In a recent interview with CNN’s Fareed Zakaria on his program GPS, former Reserve Bank of India governor Raghuram Rajan asked a thought-provoking question: “Will Indians become rich before India grows old?” This question originates from worries about India’s economic development and demographic patterns, as well as its unemployment rates and social issues. Let us go into the important topics addressed in this conversation and consider what they represent for India’s future.
The Centre for Monitoring the Indian Economy (CMIE) reported an 8.1% unemployment rate in April 2024. Zakaria emphasized that just 37.6% of India’s working-age population is gainfully employed, giving a bleak image of the job market. This scenario raises concerns about the efficacy of present economic policies and their capacity to provide enough employment opportunities.
Despite being the G20’s fastest-growing economy, India remains one of its poorest. Rajan noted that India’s current growth rate of 6.5% is insignificant in comparison to the 10% growth rates achieved by China, Korea, and Taiwan at comparable stages of economic development. This comparison highlights India’s limitations in attaining fast and inclusive economic development.
India is now witnessing a demographic dividend since a big part of its population is young and entering the labor force. This demographic advantage has the potential to greatly improve economic development if these young individuals find work. Rajan said that nations such as China and Korea successfully used their demographic dividends to generate strong economic development.
However, the demographic dividend does not provide a lasting benefit. Rajan cautioned that India’s demographic composition would shift, with fewer individuals entering the workforce as the population ages. This transformation presents a substantial barrier to long-term economic development, emphasizing the need to develop work opportunities today.
India’s economy is presently the fifth-largest in the world, having just surpassed the United Kingdom. According to projections, India will soon overtake Japan and Germany as the world’s third-biggest economy. While this is an impressive feat, Rajan emphasized that the main question is whether this economic development would convert into broad wealth for Indians before the demographic dividend expires.
Rajan recognized the Modi government’s involvement in infrastructure development, citing substantial gains in road and railway construction. However, he also acknowledged that centralized, authoritarian rule may often inhibit the creativity and discussion required for long-term growth. This contradiction emphasizes the need for a balanced government that promotes both growth and democratic freedom.
Innovation flourishes in an atmosphere that promotes discussion and criticism. Rajan condemned the repression of university demonstrations and the media’s independence, claiming that such acts limit the country’s capacity to innovate and adapt. To sustain its economic trajectory, India must retain a free and open atmosphere in which new ideas may bloom.
Rajan expressed great worry about the government’s failure to acknowledge the unemployment situation. He pointed out that the February 2024 White Paper on the Indian Economy had no mention of unemployment, a conspicuous omission considering the country’s high unemployment rate. Addressing this problem is critical to ensure that economic prosperity benefits all members of society.
Rajan raised concern over the treatment of minorities in India, claiming that no nation has succeeded in treating a major proportion of its people as second-class citizens. He stressed that growth should be inclusive, giving all people a feeling of accomplishment and equality. The contemporary mood of nationalism, and its influence on social equality, is a serious worry that must be addressed to preserve social cohesion.
The Indian Constitution, with its focus on equality, sprang from the frailties of division. Rajan emphasized the necessity of safeguarding constitutional ideals, particularly equality, which is vital to India’s democracy. Leaders often express their support for the Constitution, but actions must coincide with these stated principles to guarantee meaningful advancement.
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Rajan listed many urgent concerns for India’s economic agenda, including providing adequate employment, upskilling people to make them marketable, and increasing women’s involvement in the workforce. Addressing these concerns is critical for maintaining economic progress and ensuring that the benefits of growth are spread fairly.
India’s higher education system likewise needs considerable upgrading. Rajan criticized the fact that no Indian institution is now listed in the world’s top 100. However, he recognized promise in the Indian diaspora, arguing that bringing top-tier academics back to India may raise the quality of Indian colleges to compete with Oxford and Harvard.
Despite the hurdles, Rajan voiced hope about India’s future, citing the country’s ability to surprise pleasantly. He believes in the Indian electorate’s maturity and capacity to steer the nation toward a brighter future via educated decisions and democratic procedures.
India is at a crossroads, with enormous opportunities for growth and development, but also tremendous obstacles to face. The issue of whether Indians will become wealthy before India ages are dependent on the country’s capacity to handle unemployment, develop a free and inventive environment, defend constitutional ideals, and capitalize on its youthful population. With the appropriate policies and a dedication to inclusive development, India can guarantee that its economic success leads to wealth for all of its people.