now be called ‘lower-middle income.’ The Economic Times. Link. Yadavar, S. (2019, September 22). With 32% of its children underweight, India is likely to miss its 2022 nutrition target. Scroll.in. Link.