21 January 2015
Guinness book of World Records Recognises the Achievements Made Under PMJDY
World Employment Social Outlook report
Global unemployment is expected to increase by 11 million in the next five years as the world economy continues to grow at “tepid rates”, a latest UN report released here today has warned.
According to the World Employment Social Outlook report compiled by International Labour Organization (ILO), more than 212 million people will be jobless by 2019 as compared with the current level of 201 million.
Around 74 million youth between the ages of 15 and 24 were looking for work in 2014 and a total of 201 million were unemployed, 31 million more than before the start of the global crisis in 2008,
the report said, adding that young women were disproportionately affected by this trend.
“The global economy is continuing to grow at tepid rates and that has clear consequences,” said Guy Ryder, Director General of the ILO, the UN specialised agency which seeks the promotion of social justice and internationally recognised human and labour rights.
He said the world economy has been unable to close the significant employment and social gaps and the job cost stands at 61 million jobs the since the 2008 financial crisis.
Income inequalities have widened delaying global economy and job recovery. On an average the richest 10 per cent earn 30 to 40 per cent while the poorest 10 per cent earn around two per cent of the total income, the report said.
An extra 280 million jobs would have to be created by 2019 to close the gap created by the financial turmoil, it said.
“The world is reeling from excesses of inequalities. There is massive human waste, misery and suffering. Not just the fear of (economic) instability should be the imperative for addressing unemployment,” Ryder said, adding that inequality has reached levels where it blocks social mobility.
India had around 13 per cent of the labour force in the manufacturing sector when its manufacturing was at its peak in 2012 for the period between 1992 and 2013. For the same period China peaked at 15 per cent in 1995, Pakistan at 16 per cent in 2002, the report said.
It said the situation is especially dire for South Asia which faces a huge challenge of jobless growth with an annual average economic growth of 6.1 per cent from 2009 to 2014 corresponded to employment expansion of only 1.4 per cent for the same period.
“Much of the employment growth that occurred was in the vulnerable and informal employment,” the report said, adding with the exception of Nepal, most South Asian countries face the challenge of low labour force participation for women.
“Economies with high female labour participation rates experience economic slowdowns less often, indicating a higher resilience to adverse economic shocks,” it said.
To make a serious dent in the “mountain of inequality” there has to be clear labour market interventions by ensuring minimum wages, collective bargaining and returns to labour, Ryder said.
According to the report the employment situation is improving in some advanced economies like the US, Japan and the UK but this improvement has to be understood with some caution.
“The unemployment statistic in the US, for instance, has improved after heavy fall in participation rates. Some 4.5 million people who are no longer in the employment market, Ryder said.
“This means the jobs crisis is far from over and there is no place for complacency,” he added.
He said though there might seem to be an apparent contradiction between a growing global middle class and large scale unemployment, there is no causal relation between the two and reflect the growing complexities of a rebalancing global economy.
Aggregate demand and enterprise investment need to be bolstered, including through well-designed employment, incomes, enterprise and social policy, the report said.
According to the World Employment Social Outlook report compiled by International Labour Organization (ILO), more than 212 million people will be jobless by 2019 as compared with the current level of 201 million.
Around 74 million youth between the ages of 15 and 24 were looking for work in 2014 and a total of 201 million were unemployed, 31 million more than before the start of the global crisis in 2008,
the report said, adding that young women were disproportionately affected by this trend.
“The global economy is continuing to grow at tepid rates and that has clear consequences,” said Guy Ryder, Director General of the ILO, the UN specialised agency which seeks the promotion of social justice and internationally recognised human and labour rights.
He said the world economy has been unable to close the significant employment and social gaps and the job cost stands at 61 million jobs the since the 2008 financial crisis.
Income inequalities have widened delaying global economy and job recovery. On an average the richest 10 per cent earn 30 to 40 per cent while the poorest 10 per cent earn around two per cent of the total income, the report said.
An extra 280 million jobs would have to be created by 2019 to close the gap created by the financial turmoil, it said.
“The world is reeling from excesses of inequalities. There is massive human waste, misery and suffering. Not just the fear of (economic) instability should be the imperative for addressing unemployment,” Ryder said, adding that inequality has reached levels where it blocks social mobility.
