Growth and Competitiveness of Indian economy

Context : News - India moves one notch up to 44th rank in IMF's World Competitiveness Rankings 2018


This blog aims to discuss a paradoxical feature of Indian economy : Currently, India appears a "bright spot" when it comes to the growth rate but it is punching way below its weight mainly due to its lower competitiveness.

Why is India’s growth high but competitiveness low?

Competitiveness refers to such an objective: It determines how countries, regions and companies manage their competencies to achieve long-term growth, generate jobs and increase welfare. In an era of open economy and interdependence, growth rate of an economy should go hand in hand with its competitiveness. However, India seems to be an outlier.

Evidences of India's Low Competitiveness : 

• A/t WEF's Global Competitiveness Report 2017-18, India is ranked at 40. 
• India ranks100 in World Bank's doing Business Report, 2018
• Low competitiveness in Infrastructure
• Poor Human Resource : UNDP's HDI - India's rank of 131 puts it in the "medium human development" bracket with nations like Bangladesh, Bhutan, Pakistan
• results in low workforce productivity

Reasons of low competitiveness :

• Yawning Infrastructure gap --> high logistics cost
• Inadequate digital infrastructure
• Poor quality Roadways
• high turnaround time of ports
• Human Resource Quality
• Education system
• Health
• Skill base of Labour
• Complex Tax structure

But still India has high growth rate because : 

• cheap labour availability in large number(wage competitiveness) 
• services sector - the mainstay of Indian economy
• Indian growth rate is not export oriented unlike other competitive economies but is largely domestic consumption driven.

Way Forward : 

India will need to bridge above gaps in short to medium by 

• focusing on both creating physical infrastructure like roads, airports and railway networks, and ‘soft’ infrastructure like fixing our schools or repairing our degraded higher education system or making the population more healthy.

On the other hand, the emergence of disruptive technologies like AI, Automation, 3D printing etc. and developed countries insistence on adding new issues like environmental safety, gender and labour issues etc in trade pacts(WTO, TPP,RCEPT) forces Indian policy makers to think a step ahead. 

Nutritional challenges in India

In India, around 22% of its over a billion population still lives below poverty line. Proving minimal nutritional needs to such number is a challenge in itself.  In 2013 Parliament enacted historic National Food Security Act which aims to provide subsidized food grains to approximately two thirds of India's 1.2 billion people. Significant strides has been made in strengthening public distribution system. However, new Global Nutrition Report 2017 place India at the bottom of the table. Recently, sensing the urgency  and based on NITI Ayog's National Nutrition Strategy, the Cabinet approved National Nutrition Mission. Let us look into India's nutritional challenge in more depth. 

Issues : malnutrition manifest in stunting (low weight for age), wasting (low weight for height), micro-nutrient deficiencies and over-weight.

In Sept 2016, NHRC issued notice to Maharashtra govt over reports of 600 children dying due to malnutrition in Palghar district.

Status : 

• ~ 1/3 rd of children are undernourished
• UNICEF - India 10th spot among countries with highest no of underweight children. 17th - stunted children 
• Global Nutrition Report 2017 - 
• more than half (51%) of all women of reproductive age have anaemia, whereas more than one in five (22%) of adult women are overweight.
• 38% of children under-5 are affected by stunting(Mission 25 by 2022) & 21% of under-5s are defined as 'wasted' or 'severely wasted' 
• calls for nutrition to be placed at the heart of efforts to end poverty, fight disease, raise educational standards and tackle climate change. 

Nutritional Diseases : 

• Kwashiorkor & Marasmus - protein deficiency 
• Anemia - Iron deficiency - 51% of Indian women aged 15-49 anaemic
• Goitre - Iodine deficiency
• Pellagra - niacin deficiency etc. 

Causes : 

• Poverty - extreme hunger; NITI Aayog in a report on the rule played by rations in food security found families BPL consumed more cereals and less milk compared to affluent.
• Lack of access to health and child care services (Poor service delivery)
• Lack of awareness & Illiteracy - hidden hunger; low breastfeeding 
• Unbalanced diet - rice-based diets of south & east India make these ppl more vulnerable to micro-nutrient deficiencies
• Poor Water, Sanitation & Hygiene(WASH) reduces uptake of nutrition (diarrhea, worms)
• Inter-generational cycle of under-nutrition
• Gender discrimination 
• Child marriage 

Need of investment in Nutrition : 

