C-Change 2013: Indian economy: Will it shine again?

BANGALORE, INDIA: Several major global economies are still reeling under recession, one after the other. India, which grew at nine per cent four years in a row has slowed down. India Inc. is very cautious in terms of investment, and above all India's agricultural sector has taken a major beat.

In such a scenario, 'What is going to be India's political economy in 2013-2014; Cloudy or sunny?'Paranjoy Guha Thakurtha, independent journalist and educator, attempts to bring us to the reality on the third day of C-Change 2013.

Agriculture and allied sectors like forestry, logging and fishing accounted for 15.7 per cent of the GDP in 2009-10, and employed 52.1 per cent of the total workforce in the country.

"Share of agriculture in India's GDP down from 50 per cent to below 20 per cent over the last four decades; but share of population dependent on agriculture hardly down from over 70 per cent to around 55 per cent. In 2004-05, the share of agriculture in national income is around one-fifths, but this sector still continues to employ nearly three-fifths of the workers. Although the share of agriculture in the nation's GDP has shrunk, population depending on it has not and that is a huge structural problem," noted Thakurtha.

India is neither incredible, nor shining today.

"In 2008, when the Wall Street collapsed, the Incredible India's economy was growing at nine per cent, a pace which it maintained for the next four years, in a row. However, today it is staggering at mere 5 per cent and despite doing good as against other global economies, such as Europe or Japan, its future does not look very bright," he added.

The paradox of our society is such that while one out of every three software engineer in the world is an Indian, it is also a fact that one out of every three poor is also an Indian. Shocking? There is more.

A large chunk of the country's population resides in the US, however, a major chunk of it live in the Sub Saharan. Quality of education in the country is pathetic, school drop outs rates are enormous and female literacy rates are very low.

"We are a nation of young people today, but very soon we will become a nation with more number of old people as we surpass China to become the most populous country of the world."

On the other hand, IT industry, which steals the limelight is not a major contributor to the GDP. As a proportion of national GDP, IT/ITeS sector's contribution have risen from 1.2 per cent in 1997-98 to an estimated 7.5 per cent in 2011-12, whereas, software and services sector revenues have grown from 1.2 per cent in FY 1998 to an estimated 6.4 per cent in FY 2011.

"IT industry contributes less than 10 per cent to the country's GDP. They provide job to several lakhs of people, however, it still does not account as the most important segment in the country," he added.

However, there are still hopes. One area that provides considerable opportunities to the IT/ITeS sector is the Small and Medium Enterprises (SME) segment in India. Another area that has generated considerable interest is cloud computing, (dubbed as the next big thing) which is still in its nascent stage in India, he added.