India had around 13 per cent of the labour force in the manufacturing sector when its manufacturing was at its peak in 2012 for the period between 1992 and 2013. For the same period China peaked at 15 per cent in 1995, Pakistan at 16 per cent in 2002, the report said.
It said the situation is especially dire for South Asia which faces a huge challenge of jobless growth with an annual average economic growth of 6.1 per cent from 2009 to 2014 corresponded to employment expansion of only 1.4 per cent for the same period.
“Much of the employment growth that occurred was in the vulnerable and informal employment,” the report said, adding with the exception of Nepal, most South Asian countries face the challenge of low labour force participation for women.
“Economies with high female labour participation rates experience economic slowdowns less often, indicating a higher resilience to adverse economic shocks,” it said.
To make a serious dent in the “mountain of inequality” there has to be clear labour market interventions by ensuring minimum wages, collective bargaining and returns to labour, Ryder said.
According to the report the employment situation is improving in some advanced economies like the US, Japan and the UK but this improvement has to be understood with some caution.
“The unemployment statistic in the US, for instance, has improved after heavy fall in participation rates. Some 4.5 million people who are no longer in the employment market, Ryder said.
“This means the jobs crisis is far from over and there is no place for complacency,” he added.
He said though there might seem to be an apparent contradiction between a growing global middle class and large scale unemployment, there is no causal relation between the two and reflect the growing complexities of a rebalancing global economy.
Aggregate demand and enterprise investment need to be bolstered, including through well-designed employment, incomes, enterprise and social policy, the report said.
Chasing the growth dream
What should be the average annual economic growth rate of an economy if its size in terms of its gross domestic product or GDP has to rise from $2 trillion to $20 trillion? And how long will it take to raise its GDP size 10 times?
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
Chasing the growth dream
What should be the average annual economic growth rate of an economy if its size in terms of its gross domestic product or GDP has to rise from $2 trillion to $20 trillion? And how long will it take to raise its GDP size 10 times?
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
Chasing the growth dream
What should be the average annual economic growth rate of an economy if its size in terms of its gross domestic product or GDP has to rise from $2 trillion to $20 trillion? And how long will it take to raise its GDP size 10 times?
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
These are not irrelevant questions. Addressing a recent business summit organised by The Economic Times, Prime Minister Narendra Modi shared with the audience his dream of growing India's GDP size from $2 trillion to $20 trillion. Similar aspirations were echoed later at the same forum by the railways minister, Suresh Prabhu.
Leaders must dream. That is necessary and also their legitimate entitlement. But dreams alone are not enough. Dreams must be accompanied with a reality check on what they actually imply. For the $20 trillion dream to be realised, it is important, therefore, to understand the pace of growth that would be needed and for how long that pace has to be sustained.
A simple arithmetical calculation shows that India's GDP could grow to $20 trillion if the average annual economic growth for the next 25 years is maintained at 9.65 per cent. The Indian economy has grown at a rate higher than nine per cent only in about a few years in the past. And it is well-nigh impossible for any country to manage a sustained nine per cent plus growth rate consistently for 25 long years.
While it may, therefore, be logical to assume that India could theoretically grow its GDP to over $20 trillion, but it must also be acknowledged that achieving that goal would take much longer than 25 years. The bigger the economy gets, the feasible growth rate targets will have to necessarily come down. That is what happened to all economies when they exceeded a certain size. Look at what happened to the US and Japan and what is happening to China now. India will be no exception.
Recognition of such growth limitations is as important as dreaming big or planning for achieving an annual 10 per cent growth rate target. Indeed, it is important for leaders of the government to understand that growth does not happen in isolation. The global economy, a country's inherent potential, the domestic policy environment and its relative strengths and weaknesses are important elements in growth calculations.
Equally important is the need to get a sense of what a feasible rate of growth for a country should be in the context of the reality that prevails. In the Indian context, a relevant question would be: Is a five per cent growth rate now similar to a nine per cent growth rate achieved before the global financial turmoil of 2008?
