by admin | May 25, 2021 | Opinions
By Amit Kapoor and Chirag Yadav,
It took just over seven decades after the British left India, but recent growth trends make it clear that this year the latter will overtake its erstwhile coloniser to become the fifth-largest economy in the world.
A few months ago, World Bank data revealed that India had already muscled past the French economy in 2017; another minor coloniser of the Indian subcontinent. At this pace, it is estimated that around the centenary of Indian independence, the power balance that existed for most of the past 2000 years will be restored, where China and India would be much larger economies than that of Europe or America.
India has come a long way in its 71 years of independence. The average Indian is today seven times richer than what he was in 1947. The education and health standards, despite being severely wanting, have witnessed significant gains as well. While only 18 percent of the population was literate in 1951, the figure has now risen to account for approximately three-fourth of the country. The gross enrolment in elementary education is also reaching near universal levels, although a lot of challenges remain to be addressed in the actual learning imparted. On the health front, Indians who used to survive to an average age of 32 at the time of independence, now live up to 68 years of age. Infant mortality rate has declined from 146 in 1951 to less than 34 as of today.
But, all of this seems less of an achievement when seen in relative terms. If the Human Development Index (HDI) is taken an approximation of social indicators, India still ranks 131 out of 188 countries in the world. On the economic front, an average Indian has an annual income of $1,940, which puts India firmly in the category of “lower-middle income” economies by the World Bank. By comparison, China, which was at the same level of per capita income as India from its independence till 1980, has achieved “middle income” country status with a per capita income of $8,827.
At best, India could be where China is today in the next decade or so. And only if it continues growing at that pace can India become larger than Europe and America by the middle of the century. It is the hope of such progress that excites the world about India. But this prospect presupposes a kind of sustained growth that no country has ever managed, with a unique exception of China. Brazil underwent a brief high-growth phase of around 8 percent annually from the late 1960s to early 1970s. Similarly, Thailand became the world’s fastest-growing economy for the decade beginning from 1985 before it was interrupted by the Asian financial crisis. Only China managed to sustain such rates for much longer than a decade, but that is a model which cannot, and probably should not, be replicated.
Yet if India manages to achieve the feat by the centenary of its independence with an estimated population of 1.7 billion, it will bring more people into prosperity than any other country in the history of the world. It will also be the first democracy in the world to do so rather than turning into one while it grew prosperous, which was the case with America and Britain. This is exactly where the Indian economy and its growth differs from the rest of the world and why its achievements are still wonderous despite their relative deficiencies.
The founders of independent India chose to adopt the path of democracy at a time when large swathes of the population were unaware of the concept. Indian leaders chose the path of universal adult franchise at a time when not even advanced Western powers had taken it up and at a scale that nobody in history had done before. As the eminent educationist, Sunil Khilnani, put it in “Idea of India”: “India became a democracy without really knowing how, why or what it meant to be one.” Yet the democratic spirit allowed the survival and progress of the country when almost everyone expected it to fall apart at some point due to its diverse mix of people and interests.
However, taking everyone’s interests into account and discussing and debating policies probably also slowed down the growth process for India. It is often argued that it might be better for economies to grow under authoritarian rule initially and slowly turn into a democracy as people become more prosperous and aware of their rights. India perhaps adopted democracy too soon. But India has led the way in making economic advances while taking the interests of its entire population into consideration. And throughout its independent history when a leader has gone awry, the democratic machine has voted him or her out of power, albeit with some lag in the mid-1970s. The Indian democracy is the miracle in its last 71 years of independence. Whether it is where we stand today or where we are headed in the future, the wheel of democracy plays a guiding role. It might take longer to get there but that is probably the price of its resilience.
(Amit Kapoor is chair, Institute for Competitiveness and Chirag Yadav is senior researcher, Institute for Competitiveness. Their book, Age of Awakening, will be published later this year. The views expressed are personal)
—IANS
by admin | May 25, 2021 | Muslim World
Naypyidaw : The World Bank has offered Myanmar $100 million in aid for development projects in the conflict-torn state of Rakhine, hit by violence in 2017 that led to the exodus of more than 700,000 Rohingyas, a Muslim minority community, to neighbouring Bangladesh.
The offer came during a three-day visit by the World Bank Vice President for East Asia and Pacific, Victoria Kwakwa, to Myanmar, according to a statement released after the conclusion of her visit.
The World Bank “supports, in collaboration with the UN and other partners, to put in place the conditions for safe, voluntary and dignified return of refugees,” read the statement.
The aid would be used in projects in Rakhine with a focus on job creation, micro and small-enterprise development and to ensure access to essential services for all communities, including repatriated refugees, Efe news reported.
During her meeting with Myanmar State Counsellor and Nobel Peace Prize laureate Aung San Suu Kyi, Kwakwa discussed the importance of inclusive and sustainable development for all communities in Myanmar.
The UN rapporteur for human rights in Myanmar, Yanghee Lee, had warned two days ago in Bangladesh that the return of the Rohingya refugees — whom Myanmar considers to be illegal immigrants from Bangladesh — would be delayed as the situation in Myanmar was not yet favourable for their repatriation.
On November 17, Myanmar and Bangladesh had signed an agreement for the repatriation of Rohingya refugees living in the Bangladeshi refugee camps, which was scheduled in January.
The UN also signed an agreement with Myanmar in June to pave the way to recognize rights of the Rohingya community.
