India’s per capita GDP stays a fraction of China’s and South Korea’s, and ISB alumnus Manab Majumdar says the nation’s obsession with safety-first investments like mounted deposits is partly guilty.
In a LinkedIn put up, Majumdar contrasts India’s 2023 per capita GDP of $2,300 with China’s $12,500 and South Korea’s $35,000. “If Indians carry on investing in FD and all the time comply with safety-first method then the expansion in per capita GDP might be additionally like this,” he wrote, noting how India began on par with its Asian friends in 1961 however has since fallen dramatically behind.
Past threat aversion, Majumdar lists deeper structural points which have stunted India’s financial rise — from a slender manufacturing base to systemic failures in governance and schooling. “We have to introspect why we failed so miserably,” he urged.
Among the many core issues is the restricted enlargement of India’s manufacturing sector, which accounts for simply 17% of GDP in comparison with 29% in China. Poor infrastructure, excessive logistics prices, and unreliable utilities proceed to drive up manufacturing prices, making Indian manufacturing globally uncompetitive.
Majumdar additionally criticized the nation’s power abilities hole, pointing to a scarcity of vocational coaching and sensible schooling. “Even an Electrical Engineer from IIT waits for the electrician to come back and match the tubelight in his house,” he wrote. In distinction, China, he stated, has “soccer fields crammed with tooling engineers.”
Political inertia and what he calls the “drawback of 20%” — a phase of the inhabitants he claims extracts state advantages with out contributing to development — additional entrench stagnation.
India’s banking system, marked by excessive rates of interest and restricted credit score entry, additionally dampens entrepreneurial ambition. Solely 14% of MSMEs, which make use of 40% of India’s workforce, have formal entry to credit score. R&D spending lags far behind world leaders, limiting innovation and technological development.
Because the world strikes into an period of superior manufacturing, India’s path ahead, Majumdar suggests, will depend on shedding its concern of threat and radically rethinking its growth mannequin.
