Putting India to Work

How Modi Can Make the Subcontinent Grow

Indian Prime Minister Narendra Modi celebrates International Yoga Day, June 2015. Adnan Abidi / Reuters

Most developed countries have been struggling with years of slow economic growth. The United States is likely to manage only two or three percent increases in GDP for the foreseeable future. The European Union and Japan would be happy with one percent. In addition, China will report six percent, but that probably translates to true gains of just four percent.

In this company an India that surges seven or eight percent for years to come will stand out. Not surprisingly, such a prospect has won it plenty of international attention, with everyone from Apple’s Tim Cook to the World Bank offering praise.

Yet there is a catch. India’s growth in GDP would constitute a resounding success only if it was labor intensive, involving sustained and large-scale job creation. If not, millions of young Indians entering the labor force will not be able to find decent jobs and growth boasts will be hollow. This problem hasn’t gone unremarked. In mid-2016, Prime Minister Narendra Modi began to embrace the challenge by frequently noting that the Indian economy needed to “transform.” He dropped his previous insistence that “creative incrementalism,” or piecemeal progress, would be enough.

Unfortunately, although solid performance is within easy reach, transformation remains distant. If India is to sprint, not merely jog, New Delhi must allow Indians to be much more productive. That will require easing very restrictive labor market regulations, first and foremost, as well as taking other steps such as permitting full private ownership of land. It is also past time for India to recognize that its people stand to gain far more from open trade than they stand to lose.


Indians certainly do not need to be reminded of this fact, but the rest of the world may: the country is still poor. Policymakers and development experts debate where the poverty line should be and over the value of Indian government statistics in general, but the magnitude of the challenge is clear. Perhaps 250 million

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