• poor nutrition is poor economics - a/t WB India loses 2-3% of GDP annually due to lower productivity
• poor nutrition will fracture the dreams and aspirations of India to become a global player in manufacturing and other industries. Success of several of Government's initiative like Make In India, Smart City etc rest on healthy workforce.
• poor nutrition is poor humanity - DPSP Article 47 of the Constitution mentions the “duty of the state to raise the level of nutrition..."
• Improving nutrition will be a catalyst for achieving goals throughout the SDGs
• Fighting poverty : a well-nourished child is one third more likely to escape poverty,
• India pays income penalty of 10% due to workforce that was stunted during their childhood.
• Global Nutrition Report 2015 - investment in nutrition has benefit : cost = 16:1 for low & middle income countries 
• Eco Survey 2015-16 noted that it is important to focus on “mother and child,” involving maternal health and early life interventions .

Existing schemes/policies :

• NFSA - 
• ICDS, - caters to the needs of pregnant and nursing mothers and children under the age of 6
• MDM
• PDS
• National Deworming Programme
• National Nutrition Policy
• National Policy for Children,2013 - identifies key priority areas: 
• survival, health and nutrition; 
• education and development; 
• protection and participation, for focused attention

Steps to enhance outcomes : 

NITI Ayog - National Nutrition Strategy

• Focus on governance reforms - strengthening local governance in policy designing and implementation
• Convergence of govt schemes & convergence of state/district implementation prog
• focus on 200 low performing states
• give prominence to demand & community mobilization - key determinant to address India's nutritional needs
• coordination among front line workers -ASHA, ANM, ...
• decentralized approach promoting greater flexibility and decision making at the state, district and local levels.
• Technological intervention through private sector participation in R&D - Fortification 
• providing DBT where service delivery is poor (e.g. Poshak Yojna, BH)

Other suggestion : 

• coarse cereals(millet) - bajra, ragi, along with legumes, leafy vegetables & coconut - could reduce India's micro-nutrient deficiencies & reduce GHG emissions.

Recent Steps taken : 

• National Nutrition Mission (click here for Features, Targets, Strategy) 
• 2018 - National Year of Millet (nutritional superiority)
• Budget 2018-19 : TB Patient to get Rs. 500 per month during treatment

---

Some points to ponder ? 

• Per capita food production in India has increased by 26% (2004-05 to 2013-14), while it has doubled in the last 50 year. Why is then India ranked low in Global Hunger Index ? 
• “The Global Nutrition Report highlights that the double burden of undernutrition and obesity needs to be tackled as part of India’s national nutrition strategy". What explains the existence of such paradox ? 

Why the Risk of Obesity is Greater for the Poor ? 

• Poor families have limited food budgets and choices
• Families choose high-fat foods dense with energy – foods such as sugars, cereals, potatoes and processed meat products – because these foods are more affordable and last longer than fresh vegetables and fruits and lean meats and fish.
• Economic insecurity – such as trouble paying bills or rent – leads to stress, and people often cope by eating high-fat, sugary foods.
• Poor families often live in disadvantaged neighborhoods where healthy foods are hard to find. Instead of large supermarkets, poor neighborhoods have a disproportionate number of fast food chains and small food stores providing cheap, high-fat foods.
• Options for regular physical activity can also be restricted for poor people:
• Due to inflexible work schedules, lack of transportation, or unmet needs for child care, poor parents, especially single mothers, may find it hard to support extra activities for their children. Leaving kids in front of the TV is often all stressed poor parents can manage
• In many poor neighborhoods, parks, playgrounds, trails, and free public gyms are often not available or safe
• mothers who smoked during pregnancy(inefficient chulhas), poor breastfeeding

Primary & Secondary Education in India

Primary Education in India means from Class I to VIII. Secondary Education means Class IX to XII. (Education system in India)

Major Surveys :

• Pratham's Annual Status of Education Report(ASER) - ASER 2013 report shows that barely 47% of children in grade 5 could read a grade 2 level text.
• NCERT's National Achievement Survey(NAS)
• NCERT's All India Educational Surveys (AIES)
• UNESCO's Gender Parity Index (GPI) - improved "substantially" at primary and secondary levels by increasing enrolment of girls, although in higher education, gender disparities still prevail 

Present Status (Facts)

• Literacy rate : 74%
• Pupil to Teacher Ratio : 23:1 national level for primary schools in 2015-16(RTE stipulates PTR should be 30:1(primary level) and 35:1(upper primary level) Improved
• Gross Enrollment ratio : 
• Primary Level: 96% 
• Secondary Level: 52%
• Higher education Level: 20% 

