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Challenges preventing India to become a great power-II

Economic Challenges 

One of the biggest challenges India faces is its working population getting enough jobs. The country currently enjoys a considerable demographic dividend where its working population is growing fast but the unemployment rate is increasing. Therefore, there is a need to sustain and increase growth by providing the 1 million people joining the workforce every month a productive job. India also has a higher rate of informal employment rather than formal employment opportunities. There is a need to create more formal-sector jobs and also create a shift from a higher informal base to sustain high growth.  

India needs to understand the changing dynamics of the international economy. There is a considerable shift of focus from global multilateral trading systems to free trade agreements between a small group of countries and regions. There is also financial stagnation in the flow of money with discomfort over globalisation hurting local industries in developed nations like USA, UK, etc. India while discovering new sources of FDI, markets and trading arrangements has to keep this dynamic in mind. There is also a decline in Indian exports and domestic Investments whereas there is an overall increase in foreign direct investment. This fall is also partly regarded by the adoption of certain domestic economic policies but also due to international changes. Technological advancements providing artificial intelligence, machine learning, and robotization are also hurting export-led manufacturing growth. This significantly impacts countries like India with cheap labor advantages excelling its production sector. India also has a fragile supply chain, lack of skilled labor and cumbersome bureaucracies making it even more vulnerable while competing with self-learning mechanisation. This can also in the future hurt the textile and garment manufacturing sector back to the developed countries hurting India even further. There is a need to diversify its production capacity and also adopt new technology. The sector where India also has to expand economically is with infrastructure development. 

The income inequality in India is also rising at a major pace as the gap between the rich and the poor is widening in the country with only 1% of the population bagging around 73% of the total wealth generated. There are millions of people still in poverty with no access to proper welfare schemes designed to tackle the issue. There is also widespread economic inequality between various states within which has to be tackled.      

India also has the challenge to diversify its carbon-dependent energy resources to renewable alternatives. India faces the widespread issue of pollution in air and water. This pollution has to be curbed as it possesses a serious threat to the abundant natural resources of the country. 

Domestic Challenges

India has to look upon the aspect of perception and transparency as the government is seen to be corrupt and business procedures to be highly complicated and filled with red tape. Another issue is the ambiguity of business procedure which India is working upon and has also shifted from the 100th to 77th rank for ease of doing business from 2017 to 2019.   

India has to work upon its education and skills as it has 487 million workers, but more than two-thirds of Indian employer’s report that they struggle to find workers with the right skills. This contrast poses serious questions as to how India can get the best out of its people through education and training. India is also Urbanizing rapidly as More than one-third of Indians live in cities. It is estimated that 900 million people will be living in urban centers by 2050. Therefore, there is a need for innovative models of urban development to accommodate this population shift. 

India also faces the burden of infectious diseases and a dramatic rise in non-communicable diseases, now estimated to account for more than half of all deaths. These include cardiovascular disease, cancer, chronic respiratory conditions, and type-II diabetes, all of which affected over 63 million Indians in 2012 alone. Apart from causing individual tragedies, these diseases are also being a major economic threat. According to the World Economic Forum, India stands to lose $6.15 trillion due to non-communicable diseases and mental disorders by 2030. Therefore there is a need to expand and modernise its healthcare capabilities but also to work upon the aspect of sanitation as many health challenges are linked to it. The government of India had a specific focus on it with programs such as the Swachh Bharat Mission. The challenge is to identify and implement the right way to provide 1.2 billion Indians with a clean environment which is also very difficult. India’s large population places a severe strain on its natural resources, and most of its water sources are contaminated by pollutants, sewage and agricultural run-off. While progress has been made, gross disparities in access to safe water remain. The World Bank estimates that 21% of communicable diseases in India are related to unsafe water, and diarrhea alone causes more than 1,600 deaths daily. There are initiatives undertaken by the government such as the Namami Gange project etc. to clean its rivers and develop its inland waterways but they still need to rapidly work upon this aspect even further.


India has been growing exponentially in its recent history and is moving towards becoming a great power in the near future. There are still various geopolitical, economic and domestic obstacles India needs to overcome. These hindrances can be removed by a mixture of changes in approach and formulation of different policies. India needs to define a clear China Policy as it needs to clearly communicate what it needs from China and what it is and it is not willing to keep for negotiation. India has to devise a clear policy for the USA, as India has to show that it is ready, willing and able to play a larger role in defining a vision for the Indo-Pacific region. India must rethink and strategize effectively its engagement with its neighbors, particularly around existing regional architectures such as SAARC, ASEAN, SCO, BIMSTEC, and BRI. India also has to vigorously work towards propagating New institutions such as the New Development Bank and the Asian Infrastructure and Investment Bank with coherence with existing developed initiatives. India has to work towards changing the perception of the informal sector and in turn create more formal sector jobs. 

The government should also focus on creating support systems that will allow for India’s vast informal workforce to become more secure, productive, and look upon how to make it feasible. India has to also significantly wok towards advancing its technology to build a more capable manufacturing sector. The absence of growth and the disruption of old models globally has to be tackled with India striving to become a principal stakeholder in new technological advanced space.  India has to work in the integration of the inter-state economy with more initiatives like GST etc. India has to also work on clear cut policies to overcome various other issues. These issues depleting natural resources, water scarcity, healthcare, sanitation, urbanisation, and Education. India, therefore, requires a new directive and policy framework to tackle these issues and also work towards becoming a great power. 

Madhav Grover is a 2nd-year student at Jindal School of International Affairs. 


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