Indian Express Editorial Summary

Editorial Topic : India’s Economic Growth

 GS-3 Mains Exam : Economy

Revision Notes

 

Question : “Despite high economic growth rates, India might remain the poorest large economy.” Critically analyze this statement in the context of India’s per capita income and job creation.

Growth Projections

• India’s economy is expected to be the 3rd largest by 2027, surpassing Germany.
• IMF predicts GDP to reach $5.8 trillion by the end of the current government’s term, a $2.3 trillion increase.
• Projected growth rate of 6.5% over the next five years, similar to the past two decades.

Challenges to Job Creation

• Despite economic growth, India might remain the poorest large economy.
• Per capita income expected to be $4,281 by 2028-29, unlikely to reach upper-middle-income status.
• Sustaining high growth and creating quality jobs will be difficult.
• Broadened consumption needed as a large portion of the workforce is in low-productivity jobs.

Informal Sector Dominates

• Informal enterprises increased from 5.76 crore (2010-11) to 6.5 crore (2022-23).
• 11 crore workers are employed informally, many in low-paying one-person shops.
• Productivity and earnings in the informal sector are significantly lower than the formal sector.

Formal vs. Informal Employment

• Value added per worker in informal enterprises: Rs 1.4 lakh.
• Value added per worker in formal enterprises: Rs 15.04 lakh.
• Informal sector wage growth barely keeps pace with inflation.

Labour Force Composition

• 23 crore workers are engaged in agriculture, a low-productivity sector.
• Two-thirds of the workforce are in low-productivity jobs.
• Precarious gig economy jobs are increasing due to lack of formal opportunities.
  • Examples: Uber (10 lakh+ drivers), Zomato & Swiggy (6 lakh+ delivery personnel).

Potential Issues

• Declining migration reduces resource transfer from urban to rural areas.
• Fiscal support for the less well-off might become unsustainable.
• High taxes on wealthy individuals may have limitations.
  • Collections from high-income surcharge increased 50 times in a decade (Rs 1,343 crore in 2014-15 to Rs 65,000 crore in 2023-24).

Conclusion

• Failure to create enough quality jobs could lead to:
  • Lower social mobility
  • Increased income inequality
• This will determine if India follows the East Asian or Latin American development model.

 

 

 

Indian Express Editorial Summary

Editorial Topic : Water Crisis Threatens India’s Economic Growth

 GS-3 Mains Exam : Economy

Revision Notes

Question : Examine the impact of India’s declining per capita water availability on its economic growth and ambitions to become the world’s 3rd largest economy. Discuss the most vulnerable sectors.

Water Scarcity and Economic Impact

• India’s water woes and climate vulnerability threaten its economic strength.
• Water security is crucial for India’s ambition to be the world’s 3rd largest economy.
• Reduced water supply can disrupt farms and factories, leading to:
  • Rising food prices
  • Declining incomes
• Coal-fired power and steel production are most vulnerable industries (Moody’s).

India’s Water Situation

• Per capita water availability is declining:
  • Current: 1486 cubic meters (already below recommended level of 1700)
  • Projected by 2030: Less than 1400 cubic meters
• Past focus on increasing water supply led to overuse, especially groundwater.
• Water pricing doesn’t reflect the resource’s scarcity.

Water Conservation Efforts: Lackluster Implementation

• Jal Shakti Abhiyan (2019) aimed at rainwater harvesting and conservation.
• Laws on rainwater use exist in metros like Delhi, Bengaluru, and Mumbai.
• However, implementation is poor:
  • No data on buildings with rainwater harvesting structures.
  • No incentives or penalties for water efficiency in construction.

Future Challenges

• Growing urban population (270 million added in next 20 years) will intensify water competition.
• Industrial water audits are in their early stages.
• Moody’s report could encourage discussions on water-saving technologies:
  • Example: Dry cooling for power plants (can reduce pressure on water resources).

Conclusion

• Moody’s considers non-financial metrics like climate change for credit ratings.
• This approach may gain traction globally.
• Moody’s warning should prompt policymakers to find innovative solutions for sustainable water use.