Indian Express Editorial Summary

Editorial Topic : Journey to 2047

GS-3 Mains Exam : Economy 

Question : Analyze the importance of a multi-pronged development strategy that includes growth in exports, services, manufacturing, and agriculture. Identify key “sunrise” industries that could drive India’s economic growth and inclusivity.

 

The Goal: Developed Nation Status by 2047

• India aims to become a developed nation by the 100th year of independence (2047).
• Developed economies are currently defined by a per capita income exceeding $13,845 (likely to be higher in 2047).
• India’s current per capita income stands at $2,500 (IMF, April 2024), highlighting the significant gap to bridge.

 

The Growth Engine: Achieving 7% Annual Growth

• To reach the target income level, India needs an average annual real growth rate of 6-7%.
• This necessitates a real gross fixed capital formation (GFCF) rate of 35% of GDP, assuming an ICOR (Incremental Capital Output Ratio) of 5.
• India is close to the 35% GFCF mark presently, driven by increased government spending.
• However, high fiscal deficits (over 5.9% in the past 3 years) make this level of government spending unsustainable.
• The key lies in increasing private investment by 1-2% of GDP to achieve sustainable growth.
• Fostering a conducive environment for private investment (both corporate and non-corporate) is crucial.

 

Beyond Exports: A Multi-Pronged Development Strategy

• Rethinking Industrial Policy: Global developments necessitate a re-evaluation of India’s industrial policy.
• The Success of Export-Led Growth (Limited for India):
  • Many East Asian countries (and later China) achieved rapid progress through exports. (China’s export share grew from 0.6% in 1970 to 11.9% in 2022).
  • India’s export share remains low, rising from 0.6% (1970) to only 2.5% (2022).
• The Changing Trade Landscape:
  • Support for free trade is declining globally.
  • Protectionism is on the rise in some countries.
  • Developed economies are expected to experience slower growth.
• India’s New Approach:
  • The traditional export-led strategy may not be the perfect fit for India.
  • However, complete disregard for exports is not advisable.
• Importance of Exports:
  • Exports remain a crucial indicator of economic efficiency.
  • India needs to showcase excellence in merchandise exports (physical goods) alongside its service sector achievements.
  • Exports can significantly drive economic growth.

 

Multi-Dimensional Development for Inclusive Growth

• Focus on Multiple Sectors: Prioritize growth across exports, services, manufacturing, agriculture, and other sectors.
• Identifying Growth Drivers: Recognize “sunrise” industries with high potential, such as labor-intensive food processing that aids agriculture and has export demand.
• Smart Import Substitution: Promote efficient import substitution that considers cost-effectiveness. Atmanirbhar (self-reliance) shouldn’t lead to inefficient practices.

 

Jobs and Technology: Navigating the Future

• Technological advancements (AI, General AI, machine learning) may pose a challenge by reducing job creation per unit of output.
• Balancing Growth and Job Creation: Jobless growth is undesirable, but job creation without growth isn’t ideal either.
• The Solution: Adapt to new technologies through skill development and foster sectors that create jobs alongside economic growth.

 

Equity and Social Development: Two Sides of the Coin

• Importance of Equitable Growth: The benefits of growth must be distributed fairly.
• Poverty Reduction: Evidence suggests a decline in extreme poverty (below 3% according to World Poverty Clock).
• Decreasing Inequality: Consumption expenditure surveys show a slight decrease in the Gini coefficient (inequality measure).
• Prioritizing Poverty Reduction: Developing economies should focus on rapid poverty reduction.
• Social Safety Nets: Programs like subsidized food grains are essential for social security.
• Growth for Equity, Equity for Growth: Economic growth is necessary for achieving equity, and equity is necessary for sustainable growth.
• Investing in Public Services: Prioritize quality and quantity of public spending on health and education for equitable development.

Conclusion

India’s development strategy needs to be multifaceted. Growth can be stimulated by raising investment rates, emphasizing manufacturing, services, and exports, embracing new technologies, and promoting a mix of employment-generating sectors. Job creation will likely be the most significant challenge in the years to come.

 

 

 

Indian Express Editorial Summary

Editorial Topic : The world and Modi 3.0

GS-2 Mains Exam : IR

Question : Examine the role of strategic partnerships in the Indo-Pacific region amid rising US-China competition. How can India leverage its geopolitical position to foster regional stability and enhance its own security interests?

