We looked at growth trends across a range of economic and demographic parameters. What would happen if these trends were to continue into the 2010s? The answers were surprising, exciting and humbling. India is well on its way to becoming among the largest economies of the world, our incomes, expenditures and lifestyle will change even more dramatically over the next decade than in the last. The Indian middle class will become much larger, the affluent will rise in numbers, the differences between rural and urban India will get blurred, and an average resident in some parts of India will be able to afford a lifestyle no different from those in developed countries.
The country?s GDP is expected to have grown at close to 8% annually over the 2000s. But this 8% hides the fact that sub-sectors such as telecom have grown at about 20-25% annually, while those such as agriculture have grown at 3% or thereabouts. With time, the relatively slow growing sectors – agriculture and unorganised manufacturing for instance, will account for a lower proportion of the economy. And, therefore, even if sub-sectoral growth rates are the same as they have been in the past?overall economic growth will be in the 9.5 to 10% range?or 9.6% to be more precise. Per capita incomes, therefore, will grow at 8% per annum and this will dramatically alter the economic landscape of India over a 10-year period?housing, consumer durables, energy, entertainment, higher level education and health care services, will be some markets that will grow at a rate far greater than the country’s economy. But if further reforms such as in the power sector occur, the growth rates could be far higher.
As these markets will grow, government finances will receive a great boon?tax revenues will naturally shoot up, even without rate increases. The emerging scenario, even if growth enhancing reforms are not done is not all that bad.
But this is only one half of the picture. If trends remain as they are, endemic poverty and unemployment will be the most serious of all challenges. In a sense both are different faces of the same animal. Large numbers will enter the workforce in the coming decade, they will be very poorly educated, poorly skilled, with little experience in any activity but agriculture related. However rapidly India grows, the construction, manufacturing, and various services sector, jobs would be unable to fully absorb them. These uneducated and low-skilled manpower will continue to depend on agriculture and related occupations. But how much more will agriculture absorb? And there are not a few million of these, our estimates are that agri-employment will need to grow by more than a minimum of 60 million over the next 10 years if it has to absorb them – a possibility that is extremely unlikely. Where will these masses work? Where will they go?
A large concentration of such persons will be in north and eastern India -the forces favoring large scale migration from north and east to south and west will intensify. We will need to either create employment opportunities within their current vicinity or deal with migration unlike what we have ever seen before.
?The writer is the head of Indicus Analytics