India’s Path to Becoming an Asian Tiger

Is India achieving its full potential? In the year leading up to the third quarter of 2023, the country experienced a remarkable growth rate of 8.4%. Looking ahead, India is projected to continue expanding at an impressive rate of 6.5% annually over the next five years, positioning it as the fastest-growing major economy in the world. However, critics highlight that compared to other rapidly growing economies like China, Japan, and South Korea that expanded at around 10% annually during their growth phases, India’s growth figures may seem less impressive.

A new book titled “Accelerating India’s Development” by Karthik Muralidharan of the University of California, San Diego, sheds light on a critical barrier to India’s faster development – a lack of “state capacity”. Muralidharan defines this concept as the effectiveness of the government in achieving its goals. Despite successes in mission-driven initiatives, the Indian state faces challenges in everyday aspects of governance such as education and health. Shockingly, three out of five rural children in the fifth year of school in India cannot read at a second-year level, with the failure rate worsening over the past five years.

Muralidharan’s book delves into solutions to enhance India’s development. It emphasizes three key ideas focusing on how the state manages its people, leverages technology, and enhances its federal system. One major challenge highlighted is the high absentee rates among teachers, indicating governance issues rather than problems with pay. Muralidharan suggests filling critical school supervisory roles would be more cost-effective than hiring additional teachers. Improving civil-service management, data collection, and accountability are also crucial aspects highlighted in the book.

A significant theme throughout the book is the importance of addressing India’s federal structure. With 28 diverse states, India’s political landscape is vast and varied. The author suggests decentralizing fiscal affairs to empower local authorities and drive economic growth. For instance, splitting certain states in India has resulted in accelerated economic progress, showcasing the potential benefits of such structural reforms.

While enacting these changes may pose challenges, they are not insurmountable. Improving personnel management, enhancing data collection practices, and strengthening federalism could pave the way for significant governance improvements in India, ultimately driving sustainable growth. The disparity in economic performance across India’s states and cities underscores the potential for growth through effective governance reforms. By implementing the recommended changes, India could unlock its full potential and inspire other regions to follow suit, fostering a more equitable and prosperous future for the country.

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