"India Needs to Create More Jobs" | Firstpost Exclusive | Palki Sharma

Raised by a father whose curtailed education sparked a commitment to providing new opportunities, his journey mirrors the emergence of India's middle class following the transformative 1991 reforms. Early encounters with liberalization ignited a passion for economics, setting the stage for a career shaped by policy impact. A stark rebound in GDP per capita—from a drastic downturn during the socialist years to a full recovery—underscores the power of open competition. The revitalization of sectors such as media exemplifies how healthy rivalry enhances capabilities and drives enduring national growth.

India’s Ambitious Leap Toward a $55 Trillion Economy India plans to transform its economy from approximately $3.25 trillion in 2023 to an astonishing $55 trillion by 2047. The projection utilizes the power of compounding, envisioning consistent 8% growth combined with controlled inflation to double the economy roughly every six years. Historical examples from Japan and China illustrate how sustained, high growth over multi-decade periods can exponentially multiply national GDP. Rigorous economic analysis and past performance provide the framework for this bold yet carefully calculated ambition.

Harnessing Compounding and Currency Stability for Exponential Growth The outlook is built on achieving a nominal 13% annual increase in rupee terms, offset slightly by an expected 1% depreciation, resulting in an effective 12% growth rate in dollar terms. Applying the rule of 72, this rate suggests that India’s GDP could double every six years, leading to four doublings over the next 24 years. A shift from previous high inflation rates to 5% reduces rupee erosion and firmly supports the doubling cycle. Extensive quantitative analysis backs these assumptions by paralleling investment efficiencies and productivity gains observed in past transformative periods.

Sustaining Growth Amid Global Disruptions India achieved remarkable economic growth over the past decade despite facing a devastating pandemic, global conflicts, climate crises, and geopolitical tensions. The nation emerged as a formidable player on the international stage by building its growth strategy on a deep understanding of economic realities. Historical examples from Japan and China, which saw their GDPs multiply many times even during periods of severe external shocks, reinforce the possibility of exponential growth amid adversity.

Innovative Resilience Reaching 8% Growth The vision for India’s economic future draws a parallel with legendary sports careers, where overcoming setbacks through determination led to unparalleled success. Recognizing headwinds such as climate change, deglobalization, and shifting industrial policies, the narrative underscores that these challenges can coexist with favorable tailwinds. A focused pursuit of an 8% growth rate, supported by a comprehensive policy roadmap, transforms obstacles into opportunities for sustainable advancement.

Amid imminent conflicts in West Asia involving Israel, Iran, and Lebanon, the global instability appears less threatening for India due to its inward-focused economy. The country's economic structure is driven primarily by domestic consumption (60%), substantial investment (30%), and government spending, with foreign dependence playing a minimal role. This clear emphasis on internal policies, mirroring strategies seen in other resilient Asian economies, helps buffer India against potential external shocks.

Global Oil Price Fluctuations and Domestic Inflation Moderation India’s economy, though largely driven by domestic sources, feels the impact of global oil price shifts due to its oil dependency. The change from administered pricing to a pass-through model has decoupled crude oil price rises from direct effects on the fiscal deficit. With oil constituting only about 15% of inflation factors, even a $1 increase in crude prices has a modest effect on overall inflation, highlighting the effectiveness of strong domestic policies.

State-Level Accountability in Delivering Economic Reforms State governments are pivotal in handling reforms related to manufacturing, labor, power, and land, yet their budgets receive minimal media scrutiny compared to central policies. This lack of accountability has hindered the implementation of reforms crucial for improving quality of life and business environments. Greater public and media focus on state performance is essential to ensure that the power vested in them translates into effective economic governance.

Calculated exposure to risk is crucial for achieving higher economic returns. Embracing liberalization and global integration, India accepts managed vulnerabilities to drive GDP growth. Domestic components such as consumption and investment help cushion the effects of external shocks. Global experiences, including responses to crises, underline that thoughtful risk-taking is essential for resilient progress.

