Report predicts India’s emergence as economic superpower

Even as India’s growth has been predicted, several factors need to be fulfilled for its realisation

A Deloitte report projects India’s growing strength in Asia, with its young population as a major factor for the same, yet several challenges remain for the country.

As China and several other Asian countries such as Taiwan and Hong Kong see a rapidly ageing population, India’s demographic structure is set to come to its advantage. As per a report by Deloitte, India is set to emerge as an economic superpower, partly owing to its young population as opposed to several other countries in the region. As India is predicted to majorly contribute to Asia’s workforce in the coming decades, the country itself is faced with several challenges to attain such figures in a sustainable manner.

Anis Chakravarty, an economist at Deloitte India was quoted as stating, “India will account for more than half of the increase in Asia’s workforce in the coming decade, but this isn’t just a story of more workers: these new workers will be much better trained and educated than the existing Indian workforce.” He added, “There will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer. The consequences for businesses are huge.’’

The Deloitte report predicted that after Japan and China, India is set to drive the third great wave of Asia’s growth, with a potential workforce likely to grow from 885 million to 1.08 billion people in the next two decades and hold above that for half a century. However, the report also warned that if correct frameworks to ensure and sustain growth are not placed then the blooming population faces the threat of unemployment and could “become ripe for social unrest.” The Deloitte report also highlighted which countries were to face the biggest challenges from the impact of ageing on growth, with China, Hong Kong, Taiwan, Korea, Singapore, Thailand and New Zealand on the list. Some suggestions to cope with the crucial loss in workforce were suggested, like raising retirement ages, encouraging the presence of women in the workforce as well as accepting young, high-skilled migrants into the country have been mentioned.

Even as these reports remain optimistic, there have been several local reports as well as conditions that bring out the challenges to gaining a momentum towards achieving these projected figures. Currently, the Indian gross domestic product (GDP) has seen a plunge post-demonetisation and the implementation of the new tax regime known as Goods and Services taxes (GST), with the first quarter (April-June) of the current financial year, recording a fall to 5.7 pc in growth. Besides GDP figures, several aspects of the economy are also faced with multifaceted concerns as both skilling and generation of jobs are moving at a rather slow pace.

Major challenges remain

The country’s skilled workforce remains extremely low and even as the Deloitte report states an Indian advantage in terms of age, the demographic factor for India can only boost the economy if its potential is realised. Besides initiatives by the National Skill Development Council, several private sector initiatives coming together with the government, such as Europe India Foundation for Excellence’s Skill Development Meet are also directed towards addressing the huge gap between the requirements of the future and the situation that exists today.

The biggest concern perhaps is the requirement of generation of jobs, to make use of the projected workforce that will be available in the coming years. Post-demonetisation, the Centre for Monitoring Indian Economy (CMIE) also estimated a loss of roughly 1.5 million jobs. India’s employed force was reported to grow from 401 million in April 2016 to 406.5 million in December 2016, but it declined to 405 million in the four-month survey period of January through April, 2017. Despite several existing schemes to address these issues, the initiatives have so far not translated into reality and several economic transformations in the country have hit the job sector hard. Even as opportunities in new projects and sectors such as e-commerce have emerged, India requires several key issues to be addressed.