The Leap of Faith:

India's growth story has been full of twists and turns, with humble and modest beginnings in
1950s driven by Planning, Capital Goods and focus on establishment of state run institutions to
provide needs of the people. Beginning 1960s-70s the focus turned rightly to food security and
focus on Green revolution gave dividends. However, India was stuck in a phase of "Hindu
Growth Rate" by the end of this period.
Due to a multitude of factors, both internal and external by late 1980s India was feeling some
heat in global economic system with the emergence of a major Balance of Payment Crisis. It
wasn't the first time we had a crisis, it was just the magnitude of this crisis was unparalleled. In
this background, we took "The Leap of Faith"(partially driven by IMF norms too) and introduced
LPG reforms. And since then, there has been no turning back. From having mere 10 odd days
of forex, India now boasts "Fastest growing Economy" tag until recently.
Consumption has been the leader in driving our growth story, with the good demographic
dividend India has had helping the cause manifold. Globalization indeed helped India in more
ways than one and has helped the consumption factor for our Economy. Government policies
have ensured that India remains consumption intensive and the economic shocks are reduced
as much as possible.
However, after nearly 70 years of independence and almost 25+ years of the LPG reforms, it is
time to set another "Leap of Faith". It is time India focuses on next generation reforms to allow
industry and private investment to drive the economy.
As argued in the Economic Survey 2019, the economy needs to be viewed not being in a
constant state of disequilibrium or vicious cycles, but into "Virtuous Cycle". It is time India brings
in reforms that can spur the domestic savings and help the government increase private
investment in India. India's constant rise in global rankings like Ease of Doing Business (World
Bank) only seconds our argument that we can improve and are currently hitting below potential.
Investment brings in industry, which in turn brings jobs and increases the standard of living of
the workers. The increased standards in turn further increase consumption, and setting the
multiplier into motion which will help India achieve the ambitious goal of $5 trillion Economy by
2025.
To India's benefit, the Demographic Dividend is argued to be available till 2040s(Economic
Survey 2019). This means we can expect that the consumption led growth will not be hampered
up until this time at the very least. If this demographic is provided additional capital as argued
above, India's economic growth will be a new model, unparalleled in economic history.
However, the road isn't smooth either. Major sectors like labour, wages, land & agriculture,
banking sector, among others need to be provided a push which will help the overall goal of
Private investment. The "Emerging and Disruptive Technologies" are rapidly changing the
overall way economies work and India will need serious adaption to it, indeed emerge as a
leader. Data has already been termed the new "oil" by industry czars, it is time the government
puts in enabling legislation to help mine this new resource. The huge demographics will need
augmentation of skills, good healthcare and a security of Job which the government needs to
focus on as the next step.
The task is indeed herculean, however, the aim is also not miniscule. With strong political
leadership and public mandate, if the government of the day decides to take the leap of faith,
and the citizens respond in an equivalent or even stronger way by backing the government, the
target of $5 trillion will not be too far away. All we need is another leap of faith.