A fiercely contested US presidential race between Donald Trump and Kamala Harris offers only marginal changes to India’s economic policy. While different administrations prioritize diverse policy areas, the longstanding economic bond between the two nations remains unshaken. Shared democratic values and mutual interests continue to drive a resilient alliance, underscoring the natural partnership between the largest and the oldest democracy.

Trump's approach towards India reflects a nuanced balance where critical tariff issues are weighed against longstanding cooperation. The analysis emphasizes that despite occasional criticisms, the growing relationship ensures that any challenges are offset by mutual benefits. The perspective draws an analogy to a cricket team focusing on internal strengths rather than being swayed by external distractions, suggesting that the overall impact will remain manageable.

China's economic slowdown prompted temporary stimulus actions, yet deep-seated structural issues remain. Persistent reliance on investment over consumption and an impending decline in the working population signal long-term growth challenges. While short-term measures may provide an interim boost, they do not resolve the fundamental demographic and economic shifts that could hinder sustainable recovery.

The current leadership is focusing on deep structural economic challenges by addressing domestic wealth distribution issues and regulating major corporate influences. Their policy approach intertwines domestic reforms with the impact of international interactions, especially involving Chinese government-linked corporations. Economic stability is seen as paramount, with the emphasis on internal policy adjustments rather than venturing into international political debates.

Amid a global shift marked by China's downturn, India's manufacturing sector has registered robust growth with a 9.8% surge and notable gains in semiconductor production. The country stands positioned to replace China as a manufacturing hub, leveraging its capacity to offer comparable cost structures. Critical policy reforms—streamlined subordinate legislation, improved land access, and lower power costs—are essential to match the efficiency seen in China. Enhancements in logistics and infrastructure, such as better-performing ports and upgraded roads, further solidify India's appeal to manufacturing firms seeking alternatives.

India's democratic framework demands a unique model that balances consensus with efficiency, distinguishing it from more centralized systems. Swift permission processes, ideally within two weeks, are crucial to overcome the delays caused by bureaucratic red tape and corruption. Reforms in labor policies and a reduction in the cost of capital are essential to ease entrepreneurial challenges. Addressing these issues could transform potential into dynamic economic growth.

Industries often begin by assembling components as a necessary foundation before transitioning to fully developed manufacturing. The growth seen in India's automobile evolution—from assembling imported parts to building a complete local supply chain over decades—exemplifies this natural progression. Similar patterns in the semiconductor industry and other export sectors illustrate that mastering basic assembly is crucial while quickly advancing to value-added manufacturing is essential to capitalize on emerging opportunities.

India's trade with China has grown significantly, increasing dependency despite heightened political and defense concerns. Efforts post-Galwan to restrict Chinese influence were not fully successful, leading to recent policy shifts that open more avenues for Chinese investment and facilitate easier entry for their companies. Integrating economic decisions with geopolitical considerations is crucial, highlighting the complexity of modern trade relations and cautioning against oversimplified views on the neutrality of money.

The discussion emphasizes that economic ties with China cannot be evaluated solely on financial metrics but must incorporate geopolitical considerations. It highlights that budget shifts signal an openness to exploring alternative strategies beyond traditional economic engagement. The narrative underscores that simply focusing on economic benefits may lead to one course of action while a broader geopolitical lens could point to a different solution. Integrating these dimensions is portrayed as crucial for a comprehensive approach to international relations with China.

Nations are adjusting their industrial and trade policies to protect domestic interests amid rising global trade tensions. Europe, for example, has imposed higher tariffs on Chinese-made products despite anticipating short-term economic disruption, while still evaluating its long-term commitment. Advanced economies, including the G7, now focus on targeting finished goods with tariffs rather than raw materials, a nuanced approach that minimizes harm to domestic industries. This evolving strategy, seen in policies from countries like India, reflects a broader shift where economic and geopolitical considerations increasingly intersect.

