From Policy Paralysis to Hyper Economics: India's Remarkable Economic Growth Story

India Emerging from Policy Paralysis to Hyper Economics PDF Download

India is one of the fastest-growing economies in the world, with a GDP of $2.6 trillion in 2017. However, its economic journey has not been smooth or steady. In the past decade, India has faced a phenomenon known as policy paralysis, which refers to the inability or unwillingness of the government to implement effective policies due to various political, bureaucratic, or social constraints. Policy paralysis has adversely affected India's economic growth, development, and global image. However, since 2014, under the leadership of Prime Minister Narendra Modi, India has embarked on a series of bold reforms and initiatives to overcome policy paralysis and boost economic growth. These measures have paved the way for India to enter a new phase of economic transformation, which some analysts call hyper economics. Hyper economics is a term that describes a mode of economic activity that transcends the conventional boundaries of markets, institutions, and resources. It involves leveraging digital technologies, innovation ecosystems, human capital, and social networks to create value and impact at an unprecedented scale and speed. This article will examine how India has emerged from policy paralysis to hyper economics by analyzing its causes, consequences, measures, challenges, and opportunities.

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Causes and Consequences of Policy Paralysis in India

Policy paralysis in India can be traced back to several factors that have hampered its economic reforms and growth. One of these factors is corruption. Corruption is a pervasive problem in India that affects all levels of government and society. It erodes public trust, distorts market incentives, reduces efficiency, and increases costs. According to Transparency International's Corruption Perceptions Index 2018, India ranked 78th out of 180 countries with a score of 41 out of 100. Corruption scandals have plagued several sectors in India such as telecom, coal, mining, defence, and sports. These scandals have not only resulted in huge losses for the public exchequer but also created a climate of uncertainty and risk aversion among investors and entrepreneurs.

Another factor that has contributed to policy paralysis in India is bureaucracy. Bureaucracy is a system of administration that involves rules, regulations, procedures, hierarchies, and red tape. While bureaucracy can be useful for ensuring accountability, it can also create bottlenecks, delays, and inefficiencies in policy implementation and service delivery. According to the World Bank's Ease of Doing Business 2019 report, India ranked 77th out of 190 countries with a score of 67.23 out of 100. While India improved its ranking by 23 places from the previous year, it still lagged behind its peers in several indicators such as starting a business, enforcing contracts, registering property, and paying taxes. Bureaucracy also affects the quality and responsiveness of public services such as health, education, sanitation, and social security. According to the World Health Organization's Global Health Observatory data repository, India ranked 145th out of 195 countries in terms of health system performance in 2018. According to the United Nations Development Programme's Human Development Report 2018, India ranked 130th out of 189 countries in terms of human development index (HDI) with a value of 0.64 out of 1.

A third factor that has caused policy paralysis in India is coalition politics. Coalition politics refers to the situation where multiple political parties form an alliance to form a government or to oppose a government. Coalition politics can be beneficial for ensuring representation, diversity, and consensus in a democracy. However, it can also lead to instability, fragmentation, and compromise in policy making and governance. India has witnessed several coalition governments at the national and state levels since the 1980s. While some coalitions have been stable and successful, others have been fragile and dysfunctional. Coalition politics can create challenges for policy formulation and execution due to conflicting interests, ideologies, agendas, and personalities among the coalition partners. It can also result in policy paralysis due to lack of coordination, communication, and cooperation among the coalition partners. For instance, the United Progressive Alliance (UPA) government led by the Indian National Congress (INC) from 2004 to 2014 faced several instances of policy paralysis due to disagreements and dissent from its coalition partners such as the Trinamool Congress (TMC), the Dravida Munnetra Kazhagam (DMK), and the Nationalist Congress Party (NCP).

Policy paralysis in India has had significant negative effects on its economic growth, development, and global image. Policy paralysis has slowed down India's economic growth rate from an average of 8.2% per annum during 2004-2009 to an average of 6.7% per annum during 2009-2014. Policy paralysis has also hampered India's development goals such as poverty reduction, employment generation, social inclusion, and environmental sustainability. According to the World Bank's Poverty and Equity Data Portal, India had 176 million people living below the international poverty line of $1.90 per day in 2011. According to the International Labour Organization's World Employment Social Outlook Trends 2019 report, India had an unemployment rate of 5.3% in 2018. According to the World Bank's Inequality Data Portal, India had a Gini coefficient of 35.7 in 2011, indicating a high level of income inequality. According to the Yale University's Environmental Performance Index 2018 report, India ranked 177th out of 180 countries in terms of environmental performance with a score of 30.57 out of 100. Policy paralysis has also tarnished India's global image as an emerging power and a potential partner for trade, investment, and cooperation. Policy paralysis has eroded India's credibility, confidence, and competitiveness in the global arena.

