A road map for building Aatmanirbhar Bharat

Aatmanirbhar Bharat is critical to ensuring that India remains sustainable as the world’s fastest-growing large economy driven by reforms to increase productivity, accelerate capital formation, and boost competitiveness.
Globally, trade has been a crucial vehicle for enhancing growth. Unfortunately, the share of exports of goods and services in India’s Gross Domestic Product (GDP) has come down from 24.5% (2011) to 18.1% (2020). (HT File Photo)
Globally, trade has been a crucial vehicle for enhancing growth. Unfortunately, the share of exports of goods and services in India’s Gross Domestic Product (GDP) has come down from 24.5% (2011) to 18.1% (2020). (HT File Photo)
Published on Feb 23, 2022 08:22 PM IST
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ByRajiv Kumar and Gaurav Sharma

As India looks to retain its position as the world’s fastest growing major economy in 2022, a road map for Aatmanirbhar Bharat (self-reliant India) is crucial to sustaining high growth over the long-term.

The Aatmanirbhar Bharat Abhiyan, as envisaged by Prime Minister Narendra Modi, is based on five pillars: The economy, infrastructure, system, demography and demand. However, Aatmanirbhar Bharat should not be mistaken for an inward-looking India. Instead it needs to be seen as an integral part of India’s core philosophy of Vasudhaiva Kutumbakam (the world is one family).

The five pillars need to be aligned with India’s strategic economic priorities for ensuring the nation’s rightful position in the post-pandemic world order.

With regards to the economy, India’s per-capita income as a percentage of average world per-capita income declined from 18.0% in 1960 to 17.7% in 2020. China’s increased from 19.6% to 96.5%. Resultantly, India’s per-capita GDP at $1,928 in 2020 remains less than a fifth of China’s ($10,435), and the world average ($10,910). So, the economy will have to get on to an accelerated growth path while ensuring sustainability and inclusion.

Globally, trade has been a crucial vehicle for enhancing growth. Unfortunately, the share of exports of goods and services in India’s Gross Domestic Product (GDP) has come down from 24.5% (2011) to 18.1% (2020). So, a concerted thrust is needed to export from high-potential sectors such as auto, apparel, electronics and pharmaceutical. Further, India’s strong comparative advantage in the services sector can be leveraged to focus on Information and Communication Technology (ICT), healthcare, and business and professional services. The target should double India’s share in global merchandise goods and services trade within the next five years. The emerging shifts in global supply chains are a huge opportunity. The renewed approach taken by India in review and negotiations of free trade agreements will help realise the desired economic gains.

With the new definition of Micro, Small and Medium Enterprises (MSMEs) — increased turnover thresholds and expanded scope (inclusion of retail and wholesale trade) — the contribution of the sector targets 50% of GDP, 60% in exports and creation of 50 million additional jobs by 2025. This needs to be focussed with a graded approach for enhancing the scale of enterprises from micro to small and small to medium and finally, medium to large companies. The framework for rapid and sustained organic growth of enterprises is now in place. This will generate employment, expand the share of the formal sector and boost exports.

Second, infrastructure is critical for sustaining India’s growth and improving competitiveness. Budget 2022-23 provided a thrust for increasing the government’s capex, which will help boost the productive capacities of the economy while creating jobs.

The National Infrastructure Pipeline is a first-of-its-kind and a whole-of-government approach with projects worth 111 lakh crore (FY20 to FY25). This will be complemented by the National Monetisation Pipeline and PM Gati Shakti (master plan for multi-modal connectivity). Their combined effect will ensure the integrated development of world-class infrastructure.

Third, the government has leveraged technology towards its objective of minimum government and maximum governance. With unprecedented digital transformation, rapid strides are being taken towards improving ease of doing business and ease of living on the foundation of technology-driven systems. This will lead to better efficiency and transparency of government initiatives and help achieve greater formalisation of the economy to drive inclusive and sustainable growth.

Fourth, India’s demographic dividend can play a major role in achieving its long-term growth potential. India’s population is among the youngest in an ageing world. In 2022, the median age is expected to be 28 years; in comparison to 37 in China and the US, 45 in Western Europe, and 49 in Japan. This provides a good window for India to maximise gains from the demographic dividend and realise high growth rates over long periods. This can be achieved with upskilling of the workforce.

Finally, India is expected to become the world’s third-largest consumer market by 2030. A McKinsey study shows that India’s consumer market could grow by $1.8 trillion over the next decade with an increasing number of high-income households, rapid digitalisation and the doubling of the consumer class (defined as spending more than $ 11 per day), increasing from 24% to nearly 55% of the population. The impetus to economic activity from this bulge in domestic demand will be maximised by ramping up domestic production capacities.

Aatmanirbhar Bharat is critical to ensuring that India remains sustainable as the world’s fastest-growing large economy driven by reforms to increase productivity, accelerate capital formation, and boost competitiveness. The goal should be to increase India’s per capita GDP to the world average in the shortest possible time. Moving in this direction, we need to be open to international trade and investments on our own terms and mutually agreeable conditions to ensure the nation’s interest is protected and desired economic gains are realised.

Rajiv Kumar is vice-chairman, NITI Aayog, and Gaurav Sharma is senior specialist, NITI Aayog

The views expressed are personal

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Sunday, May 29, 2022