By Lalit K Jha :
LED by India, South Asia is moving towards becoming centre of global growth and could contribute about one-third of the world’s growth by 2040, according to a latest research by the International Monetary Fund. Notably, under the IMF’s geographical division of the world, South Asia does not include Afghanistan and Pakistan. For IMF, South Asia includes India, Bangladesh, Nepal, Sri Lanka, Bhutan, and Maldives. Under a substantial liberalisation scenario, supported by stepped-up efforts to improve infrastructure and successfully harness South Asia’s young and large workforce, the region could contribute about one-third of global growth by 2040, argues the IMF paper ‘Is South Asia Ready for take Off? A sustainable and inclusive growth agenda,’ to be released in New Delhi on Monday.
“Looking at it both from the growth trajectory that we see and the development elsewhere in Asia, we see South Asia as moving towards being much more of centre of global growth,” Anne-Marie Gulde-Wolf, Deputy Director, Asia and Pacific Department, IMF told PTI ahead of the release of the report. Previewing some key aspects of the IMF research, Gulde-Wolf noted that based on demographic trends, more than 150 million people in the region are expected to enter the labour market by 2030. “We have a region with a massive potential for demographic dividend.
(This is), a region that has been seen over the recent past significant growth spurt,” she said. This young and large workforce can be South Asia’s strength, if supported by a successful high-quality and job-rich growth strategy, leveraging all sectors of the economy in a balanced way. The IMF paper says. Although policy recommendations remain country-specific, for many South Asian economies these should include: further progress in revenue mobilisation and fiscal consolidation; greater trade and foreign direct investment (FDI) liberalisation; and investment in people, the paper notes.
What can India do to harness the potential demographic dividend and to avoid pitfalls of rapid growth that we have seen in other areas, she asked. The IMF is looking at sustainable growth, avoiding massive ecological problems that could be associated with this kind of imbalanced prose. That’s why IMF sees India needing a multipronged approach that leverages the advantages that the country already has, she said. “The country has already an excellent tertiary education system, built a on high value-added services. So, in no way, should any strategy devalue that aspect,” she said.
But it needs to be complemented with areas like manufacturing sector, wherein India is below what would one expect from a country with that level of development, she said adding that the issue is how to involve private sector to increase the manufacturing base.India, she noted, needs to create a better environment for private sector growth which looks at a product market, labour markets, land is a particular issue and obviously some of the impetus has to come from foreign direct investment. “It has to be supported by creating a basis of labour force that is able to use the opportunities that would be created here. While maintaining the quality of the tertiary education, more needs to be done to broaden the quality of primary and secondary education,” she said.