Reduced global oil prices and renewed investor confidence have put India on the growth roadmap and helped it to become one of the fastest growing developing economies.
According to the macroeconomic projections for 2030 by the US Department of Agriculture, in the next 15 years, India is believed to rise up the rankings and for the first time, enter the top three to become the third largest economy in the world.
The current macroeconomic projections for 2015 show India in the eighth spot, behind countries like Brazil, France and Germany.
According to Ernst and Young, the Indian workforce will grow to 900 million strong by 2020. To put that in perspective, the American workforce, which is the third largest in the world, comes in at just under 160 million people.
Because economic growth results from the combination of capital goods, like factories and computer systems, with labor, a growing labor force can be a huge boon for an economy. At the same time, the Indian government must also train its workforce effectively and build the necessary infrastructure to help its economy flourish.
According to a recent post in CNNMoney:
Currently only 2% of India’s workers have received formal skills training, according to Ernst & Young. That compares with 68% in the U.K., 75% in Germany and 96% in South Korea.
It’s a problem spread across industries. The Royal Institution of Chartered Surveyors estimates that in 2010, India needed nearly 4 million civil engineers, but only 509,000 professionals had the right skills for the jobs. By 2020, India will have only 778,000 civil engineers for 4.6 million slots.
There is a similar gap among architects. India will have only 17% of the 427,000 professionals it needs in 2020.
A recent survey by Aspiring Minds, which tracks workforce preparedness, found that more than 80% of India’s engineering graduates in 2015 were “unemployable.”
“The quality of training offered in most colleges is not at par with the high demands generated by tech industries,” said Preet Rustagi, a labor economist at the Institute for Human Development. “There is no regulatory body that keep checks on the quality of education.”
On the other hand, India was the world’s largest remittance recipient in 2015 despite experiencing a $1 billion drop from the previous year, the first decline in its remittances since 2009, the World Bank said recently.
India retained its top spot in 2015, attracting about $69 billion in remittances, down from $70 billion in 2014, the World Bank said in its annual report “Migration and Development Brief”.
Other large remittance recipients in 2015 were China, with $64 billion, the Philippines ($28 billion), Mexico ($25 billion) and Nigeria ($21 billion).
India has liberalised foreign investment policies and created a “very favourable investment climate” for investments across all segments of economy — agriculture, manufacturing and services, finance minister Arun Jaitley told the Development Committee meeting of the International Monitory Fund (IMF).
Mr. Jaitley said Foreign Direct Investment (FDI) inflow in India has increased by over 30-40% in last two years and India is now “the largest FDI destination in the world.”
If India can successfully transform its human resources into productive workers, we can expect it to quickly replace China as the economy that both inspires fear and respect among American economy watchers and grab a position on the world’s platform having every eye from the plethora of resources.