'As China greys, India set to become world's growth engine'
Toronto, July 29 : If it was India’s USD 35 computer that was splashed in Canadian news last week, now it is the country’s relentless growth story that’s making headlines here.
Writing under the headline “Meet the world’s next growth engine”, the National Post daily Wednesday said that while the rest of the world grapples with the consequences of declining birth rates and mass retirements from workforces, India is set to reap benefits of demographic bulge.
Though India’s planners have a tough job on their hands of creating infrastructure and jobs and providing education to keep the momentum of growth, the rest of the world needs to ready itself for an era of relentless Indian expansion, the newspaper said.
“The potential is huge and it will happen… these things will happen, and they will transform us,” the paper quoted Joseph Caron, former Canadian high commissioner in India, as saying.
While China is set to grey even before getting rich because of its one-child policy, India, on the other hand, has youth on its side, the paper said.
“By 2020, it will add an additional 110 million people to its working ranks, the single largest increase in the global labour force,” the paper said, quoting a Goldman Sachs report released Wednesday.
Though its demographic dividend is arriving 20 years after its peers in East Asia because of more gradual declines in its death and birth rates, India is now prepared to cash in on that dividend, the paper said.
According to the Goldman Sachs report, demographics alone would contribute four percent of annual growth in India for the next 20 years.
Based the country’s last year’s GDP of USD 1.2 trillion, this projection amounts to almost USD 50 billion in the first year alone, compounding thereafter.
But India’s planners have a lot of work to do to make that potential a reality, the paper said, adding that creating jobs required to absorb its new workers is their major challenge.
“Typically, countries go from an agricultural base, then into manufacturing and then services. India, to some extent, has skipped the bit in the middle,” said Kevin Grice, senior international economist at Capital Economics in London.
Compared to 57 percent workforce employed in agriculture, only 19 percent is employed in India’s manufacturing/industry sector. Industry has to ramp up its share to sustain growth, the paper said.
“The demographic dividend is one side of the coin; it can be a great disaster if people aren’t educated to meet the needs of the growing economy,” the newspaper quoted former high commissioner Caron as warning Indian planners.