In the hey days of high growth for India - between 2005 and 2007, when the economy was clocking an annual growth rate of over nine per cent, most analysts would use the global economic environment to place the India growth story in perspective. The argument then was that in a high tide all boats in the sea are lifted. India's growth momentum was thus attributed to some extent to the global economic boom and the liquidity surge. According to some estimates, at least one or two percentage points in India's overall growth were certainly due to the buoyant global economic factors.
For instance, while the global economy grew by five or a little more than five per cent in the years between 2005 and 2007, the Indian economy too clocked over nine per cent growth in each of those three years. India was then seen to be benefitting from the global economic upturn.
The question policy makers should now pose is whether the same argument should hold now as the world economy is once again in turmoil. Barring the United States, most emerging economies, Europe, Japan and other developed countries are experiencing a significant slowing of economic growth. According to some estimates, global growth will be capped at two per cent, although the International Monetary Fund is still a little bullish about the world GDP output projecting it to grow by around 3.8 per cent in 2015. But an overall slowdown seems inevitable.
In such a situation, a growth rate of five or six per cent for the Indian economy could well appear no less impressive than its performance in the 2005-07 period. After all, clocking a growth rate of 5-6 per cent without a global tide of good performance should be equivalent to a performance of nine per cent GDP growth when the global economy was firing on all cylinders. Shouldn't India's growth performance in a situation of low global tide get some credit just as the high global tide in the 2005-07 period had taken the gloss off the Indian economy's nine per cent plus growth performance.
In any case, India's dreamers of double-digit growth should now pause and recognise that the current performance of 5-6 per cent growth is not to be dismissed lightly because the global economic scenario is not too bright. Additionally, even this performance will be creditable because it is being achieved against all kinds of odds - a more stringent land acquisition law even after the latest round of amendments and a more rigorous enforcement of environment protection rules. Instead of moaning over what they mistakenly consider tepid and disappointing, they should appreciate and even celebrate India's current growth performance in spite of the adverse global headwinds. Dreaming double-digit growth or a $20-trillion economy must be rooted in a realistic assessment of the state of the economy - both in the country and abroad.
India world's second most trusted nation
Moving up the ranks, India emerged as the second mosttrusted country in the world in terms of faith reposed on its institutions even as globally trust levels fell, says a survey. As the world’s rich and powerful gather in the Swiss resort of Davos, a study by Edelman found that general level of trust in institutions among college-educated people around the globe were at levels not seen since 2009 in many of the markets it surveyed.
Trust in institutions in India has improved sharply in 2015 with the country moving up three notches to the second place among 27 nations.
While the number of "truster" countries are at an all-time low of six in 2015 including UAE, India, China and Netherlands, the number of "distruster" countries has grown significantly to 13 including Japan, Russia, Hong Kong, South Africa and Italy.
Brazil, Malaysia, France and the US are among the 8 "neutral" nations as per the trust index, the survey said.
India, which last year saw BJP-led NDA government storming to power at the Centre, stands tall.
According to the report, an "alarming evaporation of trust" has happened across all institutions, reaching the lows of the Great Recession in 2009.
Trust in government, business, media and NGOs in the general population is below 50 per cent in two-thirds of countries, including the US, UK and Germany, it said.
From fifth most trusted in 2014, India has now become the second-most trusted in 2015 with a score of 79 per cent in the barometer. The study has put India Prime Minister Narendra Modi's image on the first page.
The list is topped by UAE with 84 per cent trust. Indonesia (78 per cent), China (75 per cent), Singapore (65 per cent) and Netherlands (64 per cent) are the others that have recorded highest levels of trust.
Globally, the overall trust index was down a percentage point from the previous year at 55 per cent. Trust levels in major developed economies, such as the United States, Germany and France, hovered around 50 per cent.
The barometer shows waning trust in non-governmental organisations, media and business. Trust in government recovered somewhat but politicians remain the most distrusted group assessed at 48 per cent. Interestingly, trust in politicians in India has grown to 82 per cent in 2015 from 53 per cent a year ago.
Government was the only institution to gain trust in 2015, driven by improvements in 16 countries, including India.
In terms of NGOs in India, trust was almost flat at 74 per cent from 75 per cent. Also, while trust in media has fallen in more than half of the countries, India appears to have scored well on that front too with 76 per cent in 2015 vis-a-vis 71 per cent in 2014.
