We suggest five focus areas for the new government to accelerate economic growth and unlock India’s enormous potential. India has already embarked on several key economic and social reforms, which will improve governance, enhance productivity and reduce structural inefficiencies in the medium term. We believe India’s democracy and demographics will put pressure on future governments to deliver better governance and growth.
* The next 10 years are vital for India
With around 240 mn people likely to reach working age over the next 10 years and 372 mn children in the 0-14-year age group, India simply cannot afford low economic growth in the next decade. Aggressive investment in both soft (education, health, skills) and hard (infrastructure) assets will be important for India to capitalize on its ‘young’ demographics.
* Use democracy and demographics wisely—a quiet Indian Spring versus an Arab Spring
India’s vibrant democracy can provide the right outlet for citizens frustrated by decades of weak governance. India’s political class will do well to heed the signals emanating from the recent state elections—citizens’ expectations and aspirations have evolved to economic development and better governance versus the political class’ historical focus on entitlements and social identity. We believe India’s democracy and demographics will force changes in society and politics with more focus on governance and growth (economic and social).
* Five-point agenda for the new government
We put together an economic and social agenda for a new government (post the 2014 national elections in April-May 2014) to propel India to a trajectory of faster, inclusive and sustainable economic growth. These are (1) guarantee of equal opportunities, not outcomes, (2) better delivery of public goods and services, (3) economic management, (4) privatization of public assets and (5) efficient distribution systems.
* A more nuanced debate on entitlements and social-welfare spending is important
There is a fine line between populism and social welfare but we note some amount of spending on education, food and health is necessary to ensure a degree of equality in society. Given India’s heterogeneous society and wide disparity in incomes and economic opportunities, we should not fault any government’s attempts to ensure a more equal society in terms of opportunities. Funding is not an issue, given the massive leakages and wasteful subsidies on fuel and power. India can combine prudent economic management and essential social-welfare spending in vital areas.