India started liberalizing economy after 1991, in a meaningful way, the results of the reforms were evident by turn of the century when India joined global nations in the economic boom from 2003 onwards. India witnessed a phenomenal growth for the next few years till the globe was hit by unprecedented financial crises but India overcame the impact much faster & started to move on the journey of growth however the growth has been averaging at about 7.5% till 2014 after which it has further moderated to about 6.5%. There are questions around the validity of the GDP no. but let us not go to that debate. India is projected to become a US 5 trillion economy over the next 5-6 years from current size of 2.5 trillion. Current size & the projected size is by no means a small size & India may emerge as the 3rd or 4th largest economy in the world.
But despite the last two decades of growth & expected size: The two critical issues ailing & likely to ail India are
1. The basic quality of life of an “average Indian”
2. Generation of adequate employment opportunities
Let’s look first, at first issue to analyse the quality of life.
Shockingly the quality of life in the last 20 years hasn’t improved proportionate to the economic growth in the country.
Life in key metropolis of Delhi & Mumbai
Delhi has seen explosive growth in population, although relative infrastructure has also improved but it’s far less than what the city needs.The population of Delhi today is estimated at about 20 million & is close to 300 million in the NCR region. The city is collapsing under the weight of people & vehicular traffic. Traffic & traffic jams is silently killing Delhiites, it creates mental & physical stress & has disastrous consequences on the health of people. Noise & environment pollution due to traffic jams causes an exalted mental state & gradually results in volatile behavior & conduct. This is the reason we have seen a lot of rod rages. Besides the rate of accidents is increasing & the safety of people is at the mercy of god. I have lived in Delhi for 29 years & I am seeing a constant deterioration of road & traffic conditions in Delhi.
Pollution is another area which is a deadly killer & its amazing how people of this state have become accustomed to extremely poor air quality knowing well it’s going to reflect in health hazards of young people over a period of time in the form of deadly disease. Another problem plaguing Delhi is the quality of water besides shortage, which may become unmanageable over a period of time. Water quality with contaminated impurities is another health hazard for Delhiites.
Take another city of Mumbai, a city of entertainment & financial hub of India & a prominent city in world for its twin habitations. I have been going to Mumbai for the last 30 years, apart from a visible sea link which took about 10 years to complete besides certain apartment blocks inhabited by rich & famous of Mumbai which has sent the price of theses residential blocks sky soaring, Mumbai has seen no marked development. Compare the city with other financial capitals like Shanghai, London, New York, we can only put our heads Down with sham. Mumbai has become notorious for its repetitive crises during monsoons where the city turns a floating river claiming human lives & a pathetic mess. Mumbai is habited by chawls & jhuggis & people there are living a pathetic living conditions but remain undisturbed due to political dividends they serve. Commuting is another endless havoc the city’s population faces. Overall the Mumbai life quality has deteriorated in the last 30 years.
Take Bangalore, the cyber city of India, it’s a commuters nightmare. The city has turned into a parking lot. Pollution levels are equally alarming. The City is home to top tech Companies with a sizeable population of expats; yet the living conditions are from satisfactory.
City after City, we have repetitive and multitude of problems. The interiors of the country are rolling with the dust pollution, polluted water and top of it transportation continues to be nightmare for the population. Basic quality improvements need good quality network of roads, control on pollution, No or minimal traffic jams, clean drinking & adequate water, stable law & order, protection against thefts, burglary, control over crime rate & a time bound judicial resolution mechanism. We are far away from any of the benchmarks. Government undoubtedly is adding roads connecting cities and towns but the interior of towns are in a dilapidated condition. Lack of basic qualities in villages and towns will see migration of youth to better places, thus turning them into dense of old and aged people. This has serious implication on social demographic of the country in long run. Besides, better cities and metropolises will crumble under the weight of excess population non commensurate to the available infrastructure and facilities. We are already seeing adverse impact of migration on infrastructure and quality in the major cities.
