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‘India 2020’: Moving towards a brighter path?

(Kannan R - Research Associate, ICFAI Business School, Chennai)



          “Everyone should work hard to make India a developed country in 2020”

                                                     - Dr. A.P.J. Abdhul Khalam, President of India.  

 This statement has been made by our beloved President and it has to be achieved only by the way of dedication in each and every level. India, has been a powerful source among the world community as per the recent trend, but getting recognition in all facets is not easy. There are various challenges and opportunities prevailing in and around to go forward and simultaneously the threat is also mounting. In what category we differ from others and how to solve this issue and emerge as a superior power in the forthcoming years has to be clearly analyzed.

 India and its position

 There are various sector in India that needed to be discussed where the strength, weakness, opportunities and threats lies. In the present scenario, Indians are stronger in the Software (Information Technology IT) field and the country is famous for a slogan ‘Knowledge Pool’. Likewise India has weakness in many categories too and they are briefly discussed under with some statistics:  


India: An Internal View


Population & Pollution

 The total population is of over 1 billion which will increases to 1.46 billion by 2035 to cross China. The huge populations will result in higher unemployment and deterioration of quality. Literacy, also a worsening factor in India is yet another factor to be discussed. According to 1991 census, 64.8% of Population was illiterate and male ratio holds 75.3 and female rate is of 53.7%[1]. The literacy level in Rajasthan is very poor and even that has been crossed by Bihar in the recent trend. The major downtrend of education is due to the employment of child labor which is spread all over India and this should be totally eradicated by the way of surveillance and a good educational system must be implemented properly by the Government.  

 China today is in the top of population table. But this position will not be prolonged for ever. China has already taken an effective step to prevent it and their motto is to improve the infrastructure as well as the total systems to meet their demand in the forthcoming years. India, is still not taking an effective method to control the population will in turn be reflected in a big way.

Pollution is one more threat to the environment, for the countries prospects. This has been experienced more in urban areas mainly in metropolitan cities like Mumbai, Chennai, Hyderabad, Bangalore etc. The water pollution by the sewage seepage into the ground water and improper maintenance will lead to various diseases which in turn can affect the next generation. In most of the cities there is no proper sewage disposal.  The Government has to take effective steps to control population which, in turn, will minimize the pollution.  

 Poverty & Child labor

 Poverty questions the entire strengths of India’s political view and minimizes the energetic way of approach. The shortfall of rains, enormous floods, unexpected famine, drought, earthquake and the recent tsunami hit the country in a negative way. The proactive approach through effective Research and Analytical study helps us to determine the effects in advance and proper allocation of funds is a prerequisite. In developed countries like US, Japan precautionary methods are adopted to overcome this, but it has to be improved a lot in our systems (India).

 Increased population is one of the major reasons for poverty and the Government is unable to allocate the basic needs to the society. India, has an estimated population of over 1 billion people with nearly 400 million people living below the poverty line and 90% of active population is in informal economy [2]. The children are forced to become a child labor due to their poverty, differential caste system and untouchables are still customary in some of the states in India. They are working in match industry for daily wages, as servants, mechanics, stone breakers, agricultural workers etc. The education should be mandatory for under 14’s and to prevent child labor, existing laws which favors the Anti Child Labor Act should be implemented by the Government vigorously. There are many social welfare organizations fighting against child labor, aiding them for a better life.  


 The one disease which has slowly spreads its wings into the country is corruption. “The corruption report released by BBC News 29th August 2002, says that the least corruption nation starts from the countries like Finland, Denmark, New Zealand, Iceland, where the Britain stands in the 10th place, while US in 16th, Germany 18th, Japan 20th, Sri Lanka in 52nd, India stands along with Russia in 71st place and Pakistan at 77th place sharing with Zimbabwe. Bangladesh is at the bottom which is the most corrupt country in the world”.   

 Communication & Technical skills 

India is a country with a huge population. More population will result in cheap cost by virtue of the demand supply concept. Most of the foreign countries try to utilize this factor by outsourcing their business in India with a very low capital. According to US, India is a “Knowledge pool” with cheap labor. The major advantage is our Communication and Technical skill which is adaptable to any environment. The cutting edge skill in IT of our professionals will help the outsourcing companies to commensurate with the needs of the consumers in a short span. The major competitors for India are from China and Philippines and by the way of an effective communication and expert technical ability, Indians are ahead the race.