 

Europe’s Fear of a New Cold War

• European political thinkers are concerned about a potential new Cold War emerging, with some even fearing a World War.
• This fear stems from Europe’s experience of devastating conflicts in the 20th century, including two World Wars and the Cold War.
• They see parallels between the current geopolitical tensions and the events that led to past conflicts.
  • Multiple smaller conflicts preceded WWI.
  • Strategic mistakes by Germany and Japan (Pearl Harbor and the invasion of Poland) escalated WWII.
  • The Cold War posed a constant threat of nuclear war.
• Europe worries that a Cold War-like situation between the US and China could escalate into a major conflict involving other countries.

 

Global Competition Heats Up Despite Leader Rhetoric

• US and Chinese leaders downplay tensions, emphasizing cooperation. (Examples: Biden – “We are all better off if China does well”; Xi Jinping – “China doesn’t want a cold war or a hot war with anyone”)
• However, competition between the superpowers intensifies in several areas:
  • Resource Scramble: Competition for critical minerals intensifies across continents (Africa, Latin America).
  • Strategic Partnerships: Race to build military and economic partnerships across Asia.

Existing Conflicts Add to Global Tension

• Open Warfare: Existing conflicts in Europe (Ukraine) and Middle East (Gaza) add to global tension.
  • Mounting Casualties and Escalation Threats:
    • Ukraine war sees rising losses for both sides (Ukrainian forces, civilians, Israeli soldiers).
    • Russian minister’s accusation of NATO’s potential use of tactical nukes raises fears of a wider conflict.
  • Potential for Social Unrest:
    • Gaza conflict sparks demonstrations in Europe and US.
    • European leaders worry about pro-Palestinian movements leading to civil unrest in major cities.

 

Rising Tensions in the Indo-Pacific

• Taiwan’s Stance Angers China: Taiwan’s new president asserts Taiwan’s independence from China, citing the country’s constitution.
• China Threatens Taiwan:
  • China criticizes the president’s statement and threatens “counterattack” and “punishment” for Taiwan’s pursuit of independence.

 

The UN’s Challenges in Maintaining Peace

• The UN’s effectiveness is hampered by:
  • Its Cold War history (established after WWII’s 75 million casualties but hampered during the Cold War itself).
  • Perceptions of bias or ineffectiveness in addressing contemporary issues.

 

Urgent Need for De-Escalation

• Raging wars and rising tensions worldwide demand immediate attention.
• Another Cold War or a world war would be catastrophic.

 

India’s Role in De-Escalation

• India’s strategists should prioritize de-escalation efforts.
• India’s traditional neutrality offers a platform to collaborate with other Global South powers in finding solutions.
• India’s strong and respected position allows it to pursue “strategic autonomy” from a position of strength.

 

Global Competition Heats Up Despite Leader Rhetoric

• US and Chinese leaders downplay tensions, emphasizing cooperation. (Examples: Biden – “We are all better off if China does well”; Xi Jinping – “China doesn’t want a cold war or a hot war with anyone”)
• However, competition between the superpowers intensifies in several areas:
  • Resource Scramble: Competition for critical minerals intensifies across continents (Africa, Latin America).
  • Strategic Partnerships: Race to build military and economic partnerships across Asia.

 

Existing Conflicts Add to Global Tension

• Open Warfare: Existing conflicts in Europe (Ukraine) and Middle East (Gaza) add to global tension.
  • Mounting Casualties and Escalation Threats:
    • Ukraine war sees rising losses for both sides (Ukrainian forces, civilians, Israeli soldiers).
    • Russian minister’s accusation of NATO’s potential use of tactical nukes raises fears of a wider conflict.
  • Potential for Social Unrest:
    • Gaza conflict sparks demonstrations in Europe and US.
    • European leaders worry about pro-Palestinian movements leading to civil unrest in major cities.

 

Rising Tensions in the Indo-Pacific

• Taiwan’s Stance Angers China: Taiwan’s new president asserts Taiwan’s independence from China, citing the country’s constitution.
• China Threatens Taiwan:
  • China criticizes the president’s statement and threatens “counterattack” and “punishment” for Taiwan’s pursuit of independence.

 

The UN’s Challenges in Maintaining Peace

• The UN’s effectiveness is hampered by:
  • Its Cold War history (established after WWII’s 75 million casualties but hampered during the Cold War itself).
  • Perceptions of bias or ineffectiveness in addressing contemporary issues.

 

Urgent Need for De-Escalation

• Raging wars and rising tensions worldwide demand immediate attention.
• Another Cold War or a world war would be catastrophic.

 

 

India’s Role in De-Escalation

• India’s strategists should prioritize de-escalation efforts.
• India’s traditional neutrality offers a platform to collaborate with other Global South powers in finding solutions.
• India’s strong and respected position allows it to pursue “strategic autonomy” from a position of strength.