Led by India, South Asia moving towards becoming center of global growth: IMF
Washington: Led by India, South Asia is moving towards becoming center 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 center 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, the top IMF official said.
"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.
Together with this, there is need to reduce red tape obstacles and maybe more generally the footprint of the state, including in the financial sector, Gulde-Wolf said.
Bangladesh, which has had a very impressive development history in the recent past, mainly based on the garment industry, needs to diversify its economy, she said.
Noting that Bangladesh has a very low revenues to GDP ratio, low debt, but also very low investment in infrastructure, she said it is critical for this country to increase the infrastructure that would be needed for expansion of the private sector.
Among other countries Nepal, Maldives and Bhutan each one has their own issues, but the common issue that really binds them together is the need to unleash more private sector groups.
Sri Lanka, she noted, is in many senses, slightly different because it's benefiting less from the, demographic dividend because it's already reached its maximum. The island nation does not have the same growth history as the other South Asian nations.
Responding to a question, Gulde-Wolf said subject to implementation of the IMF recommended reforms, India's income level on PPP basis would be reaching about 45 per cent of the US income level and it would one third of the global growth.
Observing that it is always difficult to make a long-term forecast, she said it is important to show what the potential is and what the payoff over time off reforms can be.
India has a significant potential, but there is need of a significant reform, she said, adding that these reforms need to be implemented to set the trajectory. If you lose time by delaying this reform, it will take more time to catch up to where you are. And the time window is not very big, the IMF official said.
"Reforms need to be implemented. We still see that the slow down at this stage is mainly cyclical, but the most recent numbers that have come in are lower than we have expected," Gulde-Wolf said.
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Satyagraha sparks political storm in Kerala as CM accuses Centre of financial squeeze
Thiruvananthapuram (PTI): Kerala saw a heated political showdown on Monday as state ministers led by Chief Minister Pinarayi Vijayan took to the streets with a Satyagraha, accusing the BJP-led Centre of squeezing the state financially.
What followed was a war of words, with the BJP hitting back hard and the Congress keeping its distance, turning the issue into a three-cornered political battle.
Standing before party leaders, ministers and supporters at the Martyrs' Column in Palayam here, Vijayan said Kerala had been pushed into an "extraordinary struggle" to protect its rights.
He told the gathering that the Centre was trying to "snatch away" what the Constitution had guaranteed to the states.
According to him, this was not just about money, but about dignity, federalism and democracy.
"This is a struggle for the survival of this land and its people. Believing that all authority rests in their hands, the rulers at the Centre are arbitrarily usurping our rights," Vijayan said, a day after Union Home Minister Amit Shah claimed that the funds given to the state during the NDA period were more than three times higher than what it received during the Congress-led UPA period.
"The present situation has compelled us to take to struggle in order to protect those rights. This is an extraordinary and grave circumstance," the veteran CPI(M) leader said.
He said the Union government was treating Kerala with bias and political vengeance.
The cuts in grants and borrowing limits, he claimed, were meant to choke the state financially.
Vijayan pointed out that Kerala was supposed to get Rs 12,000 crore between January and March, but was denied Rs 5,900 crore without any clear reason. This, he said, had made it difficult for the government to pay bills and run welfare schemes smoothly.
The CM also accused the Union government of centralising power and using money to reward states ruled by friendly parties while punishing opposition-ruled states like Kerala.
He reminded the people of how Kerala was denied permission to receive foreign aid during the 2018 floods and how support was lacking after the Wayanad landslide. These were, Vijayan said, clear examples of discrimination.
Rejecting claims of financial mismanagement, he said the state had continued to invest in welfare, development and jobs despite financial pressure.
Taking on Amit Shah's claim that Kerala received more funds under the Modi government, Vijayan said tax devolution was not a gift, but a constitutional right. He accused the Centre of interfering with the Finance Commission and quoted NITI Aayog CEO B V R Subrahmanyam.
"Subrahmanyam, who is currently serving as the CEO of NITI Aayog, has stated that soon after becoming Prime Minister in 2014, Narendra Modi exerted pressure on the Finance Commission to reduce the tax share of states," he said.
The chief minister said the Finance Commission had recommended 42 per cent for states and that there was an attempt to cut it to 33 per cent. He added that the Prime Minister had not denied this claim.
"When Amit Shah cites figures, he must also clarify these facts. Perhaps realising that none of this can be defended, he has now resorted to dreaming about a distant future," he said.
Calling for wider protests, Vijayan said Kerala would fight legally and politically to protect federalism and ensure its rightful share. He also criticised the Congress-led UDF for not standing with the state at this crucial time.
But the BJP hit back almost immediately. State BJP president Rajeev Chandrasekhar said the Left government was trying to fool the public.
He said a government that had ruled for nearly 10 years had no excuse to shift blame.
"A government that has ruled for 10 years should explain what it has done for the people. That is the basic courtesy in a democracy," Chandrasekhar told a press conference here.
He challenged Vijayan to a public debate on governance and finances. He claimed that Kerala received Rs 72,000 crore during UPA rule, but Rs 3.2 lakh crore under the NDA.
He argued that nearly Rs 7 lakh crore had come through central assistance and borrowings in the last decade, and over Rs 10 lakh crore including revenue receipts.
Chandrasekhar said central schemes worth Rs 16,000 crore were not implemented and pointed to water shortages, unpaid contractors and homelessness.
Meanwhile, the Congress-led UDF chose not to join the protest.
Opposition leader V D Satheesan said his party would not be part of what he called political drama by the LDF.
He alleged an "unholy understanding" between the CPI(M) and the BJP and said the Left was pretending to fight the Centre while quietly supporting its policies.
"If we participate in such protests, we too will lose credibility," he said.
Later in a post on X, Vijayan said Kerala's share in tax devolution, grants and scheme funds have been reduced.
"We have suffered a total revenue loss of Rs 57,000 crores due to the Union Government’s financial discrimination against us."
He said the state was merely demanding what is rightfully owed to it, not any handout from the Union Government.
"Kerala stands firm in its resolve and will resist every attempt to subvert states' constitutional rights," Vijayan said.
