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Home > Business > Columnists > Guest Column > P Chidambaram


Chidambaram on India's biggest challenges

February 05, 2007

The challenges that we face are indeed numerous. The most formidable challenge is in the agriculture sector. The average operational land holding of a farmer is small (about 3.5 acres).

Most agricultural land (up to 64 per cent) does not have assured irrigation. Over one-half of farm households do not get institutional credit and are dependent upon money lenders. Water is scarce and, every year, some part of the country is affected by drought. Public investment in agriculture has remained low.

Agricultural growth in the six years, since 1999-2000, has averaged 2.17 per cent. This is a deceleration from the average rate of 4.68 per cent witnessed in the '80s and 3.16 per cent witnessed in the '90s. While a number of corrective steps have been taken in the last three years, the time has come to make a determined and decisive intervention in agriculture in order to boost production and productivity.

Low farm incomes have pushed many farmers into crippling debt. It is vital to increase agricultural incomes because nearly 60 per cent of the workforce is dependent on agriculture. Higher agricultural output is also critical for ensuring food security.

Another important challenge is in human resources. No doubt, we have a large population. No doubt, the size of our working age population will continue to grow until the year 2040 and we will enjoy a demographic advantage until that year. Nevertheless, it has been estimated that we will face a severe shortage of skilled workers unless we expand capacity and improve quality in our schools, colleges and vocational training institutions.

While the Gross Enrolment Ratio of children in the age group 6-14 years has improved to 85 per cent, 52 per cent of children enrolled in school drop out by the time they enter class 6, and this number deteriorates to 80 per cent by the time they enter class 11. There is also the question of health and nutrition. 47 per cent of children under three are underweight. There is also the further question of gender inequality.

At the other end, post-school education in India is still a distant dream for many school-leaving students. No more than 17 million have received tertiary education in India with a population of 1.12 billion. The enrolment ratio in tertiary education in India is about 9 per cent.

In many developed countries this ratio is in excess of 60 per cent. A huge distance has to be covered before it can be said we are capable of fully exploiting the abundant human resources available in India. Unless we do this, we will be faced with a severe shortage of teachers, scientists, doctors, engineers, accountants and other professionals.

We are, therefore, in the process of expanding capacity in all institutions of higher education by 50 per cent over the next three years. We are conscious that while we add to the quantity we must also pay attention to quality.

There are other challenges. I do not have the time to dwell on them in great detail. However, I would like to say that the approach document to the 11th Five Year Plan, which will commence on April 1, 2007, has identified these challenges and has outlined the measures to overcome them.

The goal of the 11th Plan is 'faster and more inclusive growth'. Growth and equity, in our view, are inseparable. Growth is the best antidote to poverty.

(Excerpts from Finance Minister P Chidambaram's lecture at the London School of Economics on January 29)


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