Country growth has to be aligned to improved quality of life .if the economic growth doesn’t sort out basic necessities of its citizens, it can never create a healthy & peaceful society. Construction of highways & road network across country is good but the reconstruction of lanes & sub lanes in town & villages is more important for day-to-day ease of living.
There’s a serious flaw in our planning system. Our planners have failed to appreciate the need of infrastructure needed to cater to growth in population & relative expectation of people. Shockingly a simple expressway from Delhi to Gurgaon collapsed in ten years with burgeoning traffic. Successive Government in India have lived through their terms concentrating on issues relevant during their tenure & relative to immediate expectation of people. Their vision has so far no captured the long-term needs of the country, which could envision a plan for next 20-30 years.
The rate at which the quality of life for people of India is getting compromised, I wonder India will have to face a real challenge to amend them. Political class in this country need to become far more mature, leave aside political differences & ideology to dream for a India which serves the basic & fundamental needs of its people.
Generation of adequate employment opportunities “A Burning Need”
It is imperative that the economic growth propels literacy and education. The government in its part have encouraged education in rural and backward regions of the country which has increased the overall level of literacy in the country, further the electronic media coverage and its reach into deeper parts of the country with multiple channels of entertainment and communication has brought people closer and inspires collaborative prosperity in society, stimulating desire for education.
Hence, the above factors led to a significant increase in the inclination and willingness of the people to put their younger generations in the schools and colleges.
The increase of education implies the increase in the requirements of jobs relative to different levels of qualifications and skills.
Post 2000 massive capital investment by private sector across the country in the back of economic growth created jobs allover the country including in the interior parts where new factories and industries were setup. The demand and supply of jobs and job aspirants remained fairly balanced even tilted towards more jobs relative to availability of less qualified and skilled workforce. Both salaries and wages rose at a unexpected rate over the next 10 years starting from 2001-2002 onwards, in fact India witnessed one of the biggest salary hikes during this period. May I confess people of my generation were and may remain biggest beneficiary of this boom in jobs and compensation.
Post 2011-12 as NPA’s in the banking system started rising, the credit off take and consequent capital investment started falling sharply by the private sector. Besides, the procurement of the land continues to be a major bottleneck for increased capital investment particularly by private sector. The massive reductions in capital investment by the private sector have eroded the generation of new jobs in the interiors & hinterland of country. The only silver lining in the last few years has been massive FDI inflows in ecommerce and startups, ensured the creation of fresh jobs in the sector. Job creation by e-commerce and start ups are concentrated to metropolis and key cities of the Country, while as capital investment projects are spread across the country and stimulates / Job creation in all geographical locations.
Capital investment in terms of major projects is essentially promoted by Government but increase in capital investment by Government is constrained by resources to maintain the discipline of fiscal deficit to GDP. The output of qualified graduates, post-graduates and skilled work force is increasing year after year but the country is seriously deficit in creating the jobs, which has already resulted in massive unemployment across the country.
Consequently if the rate of unemployment continues to grow at the current pace, it is likely to cross unsustainable levels in the next few years and may even create unrest and disturbances in the country. In order to accelerate employment generation the following steps are required on urgent basis. Further rapid technological developments, and its implementation is resulting in significant rationalization of jobs and it is likely to get penetrated in future and erodes jobs.
1. The central government and state government in a collaborative manner will have to streamline and rationalize land acquisition process to make it easy and a time bound process for the acquisition of land for industrial purposes.
2. A time bound process to give environmental clearance to new projects.
3. Create a mechanism of simultaneous clearances other than 1 and 2 above simultaneous to project implementation.
4. Provide massive tax breaks for encouraging capital investments.
5. Create mechanism of loan restructuring to make bankruptcy as the last resort to inspire credit off take from the banking system.
6. Encourage healthy, vibrant and friendly capital market to lay the thrust for equity capital raising.
7. Further case of FDI norms.
Job creation is a burning issue before the country and requires immediate policy attention at all levels before it spills into a major national crises it is already our edge.