East Asian Model for India
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Baljit Dhaka
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East Asian Model for India

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Economics

East Asian Model for India

Introduction:

East Asian Growth Model is a comprehensive prototype suggested by the Economic Survey to achieve India’s ambitious target to become a $5 trillion economies by 2024-25.

According to the economic survey, India needs a cycle of savings, investments, and exports to transform India into a $5 trillion economy in the next five years.

It rightly underlines the need for India to revive private investment to become the world's third-largest economy soon.

Major catalysts that will boost growth:

Maintain the real GDP growth rate @ 8%

Encourage private investment -A key driver

Focus on exports

Job creation that will further boost savings and expenditure to facilitate  economic growth

Utilize Current Demographic Advantage

East Asian Growth Model:

The East Asian model is an economic system where the government invests in certain sectors of the economy to stimulate the growth of new industries in the private sector.

It is state-sponsored capitalism, which includes

State Control of finance

Direct support of state-owned enterprises in strategic sectors of the economy

promoting a high rate of savings and investments

high educational standards

Export-oriented policy.

The East Asian model was largely driven by the newly industrialized East Asian economies of Singapore, Hong Kong, South Korea, and Taiwan, etc.

Steps followed by these countries to achieve the milestone:

Microeconomic stability

Low inflation

Fiscal discipline

Tight regulation of state-owned banks

Directed lending to govt and capping of interest rates

The close association between Govt. and banks

sophisticated industrial policies to promote domestic investment, much of which was export-led

How India can replicate the Model?

since 1991 India’s reforms have been rather haphazard and of a ‘stop-and-go’ nature, which has made it much more challenging for the country to take full advantage of its demographic dividend. So India needs policies and reforms that are carefully calibrated.

The Indian government needs to understand that a vertical industrial policy (economic growth) would not work without a sound horizontal industrial policy (dealing with labor, land reforms, bringing about basic literacy, and raising women’s participation in the labor force).

Measures like reducing policy uncertainty, ensuring the fiscal discipline; enhancing the efficiency of financial intermediation, dealing with land acquisition and environment clearances are all essential so that the investment rate can be again increased.