By 2025, a greying OECD will have 35 million less persons in 20-49 age group. Thanks to the one-child policy, even without achieving anywhere near OECD income levels, China will also have 63 million less persons in this age group. In contrast, according to Columbia University?s Arvind Panagariya, India will add around 139 million people in this age group. In other words, given the likely crippling shortage of people, it?s pretty likely the current barriers on migration across borders will ease?the only other option is to let wages rise dramatically in these countries which will, in any case, force industry to close down and move to countries like India. Another angle to this happy narrative is that of growth. According to Panagariya, India?s probably growing faster than China already since India tends to measure growth at factor cost while China, like the rest of the world, measures output in terms of market or consumer prices. Panagariya does some statistical calisthenics and estimates India?s ?real dollar GDP??which eliminates the impact of differential inflation and exchange rates?will rise to around $7 trillion by 2025, or around $5,000 per capita. In which case, it?s pretty much the end of poverty as we know it today. If the share of exports to India?s GDP remains what it is today, similarly, India?s exports will be $1.5 trillion by 2025, or 5-6% of global GDP.
That?s the good news which, in a sense, outlines just how much of a larger role the world has for India to play. The problem, however, is in the road-map of how India is to get there. Take the 139 million extra youth. Most of these have been born in states like Bihar where the existing levels of education are poorer than even those in the rest of the country. So, the world needs 100 million more well-educated youth in 2025, and all India has to offer is semi-educated youth. India, to cite one number, has a gross enrolment ratio (GER is the proportion of those in college to the total population in the relevant age group) of 13 as compared to China?s 23?in 2000, believe it or not, India?s GER was 10 to China?s 6. Or take the GDP projections. Whether you go by Panagariya?s constant dollar GDP projections or the more conventional ones, none of the projections can come right unless significant chunks of India?s labour force moves from agriculture to industry, from rural areas to urban ones. Well, the MGNREGA, for instance, works to encourage workers to remain in agriculture in rural areas. There are a host of such examples, all of which make the same point, India isn?t ready for its place in the world.