Government Support 

The Central Government supports the States by the way of increasing the business opportunity and decreasing the unemployment by promoting the outsourcing, lending finances to the State Government to fulfill the needs to overcome poverty, natural calamities and for periodical assessments. By the rapid development in the BPO sector, the Central Government took an adequate step to gather business in plenty of ways by improving Infrastructure through necessary funds to the State Government. The major Metropolitan states like Bangalore, Chennai, Hyderabad, Mumbai, Pune etc are targeting vigorously in the outsourcing field by giving various amenities to the outsourcing companies like Tax concession, allotting of land etc., to start their businesses in its cities without any hurdles. Thereby most of the MNCs preferred India as their destinations and capitalize the resources to maximize their assets.      

Foreign Exchange Reserves

 During 2003-04 the foreign exchange reserves which includes gold, SDRs and the reserve position in IMF accounted to $113.0 billion[3]. It rose to $130.02 billion[4] by the end of December showing a positive trend in the capital market. The huge reserves by the way of foreign exchange will help to promote newer business as well as to revitalize the sick industry in and around the country. Because of the abundant reserves, the recent Tsunami devastation was also handled without looking of funds from developed countries. If this scenario in the foreign exchange reserves persists, India can also decrease the debt burden in the World Bank to a minimal and utilize these funds for the welfare of the country.  

Research and Development

 Our neighboring country China’s expenditure in Research and development is $60 billion and standing in the 3rd position next to US and Japan with US$282 billion and US$104 billion respectively (Source: Beijing based Economic daily). About 40% of expenses are covered by the Government and 60% came from domestic and foreign enterprises[5]. India’s input in R&D in  outsourcing market in IT, Telecom and Pharmaceuticals was $1.3 billion in 2003 and will grow to $8 billion in 2008[6]. A number of IT Companies have started their businesses and have outsourced their R&D wing to India.  The best example is that of the General Electric Company (GE) which has already set up an R&D facility in Bangalore to design new products and samples to meet the future competition with a net worth of 80 million and employing 1600 people. Car-maker Daimler Chrysler, Hyundai and some Indian companies like Tata, Infosys and Wipro are also in the list[7] of companies who investing heavily in R&D. India's, current budget allocation for Research and Development is of 1000 crore in 2004-05 against 775 crore in 2003-04[8]. The R&D department not only generates revenue but also provides necessary job opportunities to the country.   


Infrastructure is another key factor for outsourcing company to start a business in the particular city. It includes road, rail, ports, power and water. The increased input in infrastructure in India is very limited where China’s record is excellent. For the development of infrastructure, China spent $260 billion or 20% of the GDP while India is of $31 billion or 6% of GDP (Source: Morgan Stanley’s Mumbai based Chief Economist Chetan Ahya[9]).

 An interesting comparison on Railways between India and China presented by Raghu Dayal on December 17, 2004 in Economic Times says that “Indian Railways laid 53,596 Km in 1950, against Chinese railways 22,161 Km whereas by the year of 2003, Chinese railway had laid 73,002 Km as against 63,122 Km in case of Indian railways”. Even the passenger reports are also less when compared to China. The road facility in India has to improve a lot by the way of constructing more bridges and highways to meet the future demand.                 

Safeguard Measures 

India in earlier days gave more importance for the development of Industry and less importance to other departments. But the scenario has quite changed now-a-days by allocating a special budget of funds for the security. This is because of the frightening increase in terrorism all around the world especially emerging after the 9/11 terror attack in US.  In the last ten years, budget towards the development of military forces is higher when compared to others. It shows that the threat from our neighboring countries is escalating. India has to concentrate more on this security factor to wipe out the problem in the way of cross-border terrorism.  


Making India, a developed country in 2020 is not an easy task. India has to keep in check the Population, corruption and pollution and and will have to  improve the infrastructure. It must also improve social structure and invest more on security. To quote China as an example is that they demolished an old building to construct a very big port to meet future demands, but India is still waiting for  things to happen. India in the recent past has improved a lot in the foreign exchange reserves, outsourcing business and in exports too. The profits gained are to be spent for the development of the welfare of the country. Most of the foreign companies are ready to do business in India because of the individual prowess of manpower which will give fast, quality output in a short span. India’s vision for a brighter path will come true not only by mere words or speech, but extra effort needed at all levels to overcome the pitfalls. Practical session is a requisite rather than fruitless theoretical dialogues.


[1] India’s population to overtake China, Dawn Group of Newspapers, 12 July 2004.

[2] Trade Union World, India’s sad record on Child worker’s 28th October 2004. 

[3] Indiabudget.nic.in

[4] Reserve Bank of India, December 24, 2004.

[5] China ranks 3rd in R & D spending by OECD report, November 3, 2003.

[6] The Outsourcing Times, September 20, 2004.

[7] United Press International.

[8] http.indiabudget.nic.in

[9] Infrastructure the missing link, by CNN’s Asia business editor Geoff Hiscock.