Employment Fuels Social and Economic Inclusion India’s vast talent pool and demographic dividend can transform the nation into a global hub if effective policies generate quality, formal jobs. Secure employment lifts families and creates enduring opportunities, as seen in stories where positions in sectors like railways enabled education and progress. Building widespread job opportunities is essential to ensure that the benefits of growth ripple across generations and social strata.

Manufacturing Enhances Quality Jobs and Economic Stability A robust manufacturing sector creates high-quality jobs that offer higher wages, job security, and valuable skill development. Transitioning workers from low-paying roles to manufacturing elevates earning potential, reinforces workforce stability, and nurtures long-term skill acquisition. Domestic production also meets consumer demand, reduces import reliance, and helps maintain balanced trade, driving sustainable economic progress.

Reliable Data Underscores Robust Job Growth High-quality employment data counters negative narratives by revealing substantial non-agricultural job creation over the past decade. Independent indicators from institutions like the RBI and PLFS show improved labor force participation, reduced unemployment, and rising wages. Historical evidence confirms that technological progress has consistently transformed job roles without sparking mass unemployment.

AI Redefines Work and Unlocks Economic Opportunity Technological advancements are reshaping work by changing job functions rather than eradicating roles, with AI poised to disrupt white-collar sectors like software development. Data and historical patterns suggest that while technology alters job profiles, it does not necessarily lead to significant job loss. India's expansive digital infrastructure and multilingual landscape provide a unique opportunity to harness AI for enhanced economic integration and growth.

Challenging the Middle-Income Trap Notion Sustained high growth, such as 7-8%, disproves the claim of being stuck in a middle-income trap by demonstrating robust economic expansion. The wide-ranging definition of middle-income countries allows significant progress without leaving the bracket, rendering the label imprecise. Historical transitions confirm that nations can scale their income levels considerably even within a broadly defined income category.

Phasing Out Temporary Supports to Boost Competitiveness Economic policies that provide temporary, manufacturing-linked incentives help domestic firms bridge initial capability gaps. These subsidies, much like a nurturing hand, must be gradually withdrawn to prevent dependency and foster self-reliance. A dynamic approach to policy ensures that firms build enduring competitiveness, thus safeguarding against the pitfalls of static support.

Boosting Startup Resilience with Streamlined Policies Startups inherently face high risks, but a smoother business environment can significantly reduce these shocks. Data shows a dramatic surge in new firm creation when regulatory hurdles are minimized. Reducing cumbersome processes preserves valuable time and resources, ultimately strengthening entrepreneurial growth and stability.

Driving Competitive Edge Through Innovation and Private Investment Sustained progress in global innovation rankings reflects a growing emphasis on R&D and creative business practices. A shift toward more active private sector investment in R&D, mirroring advanced economies, is critical. Embracing corporate venture capital builds a dynamic ecosystem, ensuring that established firms regularly innovate to keep pace with emerging startups.

Internship Programs Fuel Demand-Driven Skill Growth Internship programs unlock hands-on skill development by immersing individuals in real-world work environments at top firms. They merge practical training with exposure to company cultures, ensuring that participants gain industry-specific competencies. This approach aligns learning with market needs, delivering a tailored pathway to career readiness.

Technical Institutions Transform Manufacturing Training Reforming technical institutions is pivotal to bridging the gap between theory and industrial practice. Empowering institutes through partnerships that allow firms to set curricula creates a direct link between training and current market demands. This strategy ensures that graduates emerge with skills that are immediately relevant to the manufacturing sector and overall economic growth.

Prudent Debt Usage and Tough Fiscal Measures Shield Growth Strategic debt utilization emphasizes borrowing for capital investment rather than unproductive expenditures. This disciplined approach mirrors household choices that favor asset creation over short-term indulgences. Tough fiscal measures, though politically challenging, act as essential remedies that restore economic balance and protect against long-term debt traps.