Wednesday, March 14, 2007
Demographic-dividend and Infrastructure-deficit
In my view the recent cover stories in The Economist (subscription required), Fortune and Business Week, focusing a glaring spotlight on India's infrastructural and institutional problems , is a positive development for atleast two reasons. First, one lesson to be drawn from these stories is that India's awe-inspiring economic growth is no longer a news that is worthy of being adorned on the covers of prominent business magazines anymore. Media does not thrive on good news for long. For media, there is no good news like the bad news. As Indian growth story seeps firmly into the western consciousness, the real scoop is to be found in what can possibly hamper this elephant with wings as it seeks to emulate the upward flight of the giant dragon. Secondly, Indian media and politicians have been in the self-congratulatory mode for far too long. They seem to think that high economic growth and rising living standards are foregone conclusions which are going to be achieved under any circumstances. In this tsunami of optimism, some incovenient truths are being conveniently brushed aside and make-believe hyperbole like demographic dividend is ruling the roost. In such an environment, somebody has to provide a much needed sanity check and remind everyone that we are only getting started towards the long road to economic prosperity. The demographic dividend can as easily become a demographic disaster if we fail to do what is needed to be done, namely- improving the quality of country's creeking physical infrastructure and accelerating the economic reforms process. By some estimates, the country's infrastructure-deficit causes it to lose atleast 2 percentage points from its potential GDP growth. If the scatching criticism in the world's premier news publications adds even a 2 percentage points in the sense of urgency to address this problem, then it would have served its purpose.