Sunday, April 06, 2014
This month’s national election may well be the most important in India’s history. Our country faces a limited window of oppor tunity called the ‘demographic dividend’ and if we elect the right candidate, prosperity will enter crores of lives. And in the course of time, India will become a middle class country. If we elect the wrong candidate, India will experience a ‘demographic disaster’ and the great hope of youth will turn into despair.
India’s opportunity comes from being unique ly young — the large majority of people are of working age. Such a demographic situation gener ally brings a surge in economic growth as gains to society from those in the productive age far outweigh the burden of supporting the old and the very young. The dividend typically adds two percentage points to per capita GDP growth per year, as many economically successful countries have demonstrated in the past.
We should vote for the candidate who has the ability to harvest the demographic dividend. He will achieve it by investing in infrastructure and skills training; cut red tape to encourage private investment; and eliminate unproductive subsi dies. This will create masses of new jobs. People in those jobs will consume more, which will give impetus to consumer industries. They will also save more, which will drive investment and growth. With more production, inflation will gradually decline. Falling fertility in the demo graphic transition will improve women’s health which will add to the workforce and improve social indicators. Higher income and lower sub sidies will improve government’s finances, mak ing it possible to invest more in education, health and welfare of the poor.
Who among the rival parties is best capable of delivering the demographic dividend? Certainly not the regional parties — they are mainly obsessed with local issues. The Aam Aadmi Party is con cerned with corruption and crony capitalism and has shown little interest in attracting investment or creating jobs. Between the two national parties the Congress is ambivalent. Its reformers under stand the power of the demographic dividend but they are usually trumped by a ruling dynasty that favours equity over growth, preferring give-aways to win votes from the poor. Although Congress new manifesto does speak of jobs and growth, it is a half-hearted attempt. Because of this ambiva lence, reforms and infrastructure building slowed in the UPA government, confusing investors and paralyzing the bureaucracy. And this led to a trag ic fall in India’s growth and rise in inflation.
That leaves the BJP. As an opposition, it has been a disaster. However, the BJP’s thinking in the past year has been dramatically transformed by Narendra Modi who is single-mindedly focused on investment, jobs, skills and growth — key ingredients in realizing a demographic dividend Modi has proven to be a consummate implement er, a rare skill among India’s politicians. His suc cess lies in giving clear direction to the bureauc racy, which could help him un-gum the system at the centre. Given clarity of purpose, the Indian bureaucracy is capable of high performance, as we saw in Narasimha Rao’s first two years from 1991 to 1993. For these reasons, he is our best chance to deliver the demographic dividend.
Modi is likely to reduce corruption as well based on his record. Those who think he will fail to manage a coalition do not give him credit for being a shrewd politician who has recently wrest ed leadership of his party. The BJP without Modi is an unappealing option; nor is voting for him vote for RSS’ social agenda. The RSS is afraid in fact, that its Hindutva programme might be marginalized by his economic agenda. But there is a clear risk in voting for Modi — he is polariz ing, sectarian and authoritarian. There is a great er risk, however, in not voting for him. It is to not create jobs for 8-10 million youth that enter the market each year. One per cent rise in GDP rough ly adds 15 lakh direct jobs; each job creates three indirect jobs, and each job supports five people This means three crore people are impacted by one per cent growth. Restoring growth to 8% is prize worth thinking about when casting one’ vote. There will always be a trade-off in values at the ballot box and those who place secularism above demographic dividend are wrong and elitist.