India’s hunt for the new Vision 2020

The year 2020 was bleak. And while the calendar changes, things may not change all that much until the public health benefits of a mass vaccination campaign kicks in. Meanwhile, it is important to take stock of where India’s development dreams stand and where the country can go from here.

Many visions and goals need to be sent back to the drawing board; the horizon year for achieving many social and human development indicators will shift. While the US suffered the most in terms of caseload and deaths, the economic fallout in India was among the worst in the world, according to a variety of estimates. This will leave a lingering shadow on critical and necessary public spending for many years to come.

On the development front, India’s rank on the United Nations’ human development index recently fell to 131; it was 127 in the year 2000. Per capita income (in purchasing power terms) came down from $6,829 in 2018 to $6,681 in 2019, and according to IMF estimates, the per capita income for 2020 will fall to $6,284—a perceptible and significant decline. The slide started three years before covid and has accelerated steeply during the pandemic.

A set of simple figures illustrate the magnitude of the problem that lies in days ahead. If the gross domestic product (GDP) for this year contracts by 10% over last year, the government will lose an estimated ₹5 trillion (or $60 billion) in potential tax income. A one percent slowdown in growth rate in India typically results in a 0.5% decrease in employment potential. The impact of this fiscal year’s contraction on unemployment is simply catastrophic and there are no models available that can help us come to a number that is credible. With such a large impact on jobs and on savings, the near future, and the problems that it throws up, are up in the air.

The fact is that Vision 2020—which we have been talking about for 20 years—and even Vision 2024 will have to be seriously rejigged post the pandemic. Even last year, India was setting ambitious goals, some of which seemed far-fetched even before covid. Has the pandemic just destroyed all our calculations?

A careful analysis of a set of key indicators—from economic growth and literacy to healthcare access for all—indicates that many targets will now get pushed back to at least 2030. The individual projections which follow are based on the assumption that the size of India’s economy would recover to its pre-covid level by the end of FY22, grow annually at 9% on average from then on through the decade (official estimate). Another assumption is the country would steadily increase public expenditure on education and health in order to move toward the spending goal of 6% and 10% of GDP, respectively.

Even under this rather optimistic scenario, the earliest year by which India can eliminate dire poverty or achieve 100% literacy is a decade away. The question now is: how quickly will India get back on the glide path toward its long-term development goals and ambitions? Or will recovery be far slower, pushing our modest targets even further away into the future?

Growth and poverty

Ever since the ambitious goal of becoming a $5 trillion economy was articulated, there has been considerable excitement. The expectation was that with a nominal growth rate of 12-14% (and low inflation), we would indeed reach the target by 2025. Union commerce minister Piyush Goyal had announced in February 2019 that we would become a $10-trillion economy in eight years. However, the GDP growth curve had other ideas. Instead of sloping upward, it has been relentlessly sliding down. A 1.2% deceleration in 2017, followed by another 1% slide in 2018 and 2019, was not a great start to the $5-trillion vision.

In 2020, the Indian economy went into a recession for the first time in recorded history. Exports growth has also been going down incessantly. However, there is enough reason to believe that provided the virus cases continue to fall, we should see growth upward of 7% in the next year. But this would not be enough to bring the economy back to the pre-covid level; we would just limp back to somewhere close to the $2.7-trillion dollar economy that India was last year. If we are not going to see any more acts of God in the next few years, then, given present trends, the $5-trillion target that was set for 2024 by Prime Minister Narendra Modi should now be achievable by 2030.

What this means for poverty reduction is not very encouraging. An economy that shrinks can only add to the numbers of the poor and the marginalized. The World Bank had estimated that millions of people across the world would be pushed into poverty this year. India will bear the brunt of this. The poverty figures, therefore, will go up. The moot question is whether this figure will go up by a lot—to nearly 400 million—or will it go up slightly, to settle around 250 million Indians who will be trapped below the poverty line.

The UN’s 2019 multidimensional poverty index had spoken highly of how India managed to lift 271 million people out of poverty between 2006 and 2016, recording the fastest reductions in the MPI values of any country during this period. But despite the improvement, the goal of getting rid of poverty by 2020 had been a distant dream even before the pandemic.

