Despite recent economic setbacks, former Indian ambassador to the U.S. Lalit Mansingh has an optimistic outlook for India’s role in the world in 2050. When Prime Minister Modi suddenly announced he was removing all 500- and 1,000-rupee notes from circulation, the announcement was immediately met with disregard. Although designed to mitigate money laundering by devaluing currency typically held in the shadow economy, and boosting the government’s share of the tax income, Modi’s scheme instead undermined everyone who participates in the country’s informal economy, which economists estimate account for nearly 20 percent of the nation’s GDP. Widely panned as harming not necessarily millionaire money launderers, but the working poor, particularly in rural areas without established financial infrastructure, the demonetization plan tossed the long-term fate of India’s role in the global economy—and confidence in Modi’s ability to lead it—into question. In the first quarter since the scheme was implemented, the projected growth for the Indian economy has slowed, to 5.6 percent, rather than the 7.6 percent growth of last year. Former foreign secretary of India and former Indian ambassador to the United States Lalit Mansingh, however, has a decidedly optimistic outlook on India’s future, despite what he sees as the temporary setback of the demonetization scheme. Ambassador Mansingh is currently serving as the diplomatic advisor to the Federation of Indian Chamber of Commerce and Industry (FICCI) and chairman for the FICCI India-U.S. Policy Group. Previously, the career civil servant served as deputy chief of mission in the Indian embassies in Kabul, Brussels, and Washington, DC among other roles. He spoke with The Diplomatic Courier about India’s economic setback, initiatives to meet a growing, unskilled workforce, gender equality, and his predictions for India’s place in the world in 2050. This interview has been edited for length and clarity. *** [DC]: What do you see to be India’s role in the global in emerging economic trends over the next few decades? [LM]: Let’s start with now, because India is celebrating its 70th anniversary of independence. And we’ve traveled a long way since 1947. Compared to ‘47, when 80 percent of people were below the poverty line, now we have 21 percent below the poverty line. Which means that vast millions of people have crossed poverty lines and are better off today. Educational levels are higher, literacy rates are higher, the economy is growing at a healthy 7.2 percent this year and is going to grow at 7.5 percent next year, according to the IMF. There’s a projection by Citigroup 2050 India’s economy will be around 86 trillion and the China will be around 80 trillion dollars, and the U.S. will be close to 45 trillion dollars. That gives you an idea of the kind of economic growth that is likely to take place between now and 2050. [DC]: When you consider the economic downturn over the past few years, you’re still optimistic? [LM]: This is a mystery. The economy is growing but there are certain segments of the economy that are not doing so well. And important segments, like manufacturing. Jobs have not been created as anticipated. But I’m looking at the plus side, that if the economy grows at the projected rate, then India’s economy will be perhaps the top economy by 2050. But then, India’s population is also growing, whereas China’s population is going down, and we might well have 1.5 or 1.75 billion people, making us the most populated country in the world. Now, let me come to the problems. The problems are, because India is young, a lot of young people are now growing up and coming into the labor market. It is estimated that one million young people will join the labor force in India, and they’re not all well educated, they’re not all well-qualified in skill. And this is a problem that India is beginning to face, that while the economy is growing at 7.75 percent, the jobs are not growing proportionately, and this will be a huge problem, not just economically, but political and social (sic). The PM’s big schemes are Skills India, providing for half a billion young people over the next ten years or so, to educate them in certain skills that will be used in the labor market. He wants to improve manufacturing and calls “Make it in India”, which is working. He is developing a hundred smart cities, which will be new planned cities all over India. [DC]: When you say improve manufacturing, do you mean create growth in domestic manufacturing or attracting international manufacturers to India? [LM]: That’s an interesting question. We are aiming at improving our manufacturing to improve our status in the global market. Exports are a weakness of the economy right now. And his vision that we should triple our exports has not worked on the ground, and our exports are currently stagnant. So there’s new thinking now in India that maybe we should improve our quality and make our goods cost effective and then gain access into the world market. We are now at the level of 115 billion a year, and the target is related to 500 billion in the next few years. Whether this will happen or not is a question mark, but to achieve this, we must produce goods and merchandise that is acceptable to the American people in terms of quality and cost. And we have tough competition from countries like China and Korea and other places. It’s something he is doing and we won’t know if it’s going to work or not immediately. But I think that’s the way for us to the future. There’s no option for us but to improve our manufacturing and that’s the only way for us that jobs can be created. [DC]: As you mentioned, so many people entering the labor market are unskilled, and many of the people currently in the labor market are in more of the unincorporated, or informal jobs. Do you see those people incorporating more into what you’ve called the neo middle class, of both existing and aspirational middle class citizens? [LM]: Mr. Modi is looking at the basic problem of India, which is why we have poverty at still unacceptable levels—twenty one percent poverty means that tens of millions of people are below the poverty line who are almost in a state of destitution, so unless we start with them, India is never going to change. So he is sort of turning, economic security upside down and starting with the bottom of the pyramid. He is trying to bring them into the organized economy. Part of this is through a scheme that provides the required opening balance on a new bank account, so that anyone can walk into a bank and open an account. [DC]: Do you see these plans to bring people into the new economy include both men and women, or is it more of a male-dominated scheme? [LM]: I’m told that about eighty percent of the new bank accounts are in the names of the women. They are given the priority for getting the bank accounts for the families. So if the subsidies are to be received, in the account, the government says it would rather be in the name of the woman who runs the household. This is important. [DC]: Doesn’t that imply that the women are still expected to run the household? When women have control over the household bank accounts, it’s not necessarily a reflection of equality in the labor market. Are women being incorporated into the labor market as a whole in India? [LM]: Well, that is being...you know, partly it was the disparity in education and gender bias in our traditional society, but now girls are going to school in equal numbers as boys. In fact, part of the pressure on the labor market is because of the large number of women who are joining the labor market, when before, it was the monopoly of the men. So it’s a process, because, you know, we are dealing with centuries of prejudice and disadvantage but changes are taking place.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.