Trust in institutions in India has improved sharply in 2015 with the country moving up three notches to the second place among 27 nations.
While the number of "truster" countries are at an all-time low of six in 2015 including UAE, India, China and Netherlands, the number of "distruster" countries has grown significantly to 13 including Japan, Russia, Hong Kong, South Africa and Italy.
Brazil, Malaysia, France and the US are among the 8 "neutral" nations as per the trust index, the survey said.
India, which last year saw BJP-led NDA government storming to power at the Centre, stands tall.
According to the report, an "alarming evaporation of trust" has happened across all institutions, reaching the lows of the Great Recession in 2009.
Trust in government, business, media and NGOs in the general population is below 50 per cent in two-thirds of countries, including the US, UK and Germany, it said.
From fifth most trusted in 2014, India has now become the second-most trusted in 2015 with a score of 79 per cent in the barometer. The study has put India Prime Minister Narendra Modi's image on the first page.
The list is topped by UAE with 84 per cent trust. Indonesia (78 per cent), China (75 per cent), Singapore (65 per cent) and Netherlands (64 per cent) are the others that have recorded highest levels of trust.
Globally, the overall trust index was down a percentage point from the previous year at 55 per cent. Trust levels in major developed economies, such as the United States, Germany and France, hovered around 50 per cent.
The barometer shows waning trust in non-governmental organisations, media and business. Trust in government recovered somewhat but politicians remain the most distrusted group assessed at 48 per cent. Interestingly, trust in politicians in India has grown to 82 per cent in 2015 from 53 per cent a year ago.
Government was the only institution to gain trust in 2015, driven by improvements in 16 countries, including India.
In terms of NGOs in India, trust was almost flat at 74 per cent from 75 per cent. Also, while trust in media has fallen in more than half of the countries, India appears to have scored well on that front too with 76 per cent in 2015 vis-a-vis 71 per cent in 2014.
PM's climate change council discusses emission reduction in farm sector
A proposal to have a 'climate change' budget subhead, on the lines of a gender budget, incorporated in the national accounts and the annual Budget documents of the Union government was floated at a meeting of the Prime Minister's Council on Climate Change. The meeting, chaired by Prime Minister Narendra Modi, was held on Monday.
It was the first meeting of the council after it was reconstituted under the National Democratic Alliance government. The meeting also discussed a proposal from the agricultural ministry to look for opportunities to reduce emissions from the agricultural sector. This proposal, if accepted, would take India away from its current and long-standing view that the farmers and the poor should not be burdened by permitting expensive greenhouse gas emission reduction steps in the agricultural sector. India has so far fought hard at the international forums to protect the agricultural sector from any emission reduction steps even in mid-term future.
The proposal though, sources said, did not suggest an alteration of the international position at the moment and only asked that three steps be taken at the moment in the domestic arena and more opportunities for emission reduction and adaptation to be assessed for future.
The proposal for each ministry separately and distinctly reflecting its budget for climate changeactions did not see a detailed discussion, three people present at the council meeting told Business Standard. It did lay out that each ministry should review its work to separately reflect actions that would add to either adaptation or mitigation actions under the climate change framework.
The council also undertook a review of the existing national actions plans on climate change and agreed to launch three new initiatives as well as new missions besides the existing eight. A critical review of the exiting missions also highlighted that the country was lagging behind on some of these, such as the green India mission for afforestation. The lack of finances to support the missions as well as the state-level action plans were brought to attention. A review of the plans had already been conducted by the executive committee of the council, which is headed by the principle secretary to the prime minister. The environment secretary made a presentation on the status of these missions.
The prime minister suggested setting up a consortium of countries on solar energy, which could collaborate on to produce new technologies in the sector. He also suggested that the green India mission focus on agro-forestry with regulations encouraging farmers to sow and harvest trees in their fields and earn from the process. While a proposal for a separate Wind mission, along the lines of the existing Solar mission was also made, the prime minister suggested combining the two, several people at the meeting told Business Standard. Multiple sources at the meeting said that the PM made around a dozen specific interventions during the meeting on various issues pertaining to climate change.
