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India's Growth and Economy: Analysis and Quick Facts
Knowledge-Based Industries
India has many highly skilled professionals, scientists and engineers, but they represent only a fraction of the population.
IT: India has developed global niches in the Information Technology (IT) sector. The IT sector accounts for almost 4% percent of the GDP, but employs only a million people.
ICT: Indian mobile telephony is one of the cheapest in the world due to price competition. More than 47 million people had mobile phones at the end of 2004. ICTs growth has been concentrated in urban areas.
The government has to increase access to ICTs, such as make phones, cell phones, computers and internet connectivity more available; enhance people’s ICT literacy and skills; and develop ICT applications that can provide much-needed social, economic, and government services to citizens. Promoting the use of ICTs throughout the economy can raise productivity and growth.
Innovation: India is becoming a major global source of research and development (R&D). Some 100 multinational corporations have R&D centers in the country. But it’s a relatively closed economy compared with other Asian economies. India must take advantage of foreign direct investment, technology licensing, and etc. to catch up to countries like China.
To improve its competitiveness in the knowledge economy, India must strengthen the economic and institutional regime, expand access for all to education that meets the needs of the market and encourages critical thinking; improve the efficiency of public R&D, increase private R&D, and encourage university-industry linkages; build a dynamic information infrastructure; and create a shared vision between government, private sector and civil society on ways to move forward.
Managing India's Growth
If India continues to grow at 8% a year, poverty could fall to single digits in the next two decades, according to a World Bank report. The task is difficult but not impossible given the unique opportunity recent growth has created.
But the country faces two major challenges today: improving the delivery of core public services, and maintaining rapid growth while spreading the benefits of this growth more widely.
Infrastructure: ¼ of India firms cite poor infrastructure as a key obstacle to growth.
Urban Poverty: Less than 1/3 of Indians live in urban areas, but these generate over 2/3 of the GDP. A quarter of India’s urban residents are poor.
Water: 90% of the urban population has access to drinking piped and non-piped water. However, piped water is available for only a few hours a day and; non-piped water is not always a safe source. India must increase access to reliable, sustainable, and affordable water service. To this end, the country has to adjust its policies, institutional arrangements, and financial incentives to improve service delivery.
More broadly, India’s overall water infrastructure is crumbling due to poor maintenance. Today, 70% of India’s irrigation needs and 80% of domestic water use (rural and urban) come from groundwater, which is no longer sustainable as this practice has seriously lowered water tables and depleted aquifers.
Electrifying India: Severe power shortage is major obstacles to India’s development.
40% of firms in India have their own generators because of unstable power supply (data from Can South Asia End Poverty in a Decade). More than 40% of the population mostly in rural areas lack access to electricity.
Boosting economic growth by providing all citizens with reliable access to electricity by 2012 is a top government priority.
Developing hydropower is the way forward as only 30% of the country’s hydropower potential has been harnessed so far. Hydropower currently provides only 25% of India’s generating capacity.
Risk Management - HIV/AIDS in India
India has over 60% of the continent’s estimated HIV infections with approximately 40% of Asia’s population. While overall prevalence remains low, even minor increases in HIV infection rates could translate into very large numbers of people becoming infected.
As AIDS kills primarily young and middle-aged adults during their peak productive years, HIV/AIDS can reduce the labor supply and disposable incomes, affecting markets, savings, investment and consumer spending.
Since a large proportion of Asians work in private companies and the private sector has significant influence over the general workforce, the private sector could be instrumental in raising HIV/AIDS awareness and prevention.
URL: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,contentMDK:21136175~pagePK:2865106~piPK:2865128~theSitePK:223547,00.html |
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