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India’s growth narrative: Towards a $ 30 trillion Economy, Sucralose, Ganga River Channel

Table of Contents

(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Inclusive Growth and issues arising from it.)

  • India’s growth narrative is often highlighted with optimism, emphasizing its rapid GDP growth and status as the world’s fastest-growing large economy.
  • Historical precedents show that many nations at similar junctures failed to transition into developed economies.
  • For India to achieve its goal of becoming a $30 trillion economy by 2047, it must sustain rapid economic growth driven by liberal economic policies that leverage the private sector.
  • There is a phrase often repeated in policy circles about India — “It’s a country with mouth-watering opportunities and eyewatering challenges.”

Issues Hampering India’s Growth –

  1. Agricultural Dependence:
  2. Labor Force: Approximately 46% of India’s labor force is employed in agriculture, which contributes only 18% to GDP.
  3. Low Productivity: The sector is characterized by low productivity as compared to Vietnam and Bangladesh and underemployment.
  4. Female Labor Force Participation Rate (FLFPR):
  5. Current Status: India’s FLFPR is around 37%, significantly lower than countries like China, Vietnam, and Japan, which have rates between 60%-70%.
  6. Post-COVID Impact: The pandemic has seen a temporary increase in female agricultural labor, masking the overall low participation.
  7. Manufacturing Sector Challenges:
  8. Low-skilled Employment: India has not fully leveraged its surplus labor for low-skilled, employment-intensive manufacturing.
  9. Comparison with Asian Tigers: South Korea, Taiwan, Japan, and Vietnam achieved rapid growth through export-oriented industrialization focused on low-skilled manufacturing.
  10. Middle-Income Trap:
  11. Historical Data: Of 101 middle-income economies in 1960, only 23 achieved high-income status by 2018.
  12. India’s Position: Still a lower-middle-income economy, India needs to avoid losing its edge in lower-end sectors while not being competitive in high-tech sectors.
  13. Tariff Policies: Impact on Competitiveness: High import tariffs could lead to inefficient domestic industries and higher costs for manufacturers reliant on imported components.

Measures to Achieve $30 Trillion Economy –

  1. Economic Liberalization:
    1. Private Sector Role: Emphasize market-led growth with minimal government interference to encourage entrepreneurship and innovation.
    1. Ease of Doing Business: Continue reforms to simplify business processes and reduce regulatory burdens.
  2. Cluster-Led Industrial Development:
    1. Infrastructure: Develop industrial clusters with world-class infrastructure like China and Vietnam, including education, healthcare, and entertainment, to attract employers and workers.
    1. Regulatory Relaxation: Implement relaxed regulations in designated industrial zones to foster a favorable manufacturing environment.
  3. Export-Oriented Growth:
    1. Focus on Manufacturing: Promote low-skilled, employment-intensive manufacturing sectors such as electronics assembly and apparel.
    1. Openness to Trade: Maintain an open trade policy to enhance export competitiveness and integrate into global supply chains.
  4. Enhancing FLFPR:
    1. Support Services: Improve support services like childcare and eldercare to enable more women to join the workforce.
    1. Skill Development: Invest in skill development programs targeting women to increase their employability in diverse sectors.
  5. Agricultural Reforms:
    1. Productivity Enhancement: Introduce technology and best practices to improve agricultural productivity.
    1. Diversification: Encourage diversification into high-value crops and allied activities to increase farmers’ incomes.

India stands at a critical juncture with immense opportunities and significant challenges. To transform into a $30 trillion economy by 2047, India must pursue a balanced approach that addresses its structural issues while fostering a conducive environment for growth.

By embracing economic liberalization, enhancing infrastructure, promoting export-oriented manufacturing, increasing female labor participation, and reforming agriculture, India can unlock its true potential. The path to prosperity demands forward-thinking policies and relentless efforts to overcome barriers, ultimately fulfilling the vision of a prosperous and developed nation.

