Niti Aayog’s Vision for New India: Will it Transform the Economy?

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TOPIC: General Studies 2

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources, issues relating to poverty and hunger.

The third governing meeting of governing council of NITI Ayog was held in Delhi recently. With the aim to transform India, NITI Ayog has envisioned an ambitious agenda for the country to be achieved by 2032. The five year plan will be replaced by a three year action plan which will be a part of a seven year strategy that will in turn help to realise 15 year long term vision.

The target set for next 15 years include 3 fold rise in GDP, Rs. 2 lakh increase in per capita GDP and facilities such as housing with toilets, electricity and digital connectivity for all, a fully literate population with unhindered access to health care and a clean India with clean air and water etc.

Workable?

It matters little, whether it is a three year, five year or a seven year plan. The real point is that job of NITI ayog should have been to identify the challenges faced in India and not write the rosy picture of what can be available after certain years.

Today, there is a need to identify and address the challenges faced because of global environment, consistent poverty within India, regional inequalities etc.

Indian economy will grow at a rapid pace provided certain preconditions are met. When there is matter of planning and growth, the tendency is to look into investment, capital output ratio etc. but beyond that, there is a need to look at investment in social capital, human capital which is badly neglected. There is a need of social harmony in country when news such as recent killing of CRPF jawans in sukma, unrest in Kashmir shows a warfare going on in certain parts of country. It is not possible to grow efficiently if there is domestic discord and social non-harmony.

So there is a need of political vision which is inclusive and help people realise their productive potential and achieve higher growth.

Industry perspective

Even if the world economy is not booming and demand is not there for the products that allowed china to grow at rapid and sustained long term growth, India is still growing because of its huge domestic market and the draw on world for essential inputs and demand for exports. Post Lehman crisis, India’s growth rate has been 7.4%. So 8% growth rate is possible as projected by NITI Ayog.

Comparing with China

Instead of comparing the growth rate with china, there is a need to compare about huge difference between India and China in education and health and how it is distributed across the population. This is a far bigger difference between two nations. It is not proper to compare India with china until there is a similar social infrastructure as before china begun its economic reforms, it made its social infrastructure strong. Its population belonging to even lower strata of society had access to basic and good education and health care services.

Reasons for problems in India need to be found out

Why high levels of poverty, malnourishment, persisting in high growth rate economy has to be known. Merely a statement of objective is not going to transform these drawbacks in reality. Some of the prominent challenges are:

Employment- Today, India is seeing high economic rate with almost jobless growth. Indian workforce is increasing every month by 1 million and the jobs getting created are in lakhs. Without large job creation there isn’t going to be poverty reduction. The challenge to tackle job less growth and less employment opportunity is going to become worse even at 9% growth with technological changes.

Education- higher literate population talks about good quality education for all, which means doubling public investment in education, health care and social protection is required. Lack of public expenditure in social capital will create long term problems.

Agrarian crisis is visible almost everywhere but there is hardly any steps to protect farmers’ income and building resilience for small rain fed farmers. Every year, knee-jerk or situation based actions are taken.

Malnutrition is related to all other inequalities, condition of women, adolescent girls, lack of access to clean water and sanitation, conditions of tribal population.

Yet, none of this are being addressed from the core.

How to address the current challenges?

The focus has to be on

• 3 D- demand, demography and democracy which are inherent to India.
• Inclusiveness- need to focus on inclusiveness by providing health facilities, education for all and expenditure in infrastructure, agriculture etc.
• Resilience- the focus has to be on public institutions by strengthening them. Regulating environment, banking system and management of natural resources important for resilience.

Funding the development

Earlier, lot of funds used to come to states from central government through two ways-

1. Devolution as per finance commission’s recommendation which is 42% of revenue share of the centre.
2. Through special schemes of various union ministries to which any eligible state can lay a claim and get money.

The NITI Ayog has a system of laying out outcomes to be achieved in healthcare, education and water management which are thought out in detail. For this, secretaries of departments of state government, chief secretaries and occasionally CMs are convened by the NITI Ayog to monitor, evaluate and incentivise. This is happening. But enough money is not going into it. In healthcare, India spends far less than any other country, just 1% of GDP. There cannot be sustenance of social capacity that is required to generate the kind of growth expected for 15 years.

Some improvement noticeable?

The focus of NITI Ayog in next three years is on capacity building and inclusiveness. They will provide expenses in various crucial segments of economy like health and education sector, agriculture infrastructure and overall infrastructure like road, rail, airport etc.

In last three years also, policy environment is going in the same direction. Increasing trade scenario with other economies, capacity building in infrastructure and manufacturing, with schemes like Make in India is expected to provide fruitful results in coming times. With growth of manufacturing and service sectors, and increasing agricultural growth sector, the 8% growth rate is achievable.

Conclusion

The job of NITI Ayog is not to say what government can do. Instead it has to lay down the path to reach the goals. There are lot of challenges but there are opportunities too. There are opportunities arising from the technological changes, for example, solar energy generation provides more employment than one at a traditional power station. But for that skilled population presence,  there is need of a population which is better fed, better educated and has much better access to new knowledge. The political framework to address the challenges has to be inclusive. The governments should make yearly targets to achieve three year goals, 7 year strategy and 15 year vision.

Connecting the dots:

• NITI Ayog has been entrusted to provide 15 year long term vision for a ‘New India’. What is the ‘New India’ and how can it be achieved? Critically examine.