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Measures and Initiatives Taken by the Modi Government to Overcome Policy Paralysis and Boost Economic Growth

Since coming to power in 2014 with a landslide victory, the Modi government has taken several measures and initiatives to overcome policy paralysis and boost economic growth in India. One of these measures is demonetization. Demonetization is the act of withdrawing or invalidating a particular currency as a legal tender. On November 8, 2016, Prime Minister Modi announced that all Rs500 and Rs1000 banknotes would cease to be legal tender from midnight that day. This decision was taken with the aim of curbing black money, counterfeit currency, terrorism financing, and corruption in the economy. The government also introduced new Rs500 and Rs2000 banknotes with enhanced security features to replace the old ones.

Another measure taken by the Modi government is the implementation of the Goods and Services Tax (GST). GST is a comprehensive indirect tax that subsumes various central and state taxes such as excise duty, service tax, value added tax (VAT), sales tax, entry tax, octroi, and luxury tax into a single tax. GST was introduced on July 1, 2017 with the aim of simplifying the tax system, reducing the tax burden, increasing the tax base, and improving the compliance and transparency in the economy. The GST has four tax slabs of 5%, 12%, 18%, and 28% for different goods and services, with some exemptions and concessions for essential items and sectors.

A third initiative taken by the Modi government is the promotion of digitalization. Digitalization is the process of using digital technologies to transform various aspects of the economy and society. The Modi government has launched several schemes and programs to promote digitalization in India such as Digital India, Make in India, Startup India, Skill India, Smart Cities Mission, Aadhaar, Unified Payments Interface (UPI), BharatNet, and Pradhan Mantri Jan Dhan Yojana (PMJDY). These schemes and programs aim to provide digital infrastructure, services, platforms, skills, and opportunities to the citizens and businesses of India. They also aim to foster innovation, entrepreneurship, employment, and inclusion in the digital economy.

These measures and initiatives have had positive effects on India's economic growth, development, and global image. These measures have helped India to recover from the slowdown caused by policy paralysis and to achieve a robust growth rate of 7.4% per annum during 2014-2019. These measures have also helped India to improve its development indicators such as poverty reduction, employment generation, social inclusion, and environmental sustainability. According to the World Bank's Poverty and Equity Data Portal, India reduced its poverty headcount ratio from 21.2% in 2011 to 13.4% in 2015. According to the International Labour Organization's World Employment Social Outlook Trends 2019 report, India increased its employment-to-population ratio from 52.8% in 2014 to 53.7% in 2018. According to the World Bank's Inequality Data Portal, India improved its Gini coefficient from 35.7 in 2011 to 35.1 in 2016. According to the Yale University's Environmental Performance Index 2018 report, India improved its environmental performance score from 30.57 in 2016 to 30.97 in 2018. These measures have also enhanced India's global image as an emerging power and a potential partner for trade, investment, and cooperation. These measures have increased India's credibility, confidence, and competitiveness in the global arena.

Challenges and Opportunities for India to Achieve Hyper Economics in the Future

While India has made significant progress in overcoming policy paralysis and boosting economic growth, it still faces many challenges and opportunities for achieving hyper economics in the future. Hyper economics is a term that describes a mode of economic activity that transcends the conventional boundaries of markets, institutions, and resources. It involves leveraging digital technologies, innovation ecosystems, human capital, and social networks to create value and impact at an unprecedented scale and speed.

One of the challenges that India faces for achieving hyper economics is innovation. Innovation is the process of creating new or improved products, One of the challenges that India faces for achieving hyper economics is innovation. Innovation is the process of creating new or improved products, services, processes, or business models that meet the needs and expectations of customers, markets, and society. Innovation is essential for enhancing productivity, competitiveness, and growth in the economy. According to the Global Innovation Index 2022, India ranked 48th out of 132 countries in terms of innovation performance, with a score of 36.58 out of 100. India performed well in some indicators such as ICT services exports, venture capital receipt value, finance for startups and scaleups, graduates in science and engineering, labor productivity growth, and domestic industry diversification. However, India lagged behind in other indicators such as research and development (R&D) expenditure, patent applications, scientific publications, university rankings, quality of institutions, and business sophistication.

