HYDERABAD: “Few countries are as well endowed as India, with a genuine capacity to become a global power. But, before it can reach there, the country has to go through fundamental transformations,” said Dr Ashley Tellis, a senior associate at the Carnegie Endowment for International Peace and a specialist in Asian strategic issues. He was speaking here at an event organised by Manthan on Tuesday.
Dr Tellis said the West had been dominating the world for the most part of modern history. They did this by focussing on high growth rates, creation of massive economic capacities and market reforms.
Quoting China’s example, he said, for well over two decades, the Chinese economy had maintained peak growth and not high growth (which the Indian economy showed for a few years before peaking out). Capital accumulation, important for capacity-building, is at 50 per cent of GDP in China compared to 30 per cent in India... which affects the Incremental Capital Output Ratio (measures capital efficiency in terms of returns) to encourage more savings.
“Indian savings are not properly monetised — a major portion of it is locked up in physical assets such as gold and real estate, which are not further channeled towards building capacities for growth”, he said.
Expanding on India's future, Dr Tellis cited the case of the country's young population. There is good news as well as bad news, according to Dr Tellis.
“The good news is that the Indian demography is exceptionally capable. The bad news is that most of the labour force — though younger — is still not ready when vital parameters such as education, public health etc. are considered”.
Dr Ashley said unless India made massive investments in reducing its education and public health deficit, it would be impossible for the nation to achieve the West’s standards.