This included a detailed inquiry by him in to the existing energy efficiency mission and the new initiative to expand it substantially. New sectors such as railways, heavy vehicles and additional industrial units in each of the sector are to be added rapidly over years to expand the mission to cover almost 50 per cent of the total commercial energy use in the country.
A proposal to start a national water efficiency mission to reduce the water use intensity in commercial domestic and industry sector was also approved at the meeting. Besides this, the health ministry proposed to start a mission to study the impacts of climate change on health and the environment ministry to expand its existing work on coastal management and emergency response plan to all the coastal states.
The council, in a departure from its work under the UPA government, also discussed the outcomes of the recently concluded Lima round of UN climate talks and its implications for the crucial Paris agreement to be signed by the end of this year. Previously, the council was restricted to reviewing domestic policy on climate change. A majority of the council members, including concerned ministers expressed concerns about getting locked in to an ex-ante review of India's domestically determined targets under the Paris agreement. They also discussed the shape and contours of these targets that India plans to provide by June to the UN climate convention, which would be incorporated in the Paris agreement by the year-end.
These targets, or Intended Nationally Determined Contributions as they are referred to, are currently under preparation based on inter-ministerial discussions.
It was the first meeting of the council after it was reconstituted under the National Democratic Alliance government. The meeting also discussed a proposal from the agricultural ministry to look for opportunities to reduce emissions from the agricultural sector. This proposal, if accepted, would take India away from its current and long-standing view that the farmers and the poor should not be burdened by permitting expensive greenhouse gas emission reduction steps in the agricultural sector. India has so far fought hard at the international forums to protect the agricultural sector from any emission reduction steps even in mid-term future.
The proposal though, sources said, did not suggest an alteration of the international position at the moment and only asked that three steps be taken at the moment in the domestic arena and more opportunities for emission reduction and adaptation to be assessed for future.
The proposal for each ministry separately and distinctly reflecting its budget for climate changeactions did not see a detailed discussion, three people present at the council meeting told Business Standard. It did lay out that each ministry should review its work to separately reflect actions that would add to either adaptation or mitigation actions under the climate change framework.
The council also undertook a review of the existing national actions plans on climate change and agreed to launch three new initiatives as well as new missions besides the existing eight. A critical review of the exiting missions also highlighted that the country was lagging behind on some of these, such as the green India mission for afforestation. The lack of finances to support the missions as well as the state-level action plans were brought to attention. A review of the plans had already been conducted by the executive committee of the council, which is headed by the principle secretary to the prime minister. The environment secretary made a presentation on the status of these missions.
The prime minister suggested setting up a consortium of countries on solar energy, which could collaborate on to produce new technologies in the sector. He also suggested that the green India mission focus on agro-forestry with regulations encouraging farmers to sow and harvest trees in their fields and earn from the process. While a proposal for a separate Wind mission, along the lines of the existing Solar mission was also made, the prime minister suggested combining the two, several people at the meeting told Business Standard. Multiple sources at the meeting said that the PM made around a dozen specific interventions during the meeting on various issues pertaining to climate change.
This included a detailed inquiry by him in to the existing energy efficiency mission and the new initiative to expand it substantially. New sectors such as railways, heavy vehicles and additional industrial units in each of the sector are to be added rapidly over years to expand the mission to cover almost 50 per cent of the total commercial energy use in the country.
A proposal to start a national water efficiency mission to reduce the water use intensity in commercial domestic and industry sector was also approved at the meeting. Besides this, the health ministry proposed to start a mission to study the impacts of climate change on health and the environment ministry to expand its existing work on coastal management and emergency response plan to all the coastal states.
The council, in a departure from its work under the UPA government, also discussed the outcomes of the recently concluded Lima round of UN climate talks and its implications for the crucial Paris agreement to be signed by the end of this year. Previously, the council was restricted to reviewing domestic policy on climate change. A majority of the council members, including concerned ministers expressed concerns about getting locked in to an ex-ante review of India's domestically determined targets under the Paris agreement. They also discussed the shape and contours of these targets that India plans to provide by June to the UN climate convention, which would be incorporated in the Paris agreement by the year-end.
These targets, or Intended Nationally Determined Contributions as they are referred to, are currently under preparation based on inter-ministerial discussions.
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