  • The Finance Bill 2024, passed in the Lok Sabha, includes an amendment that offers relief for real estate capital gains tax.
  • Taxpayers can now choose between a new lower tax rate or the old regime with a higher rate and indexation benefits.
  • Earlier, in the budget 2024-25 proposal to remove the indexation benefit for long-term capital gains (LTCG) on real estate, replacing the 20% tax rate with a 12.5% rate without indexation.
  • Individuals or Hindu Undivided Families (HUFs) who bought houses before July 23, 2024, can now opt to pay LTCG tax at 12.5% without indexation or 20% with indexation.
  • The Finance Bill was passed by voice vote with 45 official amendments.
  • The Finance Minister defended the Budget, stating it aims to promote investment and benefit the middle class.
  • Measures taken by government:
  • Reduced customs duty to promote trade
  • Tax exemption hike on long-term capital gains in listed equities and bonds to ₹1.25 lakh.
  • Simplified taxation regime and eased compliance as 72% of taxpayers opted for the new regime
AspectLTCGSTCG
Holding Period >36 months for most assets
 >12 months for listed securities, equity-oriented mutual funds, and zero-coupon bonds
 ≤36 months for most assets
 ≤12 months for listed securities, equity-oriented mutual funds, and zero-coupon bonds
Tax RatesEquity-Oriented Investments: 10% (for gains >₹1.25 lakh without indexation)
Other Assets: 20% with indexation or 12.5% without indexation for house property bought before 23 July 2024.
Equity-Oriented Investments: 15%
Other Assets: Individual’s applicable income tax slab rate
ExemptionsAvailable under specific sections of the Income Tax Act (e.g., Section 54 for residential property reinvestment)Generally, fewer exemptions are available compared to LTCG

Dig Deeper:  Can GST rate changes be made through the Finance Bill?

The Transplantation of Human Organs and Tissues Act of 1994
• An Indian donor cannot donate organs to a foreigner unless they are a near relative, which includes spouses, children, parents, siblings, and grandparents.
• Certification of the relationship by a senior official of the donor’s embassy in India is required.

  • (Organ Donation Advisory released in June and covered in June Magazine)
  • The Union Ministry of Health & Family Welfare has issued guidelines for the transportation of live human organs, a first in the country.
  • These protocols aim to ensure the rapid movement of life-saving organs.
  • The Transplantation of Human Organs and Tissues Act, 1994, permits the harvesting of organs from living donors or brain-dead patients with family consent.
  • These organs are transported between hospitals by air or road, depending on the location of eligible recipients.
  • The Standard Operating Procedure (SOP) will guide healthcare institutions in States/Union Territories on transporting organs via various modes, including metro trains and over water.
  • It specifies that organs for transplant will only be transported within India and not outside the country.
  • When transporting organs by air, the Ministry recommends screening the organ box without opening it, though passengers carrying organ are not exempt from security checks.
  • Priority in deboarding.
  • Airlines may facilitate front-row seating, priority reservations, and late check-ins for organ transport.
  • Green path (free from obstruction) and providing a trolley for the organ box from the ambulance to the aircraft at the origin and from the aircraft to an ambulance at the destination.

Dig Deeper: Read about the National Organ and Tissue Transplant Organisation.

  • A recent Indian study examined the effects of replacing sucrose with sucralose in coffee and tea on adults with Type 2 Diabetes.
  • The 12-week randomized controlled trial found no adverse impact on glucose or HbA1c levels and noted slight improvements in body weight, waist circumference, and BMI.
  • Published in Diabetes Therapy, the study is significant as it follows the WHO’s caution against non-nutritive sweeteners (NNS) for weight control in non-diabetics.
  • Sucralose is a zero-calorie artificial sweetener, approximately 600 times sweeter than sucrose (table sugar).
  • Derived from sucrose, it replaces three hydroxyl groups with chlorine atoms, making it stable at high temperatures, and suitable for baking and cooking.
  • It is widely used in beverages, baked goods, dairy products, and processed foods.
  • Approved by regulatory bodies like the FDA and WHO, it is generally considered safe, though some studies suggest potential impacts on gut health and insulin sensitivity, requiring further research.

Dig Deeper: Read about Stevia.

Avulsion is the natural process by which flow diverts out of an established river channel into a new permanent course on the adjacent floodplain.

  • In 2018, a geochronologist team from the Netherlands studied the movement of river channels in the Ganges. A finding published in June 2024 in Nature Communications, showed a magnitude 7-8 earthquake caused the Ganga’s course shift.
  • They discovered a 2-km-wide paleochannel, indicating the Ganga abruptly changed its course about 2,500 years ago, leaving this ancient river path.
  • This area, now used for rice cultivation, revealed sand dikes formed by earthquakes, providing the first proof that earthquakes can move rivers.
  • The research used optically stimulated luminescence (OSL) dating to determine the timing of the earthquake and avulsion, confirming both events occurred around 2,500 years ago.
  • The earthquake likely originated in the Indo-Burma mountain ranges or the Shillong hills, both tectonic plate boundaries.
  • This discovery suggests that large earthquakes can trigger major river avulsions, potentially causing devastating floods, especially in heavily populated regions like the Ganges-Meghna-Brahmaputra delta, home to 630 million people.

Dig Deeper:  List Himalayan Rivers which are subject to frequent course changes.