Less corrupt India's GDP can leap to $28.2 tn by '20: Prahalad
India can increase its GDP by a staggering $28.2 trillion by 2020 if it improves human development index and becomes less corrupt. How to handle common office lies?
By PTI |
NEW DELHI: India can increase its GDP by a staggering $28.2 trillion by 2020 if it improves human development index and becomes less corrupt, world renowned economist C K Prahalad has said.
India's poor tally of 3.3 on the Corruption Perception Index (CPI) on the scale of 10, a ranking done by Transparency International in 2006, showed that very few others were perceived to be worse than the world's second populous country.
According to Prahalad's calculations, if India were able to check the menace of corruption and reaches on the seventh rank (near the US), and achieves the 20th position out of 175 in Human Development Index (HDI) of the UN, the country's per capita income will move dramatically to $25,000 from the current level of $3,800, based on the Purchasing Power Parity (local buying capacity).
The GDP gap this represents in total is $28.2 trillion, the Professor at the Ross School of Business, University of Michigan, the US, said here at a CII lecture on 'India @ 75' today.
"The explicit, quantifiable price we are paying for corruption and the neglect of human resources in the country is staggering and should be the focus of national debate," he said.
The poor quality of human development is not about lack of resources but "it is about the level of corruption in the deployment of resources," Prahalad said.
India's poor tally of 3.3 on the Corruption Perception Index (CPI) on the scale of 10, a ranking done by Transparency International in 2006, showed that very few others were perceived to be worse than the world's second populous country.
According to Prahalad's calculations, if India were able to check the menace of corruption and reaches on the seventh rank (near the US), and achieves the 20th position out of 175 in Human Development Index (HDI) of the UN, the country's per capita income will move dramatically to $25,000 from the current level of $3,800, based on the Purchasing Power Parity (local buying capacity).
The GDP gap this represents in total is $28.2 trillion, the Professor at the Ross School of Business, University of Michigan, the US, said here at a CII lecture on 'India @ 75' today.
"The explicit, quantifiable price we are paying for corruption and the neglect of human resources in the country is staggering and should be the focus of national debate," he said.
The poor quality of human development is not about lack of resources but "it is about the level of corruption in the deployment of resources," Prahalad said.
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It is good governance or less corruption which leads to high level of per capita GDP and not the other way round. "A nation does not get rich first and then becomes less corrupt. A nation becomes less corrupt before it gets rich. A focus on human development is quite critical for getting rich," he said.
Prahalad said it would be very slow process of change unless corruption is treated with the "seriousness of treason."
He underscored the need for accountability for performance. "Infant mortality is about 2 million children per year due to infectious diarrhoeal diseases. Who is accountable for these needless and preventable deaths?"
In his comprehensive presentation, Prahalad touched upon several people-centric economic issues.
He said, masses in India are restless and the country has to deal with potent mix of low per capita income, poor record of developing human potential and income inequalities.
The focus must shift from the income inequality to income mobility, he said.
However, inclusive growth for him is not about subsidies but about creating sustainable opportunities.
Prahalad said it is 800 million Indians living at the bottom of the pyramid on merely $2 a day which have significantly contributed to the consumer-led growth that the country has seen in the recent years.
"The growth in two wheelers, cell phones, personal care products, textiles, private sector health care and education owe a lot to these families," he said.
The emergence of poor as consumers has altered the picture dramatically, he said.
Affordability to the new consumer (poor) without a sacrifice in quality has changed the value equation, he said, citing examples of cataract surgery, cell phone for $30 each, $0.01 for a sachet of shampoo, $2,500 for a car, $100 for a computer and $25 for hotel room.
"This increasing capacity to create lifestyle equality can provide an antidote to increasing income inequality," Prahalad said.
He said, masses in India are restless and the country has to deal with potent mix of low per capita income, poor record of developing human potential and income inequalities.
The focus must shift from the income inequality to income mobility, he said.
However, inclusive growth for him is not about subsidies but about creating sustainable opportunities.
Prahalad said it is 800 million Indians living at the bottom of the pyramid on merely $2 a day which have significantly contributed to the consumer-led growth that the country has seen in the recent years.
"The growth in two wheelers, cell phones, personal care products, textiles, private sector health care and education owe a lot to these families," he said.
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The emergence of poor as consumers has altered the picture dramatically, he said.
Affordability to the new consumer (poor) without a sacrifice in quality has changed the value equation, he said, citing examples of cataract surgery, cell phone for $30 each, $0.01 for a sachet of shampoo, $2,500 for a car, $100 for a computer and $25 for hotel room.
"This increasing capacity to create lifestyle equality can provide an antidote to increasing income inequality," Prahalad said.
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