—IANS
by admin | May 25, 2021 | Banking, Economy, Markets, News
By Arul Louis,
United Nations : India is projected to regain its position as the world’s fastest growing major economy advancing 7.3 per cent this fiscal year and 7.5 per cent in the next two “as factors holding back growth in India fade”, according to the World Bank forecasts.
The growth projections reflect “robust private consumption and strengthening investment,” the bank’s Global Economics Prospects report released on Tuesday said.
“India’s GDP growth bottomed out in the middle of 2017 after slowing for five consecutive quarters, and has since improved significantly, with momentum carrying over into 2018 on the back of a recovery in investment,” the report said.
India has overcome the temporary disruptions caused by the implementation of the Goods and Services Tax (GST) by mid-2017, and manufacturing output and industrial production have continued to firm, it added.
Per capita growth rates “are strong” and are expected to help bring down poverty in coming years, it said.
The World Bank forecasts are slightly lower than two other projections by international bodies published in April and May.
In May the UN projected a growth rate of 7.5 per cent for 2018 and 7.6 per cent for 2019, while in April the International Monetary Fund forecast 7.4 per cent for 2018 and 7.8 per cent for 2019.
The bank said that in India there has been a further deterioration in trade and current account balances because of accelerating import grown amid strengthening domestic demand and higher energy prices.
The global economic picture painted by the bank is not as rosy as it is for India.
“After reaching 3.1 per cent in both 2017 and 2018, global growth is expected to moderate over the next two years as global slack dissipates, major central banks gradually remove policy accommodation, and the recovery in commodity exporters matures,” the report said.
It expected the global growth rate to go down to three per cent in 2019 and 2.9 in 2020.
(Arul Louis can be reached at arul.l@ians.in)
—IANS
by admin | May 25, 2021 | Muslim World
Kabul : The World Bank provided a grant of $691 million to Afghanistan to support its efforts in reviving economy and improving access to quality healthcare, the Afghan Finance Ministry said on Wednesday.
The new financing will help modernize state-owned banks, expand regional telecommunication connectivity, electronic-government services and create enabling environment for private sector investment, Xinhua news agency reported.
“Improving the quality of health services, strengthening the banking infrastructure and digitising government systems will enhance our ability to deliver better and quality services to our people,” said Finance Minister Eklil Hakimi.
“This contribution demonstrates the continued commitment and support of international community helping the government of Afghanistan implement priority reforms for sustainable development,” he said.
Afghanistan is implementing an ambitious reform programme in a context of strong budget pressures imposed by low domestic revenue, massive security spending and enormous development needs, said Shubham Chaudhuri, World Bank country Director for Afghanistan.
“In this challenging environment, we remain committed to helping the government of Afghanistan in further improving the service delivery to the Afghan people,” he said.
—IANS
by admin | May 25, 2021 | Banking, Economy, Finance, Markets, News
New Delhi : India would grow at 7.3 per cent in 2018-19, the World Bank said on Wednesday forecasting that the economy would revert to its trend growth rate of 7.5 per cent by 2019-20 as it bottoms out from the impact of the Goods and Services Tax (GST) and demonetisation.
In the current year, the economy is expected to clock a growth rate of 6.7 per cent, said the World Bank’s India Development Update report, which takes stock of the Indian economy.
It said while India’s GDP growth saw a temporary dip in the last two quarters of 2016-17 and the first quarter of 2017-18 due to demonetization and disruptions surrounding the initial implementation of GST, but economic activity had begun to stabilize since August last year.
“While services will continue to remain the main driver of economic growth, industrial activity is poised to grow, with manufacturing expected to accelerate following the implementation of the GST, and agriculture will likely grow at its long-term average growth rate,” it said.
It added that reaching growth rates exceeding 8 per cent will require continued reform aimed at resolving issues related to credit and investment, and enhancing the competitiveness of India’s exporting sector.
“Maintaining hard-won macroeconomic stability, providing a definite and durable solution to the cleaning up of banks’ balance sheets, realising GST’s growth and fiscal dividend, and regaining momentum on the unfinished structural reform agenda will be key for realising these rates of growth,” it added.
“Accelerating the growth rate will also require continued integration into the global economy.”
According to the World Bank, India’s growth in recent years has been supported by “prudent macroeconomic policy” including a new inflation targeting framework, energy subsidy reforms, fiscal consolidation, higher quality of public expenditure and a stable balance of payment situation.
“In addition, recent policy reforms have helped India improve the business environment, ease inflows of foreign direct investment (FDI) and improve credit behaviour,” it added.
World Bank’s India Country Director Junaid Ahmad said India’s long-term growth has become more steady, stable, diversified and resilient.
“In the long-run, for higher growth to be sustainable and inclusive, India needs to use land and water, which are increasingly becoming scarce resources, more productively, make growth more inclusive, and strengthen its public sector to meet the challenges of a fast growing, globalizing and increasingly middle-class economy,” he added.
Poonam Gupta, the lead economist and the main author of the report, said that durable revival in private investments and exports would be crucial for India achieving a sustained high growth of 8 percent and above.
“This will require continued impetus for structural reforms. Resorting to countercyclical policies will not help spur sustained growth and India should not compromise its hard-earned fiscal discipline in order to accelerate growth,” she added.
The report recommended reforms in the fields of private investments, bank credit and exports.
—IANS