Legislative framework : Right of Children to Free and Compulsory Education Act, 2009 (separate analysis later)

Institutions :

• SCERTs and DIETs for teacher training
• District Information System For Education

Existing Schemes/Initiatives :

• Midday Meal Nutrition Scheme
• Beti Bachao Beti Padhao 
• Integrated Scheme for School Education
• Sharva Shiksha Abhiyan (SSA) - scheme for universalisation of Education
• Rashtriya Madhyamik Shiksha Abhiyan (RMSA)
• Teacher Education (TE)
• ShaGun portal for monitoring implementation of SSA

Case study : 

• Kerala first state to achieve 100% literacy (Athulyam scheme)

Challenges/Shortcomings in present education system : 

• Limitations and challenges of the RTE Act 
• focuses on inputs — infrasturcture, teacher qualifications and compensation, standardized textbooks, curricula, etc. — more than on important outcomes such as the quality of education. 
• Poor teaching quality
• Focus on rot learning rather than promoting analytical abilities 
• High dropout rate
• Issue of accessibility especially in rural areas - naxal affected areas
• Inadequate budgetary support
• Lack of adequate infrastructure e.g. chair, toilet, laboratory equipment, sports goods, digital connectivity etc.
• Gap between RTE & Child Labour (Prohibition and Regulation) Act, 1986, amended in 2016: Prohibition of employment of children below 14 years in all occupations or processes except where child helps his family. National Commission for Protection of Child Rights had recommended revisions in child labour law and had specifically called for deletion of the word 'regulation' so that “child labour abolition becomes non-negotiable”

Suggestions : 

• Focus on two T's - Teacher & Technology
• Improving Teacher Management System(deployment, capacity building, etc) 
• Use of Technology to make it more more accessible, affordable and better monitoring of student progress
• Operation Digital Board on the lines of Operation Blackboard of 1987 should be started aimed at providing better digital education in all schools.
• Need to make education system outcome oriented - linking a component of teacher's salary with students' performance e.g Voucher system to infuse competition in public school
• Inclusive : Bridging social & gender gap
• Promoting vocationalization of education
• Promoting Volunteer teaching through programmes like Vidyanjali 
• Holistic approach : Effort should be in building sound body(sports) and inculcating moral values too.
• Strengthen anti-poverty schemes as total elimination of child labour would not be practical as long as poverty persisted

Steps taken for training teacher : 

• RTE (Amendment) Bill, 2017 - 
• to include the defined class-wise, subject-wise learning outcome
• allows teachers gives teachers time till 2019 to complete qualification. Under a scheme ‘Swayam Prabha’, teachers will not only be trained offline or online & even through direct-to-home (DTH) television channels
• Prashikshak is the teacher education portal for DIETs which contains a comprehensive database of all DIETS in the country with all relevant performance indicators.
• DIKSHA portal to assist teachers by equipping them advanced digital infrastructure.

The blog is Part of  Educating the Nation series

Education in India - constitutional framework & generic challenges

Under Constitutional Division of Power, 'Education' is a subject under the CONCURRENT LIST (42nd Constitutional Amendment Act) thus imparting equal responsibility to both States & Centre.

Following are important constitutional provisions wrt education : 

Article 21A - the 86th CAA made Right to Education a Fundamental Right of children aged between 6 to 14 to get elementary education.

• In 2009 Parliament enacted Right to Education Act commonly known as RTE.

[Note : Child Labour (Prohibition And Regulation) Amendment Act, 2016 defines adolescent has been defined as a person between the ages of 14-18 years. It permits employment of adolescent labour except in hazardous processes or occupation.]

Article 28 - Freedom as to attendance at religious instruction or religious worship in certain education institutions.

Article 45(DPSP) - Provision for free and compulsory education for children

Article 51A(k) - makes it Fundamental Duty "to provide opportunities for education by the parent the guardian, to his child, or a ward between the age of 6-14 years as the case may be."
 As an ancient Sanskrit shloka says :

meaning, those parents are like enemy, by whom the child is not educated. (Because an uneducated person) doesn't grace the (august) assembly, as the crane amongst swans. 

Article 350A - It shall be the endeavour of every State and of every local authority within the State to provide adequate facilities for instruction in the mother-tongue at the primary stage of education to children belonging to linguistic minority groups; and the President may issue such directions to any State as he considers necessary or proper for securing the provision of such facilities.

