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India's Deciding Decade. The 10 years that start tomorrow can end with India becoming a different country,where mass prosperity is taken for granted....

Written by Saubhik Chakrabarti | New Delhi |
January 1, 2010 4:09:00 am

India’s Deciding Decade. The 10 years that start tomorrow can end with India becoming a different country,where mass prosperity is taken for granted. Or it can become a country where much changes radically — but many problems persist.

The Indian Express-Indicus Analytics study on how India will look in 2020 has a remarkable finding: even if no reforms happen,India’s GDP can grow at an average annual rate of 9.6 per cent for the next 10 years.

Nine per cent growth for 10 years with no reforms — that’s how well-placed India is as 2010 begins.

But if there are no reforms,and growth is 9 per cent-plus,more than 250 million people,of a total population of 1.3 billion-plus,will still be very poor in 2020. And not even 100 million Indians will be graduates or post-graduates.

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With rapid reform,these bad numbers can change dramatically. So 2010-2020 is the deciding decade because India starts it with the most advantageous conditions it’s ever had in its post-Independence history to effect a real paradigm shift.

The Indian Express-Indicus study crunched all sorts of numbers to take a call on the future.

These are the headline good numbers by 2020.

* Even if no significant reforms happen,per capita income will grow at an average of 8% per year. Incomes will be almost double compared to now.

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* Fifty million more households in India will join the ranks of the middle class — defined by those earning between Rs 75,000 a year to Rs 10 lakh a year.

* The households-in-middle class number will jump from less than 120 million now to almost 170 million. Taking the accepted multiple of five people per household,this means that roughly 800 million Indians will be middle class out of an end-of-decade population of 1.3-plus billion.

* Average household expenditure will be twice the current levels in real terms; education,health and recreation will be among the fastest growing heads,share of food in people’s budget will fall significantly (although absolute levels spent on food will rise as incomes go up). Penetration of consumer durables like two-wheelers,television and air coolers will be more than 80 per cent of the population.

And here are the not-so-great findings:

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* Under policy status quo,more than 250 million people will still be very poor. Agriculture may still have to support far larger numbers of Indians than its relative share (less than 10% by 2020) in the economy will dictate.

* Less than 4 out of 10 Indians will be city dwellers by end-2019. Without power sector reforms,electricity shortage will be a drag on manufacturing. And if we project standards of living state-wise,using the purchasing power parity method (this irons out the excessive differentials that arise from simple rupee-dollar conversions) and compare them globally,we will get some very humbling results.

By end-2019,UP’s standard of living will be what Pakistan’s was in 2005. And Bihar at the end of the decade will offer a standard of living comparable to what prevailed in Djibouti in 2005. MP in 2020? Like Republic of Congo in 2005.

More bad news: The number of Indians not literate will fall by 10 million in 10 years,but that will still leave nearly 200 million non-literate citizens.

Equally bad news,the number of Indians holding graduate and higher degrees will increase from a low 45 million or so to a still-low 73 million or so. Those with medical degrees/diplomas will go up from a shockingly low 1.3 million now to a still shockingly low 2.1 million in 10 years.

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The lessons are clear: One,Congress-led UPA can easily make the next 10 years 10 per cent-plus GDP growth years if it restarts reforms now. Ten per cent-plus growth over 10 years will have far bigger impact,on poverty levels,for example,than 9 per cent-plus growth. That’s the magic of compounding.

Two,agriculture will remain a socio-economic drag unless plenty more jobs are created outside farms.

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Three,education will need a massive boost. Just two million doctors and 200 million non-literates in 2020 constitute a scandal.

Four,a fast growing India can afford laggard states even less in the future than now,because better-performing states will be approaching sort-of first world living standards by then. Gujarat’s standard of living in 2020 will be like Poland’s in 2005 and Delhi’s like Portugal’s.

Can India do it?

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The essays in today’s newspaper,on politics,economy,social trends and foreign policy,in our special section — The Deciding Decade — explore some aspects of this question. How the Congress practices its politics will be the biggest influence on India.

If all or most cards are played right,how will the budget speech of 2019 read like? Can we create islands of excellence that will act as a pull factor for society at large? Can we please stop missing the foreign policy bus?

Here’s one last 2020 projection before you start reading our numbers and commentaries.

The one profession that will see a virtual stagnation in employment opportunities is that of clerks. The relative importance of the babu will sharply decline in India.

Surely that’s cause for hope?

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First published on: 01-01-2010 at 04:09:00 am

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