India’s journey toward becoming a middle-income economy is contingent upon advancements in education and infrastructure, emphasized the Chief Economist of the Asian Development Bank (ADB). India should also uphold its open economy stance and re-evaluate import tariffs that may inflate input costs for sectors where it has a competitive edge. Education is a priority area for improvement, as it is crucial for climbing the technological ladder and producing more sophisticated goods. This requires a skilled workforce, which can be achieved by providing higher levels of education and training. China’s success in this area is evident in its high PISA scores. However, India’s higher education institutions need to improve, as none have made it into the top 100 of the QS World University rankings. Agriculture also requires attention, with policies and reforms to encourage farmers to adopt sustainable and less water-dependent practices. Pricing reforms for inputs like fertilizer, which can be carbon-intensive, will enhance the sector’s resilience to climate change. India’s investments are on the right track, but opportunities remain for attracting foreign direct investment, participating in global value chains, and boosting manufacturing. The government should facilitate ease of doing business, reduce tariffs, and assess their impact on import-dependent sectors. India’s participation in global value chains is growing, but exports in manufacturing-intensive sectors like electronics need further development. The government’s increased capital expenditure and private sector investments are positive signs. To mitigate climate change impacts, India must prioritize sustainable farming. Reforms in farm input pricing and farm produce pricing can encourage farmers to shift to less water-intensive and more sustainable practices. Additionally, replacing subsidies with less distorting social transfers can free up resources for technological innovations that support this transition. India’s farm output growth has slowed in recent years, highlighting the need for new technologies and farming methods that can reduce water usage and greenhouse gas emissions. India’s efforts to address climate change may lead to increased energy and food prices, but each country can implement measures to manage these impacts and support its agricultural economy.
India’s Path to Middle Income Status Hinges on Education and Infrastructure