Another challenge that India faces for achieving hyper economics is education. Education is the process of acquiring knowledge, skills, values, and attitudes that enable individuals to participate effectively and responsibly in the economy and society. Education is crucial for developing human capital, fostering innovation, enhancing social mobility, and reducing inequality. According to the Education at a Glance 2021 report, India had a low level of educational attainment among its adult population. Only 10% of adults aged 25-64 had a bachelor's degree or higher, compared to 17% on average across OECD countries. Only 16% of adults aged 25-34 had a bachelor's degree or higher, compared to 38% on average across OECD countries. India also had a high rate of illiteracy among its adult population. According to the UNESCO Institute for Statistics, India had an adult literacy rate of 74% in 2018, compared to 86% on average across the world.

A third challenge that India faces for achieving hyper economics is demographics. Demographics is the study of the characteristics and trends of the population, such as size, age, gender, birth rate, death rate, migration, and urbanization. Demographics can have significant implications for the economy and society. On the one hand, India has a large and young population that can provide a demographic dividend for economic growth. According to the World Bank, India had a population of 1.38 billion in 2020, making it the second most populous country in the world after China. More than half of India's population was under age 30 and less than one-fourth was age 45 or older. According to the UNICEF Data Portal, India had an employment-to-population ratio of 53.7% in 2018, indicating a high potential for labor force participation.

On the other hand, India faces challenges in managing its demographic transition and ensuring its population's well-being. According to the World Bank, India had a fertility rate of 2.2 births per woman in 2020, slightly above the replacement level of 2.1 births per woman. This means that India's population will continue to grow in the coming decades, putting pressure on its resources and environment. According to the Yale University's Environmental Performance Index 2018 report, India ranked 177th out of 180 countries in terms of environmental performance with a score of 30.97 out of 100. India ranked close to the bottom on a number of indicators such as ecosystem vitality (178th), biodiversity (179th), biodiversity habitat index (170th), species protection index (175th), wetland loss, forest loss (179th), and air quality (178th). India also faces challenges in providing adequate health care, education, and social security to its population. According to the World Health Organization's Global Health Observatory data repository, India had a low level of health expenditure per capita of $69 in 2017, compared to $1,080 on average across the world. India also had a low level of health workforce density of 4.6 physicians and 3.2 nurses and midwives per 10,000 population in 2017, compared to 15.6 and 28.6 on average across the world. According to the United Nations Development Programme's Human Development Report 2018, India had a low level of human development index (HDI) of 0.64 in 2017, compared to 0.73 on average across the world. India also had a high level of multidimensional poverty index (MPI) of 0.12 in 2015-2016, indicating that 27.5% of its population was multidimensionally poor.

Despite these challenges, India also has many opportunities for achieving hyper economics in the future. One of these opportunities is digital technologies. Digital technologies are technologies that use digital information and communication to create, store, process, and transmit data and signals. Digital technologies include devices such as computers, smartphones, tablets, and wearables; platforms such as cloud computing, big data, artificial intelligence, blockchain, and internet of things; and applications such as e-commerce, e-governance, e-learning, e-health, and e-agriculture. Digital technologies can enable India to leapfrog the traditional stages of economic development and create new sources of value and impact in the economy and society. According to the McKinsey Global Institute's report Digital India: Technology to Transform a Connected Nation, India had a digital economy worth $200 billion in 2017-2018, accounting for 8% of its GDP. The report also estimated that India could increase its digital economy to $1 trillion by 2025, accounting for 20% of its GDP.

Another opportunity that India has for achieving hyper economics is innovation ecosystems. Innovation ecosystems are networks of actors and factors that interact and collaborate to generate, diffuse, and apply innovation in the economy and society. Innovation ecosystems include actors such as entrepreneurs, investors, researchers, educators, policymakers, and consumers; and factors such as infrastructure, institutions, policies, regulations, culture, and markets. Innovation ecosystems can foster a culture of creativity, experimentation, risk-taking, and problem-solving in India. They can also facilitate the creation and scaling of new or improved products, services, processes, or business models that meet the needs and expectations of customers, markets, and society. According to the Global Innovation Index 2022, India ranked 4th out of 132 countries in terms of innovation efficiency ratio, which measures the ratio of innovation output to innovation input. India also ranked 1st in terms of ICT services exports, 2nd in terms of graduates in science and engineering, and 3rd in terms of venture capital receipt value.