Common Challenges wrt Public Education in India 

• Low Literacy Rate : 74.00% (2011 census) vs China/Brazil >90%
• Finance : Low budgetary support  ~4% of GDP(demand of 6% since Kothari Commission, 1965)
• Inadequate infrastructure : e.g. of separate toilet for boys-girls, proper desks, computer etc.
• Accessibility  
• Quality - poor teaching quality,  Poor learning outcome; preference for private school,   
• Not Inclusive - women, tribal , minority
• High Cost(elitist) especially in higher education leading many to drop out

Part of Educating the Nation series

Educating the Nation

Education is one of the surest means in actualizing true human potential. That is, education is one of key ingredient to make human, human resource. The significance of education in a rather realistic tone is aptly put in the following Sanskrit Shloka

“Vidya dadati vinayam vinayad yati patratam 

Patratvad dhanam apnoti dhanad dharmam tatah sukham”

meaning, Education leads to sensibility, sensibility attains character/qualification, from that comes wealth and from wealth (one does) good deeds, from that (comes) joy] - Hitopdesha

As the world is moving more from primary(agriculture) to secondary(manufacturing) and now to tertiary sector i.e. world becoming knowledge economy, imparting education is becoming more national priority. The UN in its Developmental Agenda 2030 recognizing the "force multiplier" effect of education in attaining other goal has made universal education it's central goal (SDG #4 - Quality Education).

However, India's all indicator point a picture that is far from being satisfactory. In a series of upcoming blog posts, I will try to present and analyse status of Indian Education from different perspectives and at different layers accompanied by policy suggestions to improve its quality and accessibility. Here's brief outline : (these will be hper-linked gradually)

• Education - constitutional framework & generic challenges 
• Primary/Elementary & Secondary Education
• Higher/Tertiary Education
• Sectoral Analysis (status, challenges & suggestions) 
• Medical Education 
• Engineering 
• Humanities
• Law
• How to foster the culture of Innovation
• Recent steps : RISE, Integrated Scheme of School Education ...

How to be honest ?

That's a million dollar question? Unfortunately, there is no single answer. Honesty is at best personal inclination to be true devoid of any expectation in return. One has to have earnest desire of being honest. It should be like a habit.

Childhood stories, examples showcased by elders at home, school  etc. can have far reaching consequence on shaping one's character. Lessons of life is the best teacher.

Still, there are measures which can be taken at individual level, societal level and at institutional level to promote honesty in our societies. This requires following interventions : 

Individual level :

• Reading biography of the likes of Mahatma Gandhi
• Minimalism: Minimizing our wants/greed and if not, then ensuring that we always adopt right means to achieve our wants.
• Willingness to inquire about consequence of being dishonest

Societal level :

• Counter materialistic culture 
• The yardstick for measuring success should not merely be wealth but how they achieved it.
• To tackle nepotism, we should not exploit relationship for self benefit rather we must strive ourselves to get what we want.

Institutional level : 

• School: imparting moral education and not just enriching in maths & science.]
• Right leadership : can inspire good character by providing role model.
• Legislation : law makers need to make stricter law against fraudsters & enforcement agency need to catch them.

The approach has to be combination of carrot and stick - rewarding the honest & hardworking and seriously reprimanding the dishonest. 

Impediments in being honest ?

Now that we understand the importance of being honest it is important to know what are different impediments that stops us from leading an honest life.





The impediments are both internal and external to the agency. These are explained below with some examples.

Internal factors:

• Human greed - the root cause of all evils.
• Rationalization of existing malpractices : e.g. mentality which sounds like "small grafts do not matter as long as efficiency is not impacted". This is the deep seated problem.
• Relationship : We have soft corners for our close relatives, friends and well wishers. These relationship breeds expectation and to meet those expectation we might be compromising with our integrity. That does not mean relationships are bad. That only suggest relationship can handicap our honest & impartial decision making.

External factors :

• Societal acceptance : In a developing society like ours, often dishonest people manage to wield power and money. In a world becoming materialistic such people enjoy respect from society irrespective of means they have adopted.
• Ambiguity in laws : rules & regulations needs to be as clear as possible.
• Culture of organisation/ Departmental tolerance : An organisation showing lenient attitude towards dishonest and malafide practices is likely to breed evil tadpole.
• Poor enforcement and organisational oversight 
• Materialistic culture : Material prosperity has become the yardstick of measuring one's success and that, arguably, forces many to amass wealth irrespective of means they adopt.
• Harassing the honest : while one may argue honesty is a virtue and is expected of everyone, for any quality to be promoted in society it needs adequate feedback. Suitable prize for those showcasing honesty must be the norm and not harassing them. 

How to overcome these impediments? Read the next blog in this series.