For example, the goal of providing 24x7 power to all households by 2019 has already been forgotten. Less than 50% of the households in India even get electricity for 12 hours. Thus, what could have been achieved by 2025—an end to dire poverty—must now be corrected. And, here too, it is 2030 again, a delay of at least 5 years.

Among the social and human development parameters that are closely linked with poverty, schooling perhaps needs the most urgent fix. Most schools remain closed even after seven months of lockdown and there is no certainty on when they would reopen.

In a country where more than half of the 250 million children of school-going age drop out at the secondary school level, 2020 has only made things worse. What this means is that 37% of global illiteracy that India is responsible for—by way of its illiterate population of nearly 300 million—is not going away quickly. While full literacy and education for all is currently envisioned for 2030, this date now looks uncertain. Given the current trend of schools going online and several educational institutions shutting shop, the danger of a larger number of children slipping out of the schooling net is quite high.

Hunger and health

The global hunger index (GHI) ranks India at 94 among the 107 countries which feature on the list—much lower than Bangladesh at 76 and Pakistan at 88. This again does not factor in the covid-19 impact as the index uses 2015-19 data. Worryingly, recently released phase-I results from the national family health survey (NFHS-5) indicate the marginal nutritional gains India made since the mid-2000s are in the process of being reversed.

We were supposed to achieve food for all and zero malnourishment by 2030. This goal, always a difficult one, has receded to some indeterminable date in the future. The NFHS data shows that the number of underweight and severely wasted children has gone up in 16 states. There has been a surge in stunting since 2015 and a disappointing increase in anaemia—with 57% of women in the 14-49 age group and 69% of children now found to be anaemic. Since anganwadis have not been functional for several months since 24 March, the situation must have worsened considerably. An estimated 190 million Indians sleep hungry on most days.

Nowhere is the scale of the imminent challenge more visible than in the healthcare sector. Alarming doctor shortages, the paucity of ventilators and ICU beds, and the lack of adequate testing facilities were among the biggest reasons for morbidity and mortality while covid-19 was at its peak. The prevalence of comorbidities, which were at the root of many deaths, has only gotten exacerbated since scores of people suffering from chronic illnesses were unable to visit hospitals easily for months.

The long-term effects of a spike in non-institutional deliveries and the poor nutritional status of expectant mothers would all be carried by a generation that will be born in the shadow of 2020. How India manages this continuing health burden will be critical.

Ayushman Bharat had promised healthcare access to 500 million people, or 40% of the population. But there is no evidence of any rapid rise in enrolments. This target seems to have been pushed far into oblivion. The vision of health for all by 2030 also appears unreachable. In addition to the threat of epidemics, which are not receding, we also have to handle the increasing burden of non-communicable diseases. The health sector will perhaps continue to be in the news for a long time to come.

The path to 2030

The clear indication is that almost all our visions for 2020 or 2024 have now been consigned to 2030 or later. In the spirit of good governance, we need to recalibrate our targets and target dates. It is also important that this new vision is monitored carefully and incentivized.

The undeniable fact is that almost all our development goals have changed. We need to now ensure that these new social sector goals remain on the radar of the government. It is easy for a country to bypass its development agenda when faced with a crisis. That is why it is important for civil society to bring the government’s attention back to several long-pending social and human development goals.

India’s development path has never been as challenged as it is today and it will be even more important for the for the Union government to boost its investment in infrastructure and increase development expenditure. These will fuel growth and consumption and then stimulate market forces.

The future is fragile, given the tight fiscal situation that the country is facing. It is imperative that we redesign our interventions and set up new goals with new dates. What is for sure is that the various slogans and promises that were supposed to turn into reality by 2022 or 2024 will now need to be updated. In most cases, the new date is 2030.

If India had little time to lose before this crisis, that window has only gotten even shorter. Small businesses need to be funded and encouraged to re-start and regain their market shares. It is also important for the government and the public sector to become aware of and adept at digital platforms. Unless job growth returns, small businesses begin producing and exporting, and the health and education sector receive significant public investment, the development path that we have chosen will take forever to reach our own modest targets.

The writer teaches development policy at TISS and at ISB in Hyderabad