Timely policy reforms can unlock economic promise of India’s demographic dividend

By Wang Jiamei Source:Global Times Published: 2018/2/1 22:38:40

It is clear that India's economy still has tremendous growth potential despite such problems as severe wealth inequality, massive unemployment and poor infrastructure, but whether the potential can be fully realized depends on how the country adjusts its reform policies.

After a considerable contraction in the first half of the 2017-18 fiscal year that began in April 2017, India's GDP growth is expected to have rebounded in the second half. According to the annual economic survey submitted on Monday by Finance Minister Arun Jaitley, the Indian economy will grow by 7 percent to 7.5 percent in fiscal 2018-19, making it the fastest-growing major economy in the world again.

While the report mainly attributed the growth to improved exports and the liberalization of foreign investment rules, there is no doubt that India still has the potential for rapid development in the coming years.

The biggest selling point of the Indian economy is its large demographic dividend, an important factor contributing to China's extraordinary economic success in recent decades. Statistics from the World Bank show India has the world's largest and youngest population, a powerful impetus to the country's future growth.

It is because of this promising demographic dividend that companies from around the world have been investing in India in the hope of a repeat of China's economic success.

Although India has long been criticized for its underdeveloped infrastructure, the situation also means that its potential in this aspect is great. Once the construction of massive infrastructure projects starts in the country, its economy will get a major boost.

Observers are generally optimistic about India's economic prospects, but challenges remain. For instance, according to the OECD, more than 30 percent of youth aged 15 to 29 in India are not in employment, education or training, more than double the OECD average.

Reform is certainly the key to addressing the unemployment challenge and other economic restructuring problems in India. The government of Indian Prime Minister Narendra Modi has announced aggressive reform measures since late 2016 such as demonetization, a goods and services tax and relaxed rules on foreign investment. But so far none of these measures has stimulated its demographic dividend.

While it is said that the reforms will pay off in the long run, it is still important that the Indian government makes timely adjustments to the policies as needed so that its economic potential can be fully released as soon as possible. After all, it is never a bad thing for China to see its neighbor in a good economic situation.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn


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