A third opportunity that India has for achieving hyper economics is human capital. Human capital is the stock of knowledge, skills, abilities, and attributes that individuals possess and can use to contribute to the economy and society. Human capital is vital for enhancing productivity, competitiveness, and growth in the economy. It is also important for improving well-being, happiness, and quality of life in the society. According to the World Bank's Human Capital Index 2020, India ranked 116th out of 174 countries with a score of 0.49 out of 1. The index measures the expected productivity and earnings of a child born today over their lifetime, based on indicators such as health, education, and survival. India performed well in some indicators such as child survival rate (97%), adult survival rate (83%), and learning-adjusted years of school (10.2). However, India performed poorly in other indicators such as stunting rate (38%), harmonized test scores (355), and expected years of school (12.2).

Conclusion

In conclusion, this article has examined how India has emerged from policy paralysis to hyper economics by analyzing its causes, consequences, measures, challenges, and opportunities. Policy paralysis is a phenomenon that refers to the inability or unwillingness of the government to implement effective policies due to various political, bureaucratic, or social constraints. Policy paralysis has adversely affected India's economic growth, development, and global image. However, since 2014, under the leadership of Prime Minister Narendra Modi, India has embarked on a series of bold reforms and initiatives to overcome policy paralysis and boost economic growth. These measures have paved the way for India to enter a new phase of economic transformation, which some analysts call hyper economics. Hyper economics is a term that describes a mode of economic activity that transcends the conventional boundaries of markets, institutions, and resources. It involves leveraging digital technologies, innovation ecosystems, human capital, and social networks to create value and impact at an unprecedented scale and speed. India faces many challenges and opportunities for achieving hyper economics in the future, such as innovation, education, demographics, environment, and geopolitics. India needs to address these challenges and leverage these opportunities to realize its full potential as a hyper economic power.

This article has provided an overview of the topic of India emerging from policy paralysis to hyper economics. It has not covered all the aspects and nuances of the topic, but rather aimed to provide a general understanding and perspective. For those who are interested in learning more about the topic, here are some sources that can be accessed online:

Source

Title

URL

Book

India Transformed: 25 Years of Economic Reforms by Rakesh Mohan

Report

Digital India: Technology to Transform a Connected Nation by McKinsey Global Institute

Article

India's Hyper Economics by Rajiv Kumar and Pankaj Chandra

Article

India's Policy Paralysis: Causes, Consequences and Remedies by Arvind Panagariya

Article

The End of Policy Paralysis in India? by Milan Vaishnav

Frequently Asked Questions (FAQs)

Here are some frequently asked questions (FAQs) about the topic of India emerging from policy paralysis to hyper economics:

What is policy paralysis?

Policy paralysis is a phenomenon that refers to the inability or unwillingness of the government to implement effective policies due to various political, bureaucratic, or social constraints.

What is hyper economics?

Hyper economics is a term that describes a mode of economic activity that transcends the conventional boundaries of markets, institutions, and resources. It involves leveraging digital technologies, innovation ecosystems, human capital, and social networks to create value and impact at an unprecedented scale and speed.

How did India overcome policy paralysis?

India overcame policy paralysis by embarking on a series of bold reforms and initiatives under the leadership of Prime Minister Narendra Modi since 2014. These measures included demonetization, GST, digitalization, reforms in various sectors, and foreign policy outreach.

What are the benefits of hyper economics for India?

The benefits of hyper economics for India include enhancing productivity, competitiveness, and growth in the economy; improving well-being, happiness, and quality of life in the society; and strengthening India's global image as an emerging power and a potential partner for trade, investment, and cooperation.

What are the challenges of hyper economics for India?

The challenges of hyper economics for India include fostering innovation, improving education, managing demographics, protecting environment, and navigating geopolitics. India needs to address these challenges and leverage its opportunities to realize its full potential as a hyper economic power. 44f88ac181