By S.L. Rao

The farther backward you look,the farther forward you can see,'' said Winston Churchill. This essay is a speculation about the future and is rooted in policy trends, ideas in the public domain, and a wishlist of what is needed. My expectation is that, over the next 20 years, we will see an average GDP growth of 6.50 per cent a year. So, by 2020, poverty, as economists calculate it, would have disappeared. There would no longer be anybody in the country who has less than a meal a day in calorie terms.

Projections from the NCAER (National Council of Applied Economic Research) data suggest that India will be one of the largest consumer goods markets in the world by 2020. Within this market, there will be huge niches. The so-called very rich will be a much larger group; in fact, larger than their counterparts in many European countries. Our population (about 1,250 million by 2020) will have a fairly even age-distribution. Today's demographic pyramid will become a barrel, with a high proportion at the bottom (the age-group upto 15), a somewhat smaller working-population (aged between 16 and 60), and a significant proportion of the aged (above 60). The proportion of non-working young dependents will fall; that of the workforce, rise; and that of the aged, be higher than now. This has implications for products, markets and social policies.

India, unlike the developed countries, will not be much of a service economy. By 2020, India will be a major manufacturing economy-not merely in terms of a large organised sector, but also in terms of a better organised small-scale sector. Both will be supported by a strong services sector. By 2020, the share of agriculture in GDP is likely to be 15 per cent; industry, 40 per cent; and services, 45 per cent. But the proportions of employment will be different: far fewer people, for instance, will be employed in the industrial sector.

There will be a great deal of enterprise development in rural areas. The communications network would have improved dramatically by 2020. Our power situation too will be comfortable. Renewables will play a larger role, especially in the rural parts of India. We will be more export-oriented. Today, India's exports are about 8 per cent of GDP. By 2020, this figure will be 15 per cent.

India will be more a part of a relatively borderless world than it is now. But, at the same time, it will continue to be hesitant about becoming too closely integrated with the world. There will be limits on foreign investment and ownership although these regulations will be far more generous than they were in the 1980s. People-flows will become freer than they have been because of the greying of the European, North American and Japanese populations. These countries will need young people from countries like India, who will provide much of the workforce for strenuous work.

We should expect an acceleration of the privatisation of public enterprises. This will happen because of the need of Central and state governments for increasing financial resources to meet the needs of social infrastructure, and also to seed both public and private investments in infrastructure.

We should expect growing foreign ownership and control in a variety of industries ranging from infrastructure to consumer goods. The dominant brands in Indian markets will be foreign-owned, with the Indian brands mostly relegated to niches.

Coalition governments at the Centre are here to stay. This has lead to a growing consensus on economic policies. The electorate no longer condemns reformers to lose elections. We should hope to see a reorganisation of ministries and departments of both Central and state governments in order to improve the co-ordination and speed of decision-making through modular matching. These will happen if we have governments that last their term.

Centralised planning and the direction of resources will give way to a new role for the Planning Commission. It would be a composite of MITI in the 1960s Japan and the National Security Council of the US. India will become a true common market, with easier and speedier movement of goods across states as sales tax-rates become uniform, and octroi is abolished.

The role of business in politics will become more transparent as business contributions will be fully declared to shareholders. More businessmen will enter politics. Caste and religion may continue to play a large role in public policy, but electoral politics may well hinge much more on local issues and their resolution. Regional imbalances will be accentuated. The South will stride ahead, followed by the West. The North and the East will bring up the rear.

The demographic profile of India shows a declining rate of population growth even at the beginning of the century. Life-expectancy will continue to grow, as will female participation in economic activity. The young will be a vital part of the population, with a strong influence on politics and consumption. Literacy will grow even more rapidly than in the 1990s, and could reach the figure of 75 per cent by 2020.

Consumption in rural and low income-groups will accelerate. As it does, and businesses begin to exploit the vast market potential, the balance of advantage will shift to rural India over urban India. Poverty levels will drop sharply, leading to significant changes in lifestyles because of the influence of TV and other mass media as well as the increased penetration of manufactured consumer goods. Law and order will decline. With increasing urban-rural trade, the rural infrastructure will improve; so will rural literacy, education, and the variety in available employment.

The growth in employment will come primarily from an explosion in the services sector and from self-employment, but far less, from industry. As small-scale industry begins to use infotech and modern equipment, it will also become a source for employment for relatively better-skilled people. We should expect a reversing of the braindrain .

The first 2 decades of the 21st Century will see a radical transformation of India. From being a poverty-ridden and inefficient country, it will become one of the world's fastest-growing markets. As poverty declines and consumption increases, local and economic issues will become dominant. Economic policies will become more consistent. Business will be more competitive, with a large foreign presence, a small public sector, better focus and with a far greater emphasis on competence-not inheritance.

S.L. Rao is the Chairman of the Central Electricity Regulatory Authority

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