Tuesday, January 25, 2005

President Kalam's mantra for national prosperity

Following is an extract from the Indian President Kalam’s Republic Day speech echoing the same concerns I raised in the blog India in the year 2020.

Changing Pattern of Society

When the world was moving from the industrial to the information and knowledge era, we witnessed a changing pattern in the sectoral share of Gross Domestic Product and the number of people employed in each sector. The share of GDP percentage has undergone a considerable change. Contribution of agriculture to India's GDP has reduced from 39 percent to 22 percent during the period 1979 to 2004. During the same period the contribution of the manufacturing sector has moved from 24 percent to 27 percent and whereas the contribution of the service sector has increased from 37 percent to 51 percent. There has been considerable change in the employment pattern also. The percentage of people employed in agriculture has come down from 64 percent to 54 percent. Simultaneously, the percentage of people employed in manufacturing has gone up from 15 percent to 19 percent and in the service sector from 20 percent to 27 percent. This trend has to continue and by 2020 our employment pattern should aim at 44 percent in agriculture, 21 percent in manufacturing and 35 percent in service sectors. The displacement of 10 percent people from the agriculture sector has to be facilitated through skill enabling for undertaking value added tasks in rural enterprises so that migration to urban areas is reduced. Instead of person from rural areas going to urban towns in search of jobs in manufacturing and services sectors, PURA (Providing Urban Amenities in Rural Areas) will facilitate creation of employment in rural areas. PURA achieves this by providing physical, electronic and knowledge connectivities to a cluster of villages thereby leading to their economic connectivity and prosperity.

National Employment Status

The National Rural Employment Guarantee Bill 2004 was tabled in Parliament in its last session to create employment opportunities in the rural sector. What is needed is coordinated planning and linking of the spirit of this Bill to productive and sustainable employment generation schemes for the unemployed youth. Now I would like to discuss the national employment scenario.

As per the estimates of the Planning Commission, the total number of people eligible for employment at present is approximately 400 million. Out of this, nine percent are unemployed which works out to around 36 million. In addition, there is a need to find value added employment for 10 percent of those employed in the agriculture sector in rural areas. Our attempt hence should be to find gainful employment for around 76 million people. This will add to our productivity and will ensure a sustained 10 percent GDP growth for the decade, which is an essential need for India to become a developed country before 2020.

Dear Citizens, a nation of a billion people that is capable of exporting foodgrains, a nation that is recognised for its software products and services, a nation that can build its own aerospace systems and nuclear power plants, a nation that is leading in the pharma and automobile industries, I am sure, will be able to put all its think tanks together and come up with many innovative wealth generating schemes for the productive employment of 76 million people.

The complete text of President A P J Abdul Kalam's address to the nation on the eve of the country's 56th Republic Day is available in this URL : http://us.rediff.com/news/2005/jan/25prez.htm

Friday, January 21, 2005

India in the year 2020

India's foreign reserve is around $131 (as of Jan-1, 2005) billion dollars. However, what is disturbing is our GDP and Labor force distribution.

GDP1 (Gross Domestic Product) Distribution.

- 25% is from Agriculture
- 30% is from Industry (of which 19% is manufacturing)
- 45% is from Services & Information Technology

Labor Force: 470 million

Labor Force Distribution

- 60% Agriculture
- 23% Industry
- 17% Services & Information Technology

Decline in contribution of agriculture towards GDP for the past two decades is in sync with the growth pattern of any developing countries. The share of agriculture in the GDP has shrunk to 25% in 2004 from 40% two decades ago, however the labor force reduction was only 10% i.e., from 70% two decades ago to 60% as of now.


































Services & Others









Labor Force

470 Million

700 Million

778.1 Million

146.5 Million

Public Debt2

59.7 % of GDP

30.1 % of GDP

62.4% of GDP


$57 Billion

$436 Billion

$714 Billion


$74 Billion

$397 Billion

$1.26 Trillion

GDP per Capita3





$3.033 Trillion

$6.449 Trillion

$10.99 Trillion

GDP Real Growth Rate5




The transformation in the GDP is typical of developing country experience. However, if you look at the labor force distribution, we find that 75% of the GDP contribution comes from 40% of the labor force.

All successful developing economies moved significant numbers of people out of agriculture as the share of agriculture in the GDP declined. Looking at the developed nations GDP (see US) shows this fact.

So, over here 60% of (Labor force) our population is dependant on Agriculture and imagine the chaos it will create when there is monsoon failure. Another misconception is that while China has become world’s factory India in the last 10 years becomes the world’s knowledge center – which looks better in paper. China did the right thing in the last 15 years to transform their Agriculture labor force by bringing in industrialization, and that is the natural progress (Agriculture to Industry to Service). Thanks to the liberalization of early 1990’s India did pretty well in the last 15 years. However, we did pretty well in the Service and IT (Information Technology) sectors, neglecting our Agricultural labor force. So, to bring our 60%s Agriculture labor force down to 15% – 20% (i.e., approximately around 220 million people), we need to create more jobs in our industry sector and we need to have good plan and commitment to do the transformation.

We (India) could become an economic giant in 2020 if we were able to move people from Agriculture to other industries. We need government's who could see into the future to do this transformation.

The question over here is –


1. GDP – Gross Domestic Product is the value of all final goods and services produced within a nation in a given year.

2. Public Debt – The cumulative total of all government borrowings less repayments that are denominated in a country's home currency. It should not be confused with external debt, which reflects the foreign currency liabilities of both the private and public sector and must be financed out of foreign exchange earnings.

3. GDP Per Capita - GDP on a purchasing power parity basis divided by population.

4. PPP – Purchasing Power Parity (2004 estimate).

5. GDP Real Growth Rate - GDP growth on an annual basis adjusted for inflation and expressed as a percent.