India wants to be a $10 trillion economy by 2032. Another way of putting that: In 16 years, it aims to be where China is today.
That’s a remarkable target and could be achievable, especially since India’s economy grew by 4.6 times in the last 16 years. From $494 billion in 2001, India is expected to become a $2.2 trillion economy by the end of this year. China’s economy is currently pegged at over $10 trillion, while the US is worth over $17 trillion, according to the World Bank.
Last year, India’s prime minister, Narendra Modi went even further, announcing that his dream was to make India a $20 trillion economy, without giving a definite time frame.
Now, NITI Aayog—the policy think tank that replaced the socialist era planning commission in India—has laid out a roadmap to help Asia’s third largest economy cross the $10 trillion mark by 2032. In a presentation made to Modi last week, the policy agency said that India can become a $10 trillion economy by 2032 if it increases its growth rate from 7% to 10% annually, starting this year.
“If we achieve a $10 trillion economy target by 2032 by a 10% growth rate year-on-year, the compounding effect would be such that ours could be a $20-trillion economy in the next 6-7 years after 2032,” Amitabh Kant, the CEO of NITI Aayog said last week. “The 10% year-on-year growth is the biggest challenge.”
The agency said such a growth rate could eradicate poverty and generate over 175 million new jobs. The flip side: If it doesn’t improve its growth rate from 7%, India will still have about 6% of its population living below poverty line in 2032. Currently, about 12.9% of the Indian population, or 172 million people, live below the poverty line. The current rate of growth would reduce poverty, but since India’s population is expected to grow to over 1.4 billion by 2030, it would not eradicate it.
The policy agency listed seven key areas where the Indian government needs to work hard to ensure that 10% growth. Here they are:
The Narendra Modi government has concentrated heavily on improving the bottlenecks in the infrastructure sector since assuming power in 2014.
In particular, the roads sector has seen a downturn since 2012. Now it is in recovery mode, and the government has already promised investments of Rs. 2 lakh crore ($30 billion) in fiscal year 2017. NITI Aayog predicted that the addition of 10,000 kilometers (6,200 miles) of road projects this year will go a long way to achieve the $10 trillion target.
Other key recommendations include improving the airports in the country’s Tier II and Tier III cities and developing 300 Rurban clusters. Rurban clusters are essentially smart villages that are similar to smart cities and are being developed as centers of economic activity in rural India.
The new government had also laid out a path to improve skill development courses across the country to address unemployment. India has an unemployment rate of about 10%, and the policy think tank has now proposed that the linking of the country’s employment exchanges with a national career service will help in ensuring employment. The national career service provides a nationwide online platform for jobseekers and employers.
The policy think tank’s roadmap also suggests that medical tourism could go a long way to boost economic growth in the country. India’s medical tourism industry is currently pegged at $3 billion, and could be worth over $8 billion by 2020, according to a report by the industry body CII and the consultancy firm Grant Thornton.
Another key to improving healthcare is providing LPG gas connections to women who live below the poverty line. More than half a million women die in India annually from using smoke-generating fuels for cooking, according to WHO estimates. The agency also suggested expanding schemes to offer medicines at subsidized rates.
NITI Aayog has also highlighted the lack of quality of education in India as a concern, especially with studies suggesting that almost half of the students in grade 5 are reading at the level of grade 2 texts. The agency also wants the government to prioritize funding for villages where the scheduled caste community make up half or more of the students, in addition to setting up a higher education financing agency, to improve education in India.
India has consistently fared poorly in the Doing Business Index—which ranks countries on the ease of starting and running businesses—and the Modi administration had made it a priority to reduce bottlenecks. NITI Aayog suggested the removal of some 1,053 archaic laws.
The agency also proposed setting up one contact point for approving projects. India has historically been notorious for its problems with red tape, as businesses are forced to visit numerous departments to get clearances for projects.
Despite a big push from the government, many companies are still skeptical of investing in India, partly because of unclear tax regulations in the country.
In a country where thousands of farmers commit suicide annually due to crop loss and financial burden, the government’s road map to the $10 trillion economy proposes the use of advanced technology, setting up an irrigation fund, and the use of high-yield seeds. In addition, to address concerns of food waste, the government is planning to set up four mega food parks and 29 cold chain projects to ensure preservation of agricultural products.
Following a tussle with Monsanto over the seed giant’s monopoly and high-pricing of genetically engineered crops, the government is planning to deregulate genetically engineered insect-resistant pulses to increase production and cover loss.
One of the first initiatives the Narendra Modi government undertook was the Swachh Bharat mission. The mission’s idea was to improve cleanliness in India by building toilets, to put an end to open defecation and the health and safety risks associated with it.
Niti Aayog has suggested that the country’s public sector companies adopt railway stations, schools, bus stands, hospitals, religious, heritage sites for cleanliness to ensure efficiency. It has also proposed additional waste management facilities in over 50,000 villages in India.
For decades, India has had trouble with electricity production.
Just last year, the country faced a 3.6% deficit in peak-hour energy supply. Such shortfalls often affect manufacturing and industrial productivity. Lately the government has created programs to provide energy-efficient products such as LED lamps, fans, and pumps.
Now, NITI Aayog has suggested that the country should also reduce its massive fuel import and subsidy bills by improving the fuel efficiency. The roadmap lists tougher emission norms for vehicles, incentivizing the construction of energy efficient buildings, and setting up 15 new coal washers to reduce ash content. Industrial coal ash, produced in coal-based power plants, is one of the largest causes of air and water pollution in India.