Powering up to Reach the $30-Trillion Economy Mark

Introduction

• 21st Century India: With India potentially becoming a $30-trillion economy by 2047, rapid economic growth through liberal policies and private sector engagement is crucial.
• GDP Growth: India’s GDP growth rate is expected to exceed 7%, making it the fastest-growing large economy globally.
• Debate on Inequality: Despite growth, inequality remains a significant concern in India’s economic journey.

Potential of India’s Working-Age Population

• Economic Growth: The most effective tool for poverty alleviation and improving living standards.
• Poverty Reduction:
  • 1947-1991: Poverty rate remained around 50% despite socialist policies.
  • 1991-2011: Post-liberalisation, poverty rate fell to ~20%, lifting 35 crore people out of poverty.
• Wealth Creation: Economic growth inherently involves wealth creation, which incentivizes entrepreneurship.

Key Data Points on Indian Economic Growth

• IT Boom (2000-10): Led to the rise of a middle class; crucial period during economic reforms.
• Agricultural Labour:
  • 46% of India’s workforce is in agriculture, contributing just 18% to GDP.
  • Female Labour Force Participation Rate (FLFPR):
    • Post-COVID: FLFPR was 26%, now at 37%.
    • Comparisons: China, Vietnam, Japan FLFPR ranges from 60%-70%.

Unlocking the Potential of the Indian Economy

• Export-Oriented Industrialisation: Focus on low-skilled, employment-intensive manufacturing (e.g., South Korea, Taiwan, Japan, Vietnam).
• Economic Openness:
  • 1990-2013: Exports grew from 7% to 25% of GDP.
• Supply Chain Augmentation:
  • India is capitalizing on the China+1 strategy to attract global manufacturers.
• Controlled Import Tariffs:
  • High tariffs risk creating inefficiencies and raising costs in industries like mobile phone manufacturing.
• Avoiding the Middle-Income Trap:
  • India must move from a lower-middle-income economy to a middle-income status by the early part of the next decade.

Necessary Steps to Boost India’s Economic Growth

• Low-Tech Manufacturing:
  • Leverage surplus labour to grow in low-end sectors, similar to the IT boom.
• Ecosystem Development:
  • Build ecosystems of managers and workers in low-tech manufacturing sectors.
• Improving Work Conditions:
  • Address campaigns against “sweatshop” conditions without harming job creation.
• Balancing Interests:
  • Balancing employer and employee interests is essential for sustainable growth.
• Minimum Government, Maximum Governance:
  • A market-led economy allowing private enterprise to thrive is key to avoiding the middle-income trap.
• Ease of Doing Business:
  • The government must continue improving business conditions.
• Cluster-Led Industrial Model:
  • Develop industrial clusters with advanced infrastructure and ancillary ecosystems.
• Labour Productivity & Logistics:
  • Enhance productivity and reduce logistical costs compared to Bangladesh, China, Vietnam.
• Compliance Burden:
  • Relax regulations in designated areas to encourage new and expanding businesses.

Conclusion

• Time Sensitivity: The government must leverage private sector strengths and reforms to focus on low-skilled manufacturing.
• Migration & Urbanization: Inter-State migration, urbanization, and increased FLFPR are crucial indicators of progress.
• Path to Prosperity: Breaking barriers to growth is essential for India’s journey towards becoming a $30-trillion economy by 2047.

 

 

 

Set for a Stand-Off with the Governor

Introduction

• Political Tensions in Karnataka:
  • Karnataka has been embroiled in political drama, with the ruling Congress accusing the Governor, Thaawar Chand Gehlot, of attempting to destabilize the democratically elected government under instructions from the BJP.
  • The conflict intensified after the Governor issued a show cause notice to Chief Minister Siddaramaiah regarding alleged irregularities in the distribution of sites by the Mysuru Urban Development Authority (MUDA) to his wife.

Government’s Stance in Karnataka

• Chief Minister’s Absence:
  • The Council of Ministers, chaired by Deputy CM D.K. Shivakumar, advised the Governor to withdraw the notice and reject the request for prosecution sanction against CM Siddaramaiah.
• Congress High Command:
  • Urged Cabinet members to remain united and stand firm against what they term an “anti-democratic and anti-constitution” move by the Governor.
• Legal Battle:
  • The Congress is preparing for a legal battle, framing the Governor’s actions as unconstitutional.

Allegations in the Mysore Urban Development Authority (MUDA)

• Compensatory Allotment Scheme:
  • Under the 50:50 scheme, land losers receive 50% of the developed land. Allegations have been made against the CM’s wife, who was reportedly allotted 14 sites under this scheme.
• Political Connections:
  • The sites were allegedly allocated during the BJP’s rule in 2023 when Siddaramaiah was Leader of the Opposition.
  • Reports suggest that a family member of the Chief Minister and other political figures also benefited from the scheme.
• Denials and Pressure:
  • Siddaramaiah and his supporters deny any irregularities, citing legal and procedural safeguards.

Governor’s Actions

• Issuing the Show Cause Notice:
  • The Governor sought clarifications from the government twice before issuing the show cause notice on July 26, 2024.
  • The Chief Secretary and the Chief Minister provided explanations, yet the Governor proceeded with the notice, allowing a week for the CM to respond.
• Government’s Response:
  • On the deadline’s last day, the Council of Ministers advised the Governor to retract the notice and dismiss the prosecution request.

Challenges to the Governor’s Actions

• Article 163 of the Constitution:
  • The Governor’s action is criticized as hasty and lacking due diligence, as Article 163 suggests the Governor cannot issue a show cause notice without an investigative report.
• Historical Precedents:
  • Reference is made to the 2011 case when then-Governor H.R. Bhardwaj sanctioned prosecution against CM B.S. Yediyurappa, backed by a Lokayukta report.
  • The Prevention of Corruption Act, 1988, has since been amended, further complicating the Governor’s decision, which is seen as premature due to an ongoing complaint with the Lokayukta.

Conclusion

• Opposition Demands and Congress Response:
  • The BJP and JD(S) are demanding CM Siddaramaiah’s resignation and have launched a 140-kilometre padayatra from Bengaluru to Mysuru.
  • In contrast, Congress is conducting the Janandolana program to counter “misinformation” and emphasize that the controversial scheme existed during the BJP’s tenure.
• Siddaramaiah’s Defense:
  • Siddaramaiah, known for his “corruption-free four-decade political career,” is determined to fight the allegations.
• Future Outlook:
  • The focus now shifts to the Governor’s next move. Constitutional provisions and legal channels should guide the proceedings, with both the Governor and the CM expected to maintain transparency and the dignity of their offices.