In a profound exposition delivered during the inaugural NITI Lecture on ‘Transforming India’ in August 2016, the distinguished economist of Indian lineage, Tharman Shanmugaratnam, illuminated critical facets of India’s economic trajectory. Amidst his recent electoral victory in Singapore’s presidential race, his insights remain pertinent.
Shanmugaratnam cogently delineated that India grapples with two paramount challenges. Firstly, an impending demographic predicament necessitates sustained economic expansion exceeding 8% over the ensuing two decades. Such growth becomes imperative to alleviate burgeoning youth unemployment, rectify underemployment, and foster inclusive economic prosperity.
Secondly, he underscored the inexorable ascent of intelligent machines and the imperatives of adaptability in response to this evolving technological paradigm.
The crux of Shanmugaratnam’s discourse pivoted on India’s proclivity for excessive government intervention, a conspicuous facet of its economic landscape. This interventionist approach, while historically well-intentioned, has inadvertently stifled private investment and impeded job creation. It has also engendered a landscape wherein established players are unduly favored over burgeoning entities, constraining economic dynamism.
Moreover, Shanmugaratnam underscored India’s paramount need to disengage from antiquated roles, shedding the mantle of economic regulator and proprietorship in enterprise. The atavistic retention of these roles perpetuates inefficiencies, thwarting the organic emergence of novel market entrants.
The luminous prism of history reveals India’s comparability with China in the mid-1970s, with analogous per capita income levels. However, today, India languishes significantly behind its Asian counterpart, with a per capita income less than half of China’s. Shanmugaratnam poignantly articulated that India’s ambitions for equitable economic prosperity must be predicated upon the rapid acceleration of its economic engine.
The economic disparities vis-à-vis China necessitate not merely a luxury but a quintessential economic imperative. Even with sustained growth rates ranging from 8% to 10%, India’s per capita income would, after two decades, only approximate 70% of China’s.
Shanmugaratnam accentuated India’s untapped potential, contending that it boasts one of the world’s most substantial latent reservoirs of human capital. However, he underscored an urgent demand for political, societal, governmental, and individual ardor to unlock this potential.
In this ambitious pursuit, integration into the global market emerges as an axiomatic necessity. India’s lackluster presence in international exports, representing less than 2% of the global total, requires vigorous rectification. His assertion of India’s unexplored export capacity, a quintessential avenue for growth, offers an ambitious strategy to offset these historical imbalances.
He castigated India’s employment and land acquisition laws, which he avowed as antithetical to larger-scale employment and business expansion. These constraints discourage firms from scaling up and employing more citizens, resulting in a paradoxical environment that safeguards formal sector employees at the cost of the vast informal workforce.
Shanmugaratnam’s elucidation of India’s deficits extended to education, positing that the nation harbors a colossal gap between the intellectual elite and the underutilized populace. India’s educational landscape, particularly the school system, was identified as a chasm that demands immediate rectification.
In the broader global context, he castigated India’s paltry export presence, a glaring discrepancy compared to several East Asian counterparts. India’s export per capita languishes at a fraction of China and Vietnam’s levels.
In conclusion, Shanmugaratnam advocated not only for economic course correction but also for a profound shift in India’s socio-economic paradigm. His insights continue to resonate as India navigates its trajectory toward economic rejuvenation and global eminence.