India is on its way to becoming a leading industrial nation. But how can more jobs be created, how can poverty be reduced and what are the biggest economic challenges facing the new government?
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00:00India, after the election, how can the new government encourage stronger economic growth?
00:07How can it drive forward education and industrialization?
00:11The country has risen to become the fifth largest economy in the world, and it will
00:16probably move up even further in the rankings.
00:19I mean, all estimates, the IMF, for example, the World Bank, they all tend to think so.
00:27And I think that, you know, one thing that can't be overlooked is that investors globally
00:32are seeing India as the next big economic power.
00:37In terms of gross domestic product, India is now among the big global players.
00:43With a GDP of over $27 trillion, the U.S. is in top spot, followed by China, then Germany
00:50and Japan.
00:53India at $3.5 trillion U.S. has now overtaken Britain.
01:00India's economy is currently growing by 7% per year.
01:04But relative to its huge population of over 1.4 billion people, per capita income is lower
01:11than in all the other G20 countries.
01:14So India has a lot of catching up to do to ensure more prosperity among the wider population
01:20and to fight poverty.
01:22One problem is the low employment rate in general, and especially among women.
01:30Just 60% of men are employed, and only 36% of women.
01:41Female labor force participation rate has always been lower than international levels.
01:48And even though historically in the other countries it has risen with economic growth,
01:55in the Indian case it has been going down in the past two decades.
02:03India's new government therefore needs to invest more in the ailing school system, above
02:08all by providing students with a good education.
02:11Many of them leave school without any qualifications, and teachers are often insufficiently qualified.
02:18What we know, or think we know, that what you really have to do is prepare people to
02:23be lifelong learners, to be able to adjust to whatever situation and learn whatever needs
02:28to be learned at that time.
02:31Even among young graduates, the unemployment rate is in double figures.
02:35The previous government was not able to solve these problems.
02:39But there's a lack of jobs in the manufacturing sector in particular.
02:43The country imports more goods than it exports.
02:47How could India's economy grow faster?
02:50Economists like to cite countries such as China and South Korea as examples.
02:55So China, the investment rates were between 35 to 50% of GDP.
03:01And that's incredible, right?
03:02Almost half of GDP was invested.
03:04In South Korea, it was between 35 and 45.
03:08So very high investment rates.
03:11And if you invest so much, yes, you will get higher growth for sure.
03:14You'll get better infrastructure, better facilities, better supply conditions, and
03:18better demand.
03:20But the second is that they actually did manage a structural transformation.
03:25In China, for example, it was possible to build up a broad industrial base when wages
03:30in the country were as low as they are currently in India.
03:34But that required extensive support programs for small and medium-sized enterprises.
03:43To actually have a package for these micro, small, and medium enterprises, which provides
03:49them the same kind of benefits we are currently giving large corporates.
03:53That is credit on equal terms, access to inputs, access to knowledge, access to markets.
03:59All of the things that I think are routinely provided in other countries.
04:04But we have not been provided.
04:06Nevertheless, India is making progress in many areas.
04:10In infrastructure, for example, countless highways, new railroads, and airports have
04:15been built.
04:20The last government spent $100 billion a year on infrastructure.
04:24And even more money will be needed in the future.
04:30India is also attracting more and more tech companies.
04:33Investors such as Apple, Microsoft, Samsung, and SAP.
04:38One advantage, but also a challenge for the country, is population growth.
04:43With over 1.4 billion people, India's population is larger than China's and will grow to 1.7
04:49billion by 2064.
04:52Only then will numbers start to decline again.
04:56With an average age of 28, India also has one of the youngest populations in the world
05:01and enormous potential.
05:03Perhaps some analysts are right in predicting that the country will experience growth over
05:08the next few decades similar to that which began in China over 20 years ago.
05:14But above all, huge investments will be vital in order to create enough new jobs.