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INDIA‘S NEXT BIG GROWTH SECTOR India’s economy has been dramatically changing in the last 15 years, It is now the latest of a long string of Asian countries that have been transformed by a sharp acceleration in growth and development since the mid-20th century, However, India’s growth trajectory has been very different from that of other Asian countries. Wire money online to India with Xoom.com for as low as $4.99. The standard Asian “miracle” was all about deploying ever larger amounts of labour and capital in manufacturing and construction, In contrast, India has so far grown by deploying a highly skilled but cheap middle class in the services sector, This has led to a boom in banking, media, software, business process outsourcing, tourism and so on. As a result, the services sector now dominates the Indian economy at 55 per cent of cop, (In comparison, services only account for 35 per cent of China’s GDP). India’s unique growth path was the result of two historical accidents: First, it already had an educated middle-class in place before economic reforms were introduced; second, the information technology and communications revolutions of the 1990s coincided with India’s economic liberalisation. Unfortunately, the unique services-led growth model has a major constraint-the size of India’s skilled middle class. A figure of 300 million is often quoted in the media, but, in my view, the middle class is still a fraction of this size. This is why the country is currently experiencing one of the sharpest escalations in wages/salaries of skilled workers ever witnessed. Ask any major corporate and you will be told that the biggest constraint to expansion is the availability of skilled workers. In other words, a growth path relying exclusively on the urban middle class is no longer tenable. Montek. S. Ahluwalia (Vice-chairman Planning commission) So, is this the end of the Indian growth story? No, Two completely new factors will drive growth over the next 15 years. First, a primary education revolution is rapidly pushing up literacy rates across the country, Since the mid -1990s, the efforts of the government, NGOs and, more importantly, private schools, have pushed up primary and secondary enrolment rates sharply-an achievement that is rarely recognised. We have witnessed how schools have sprouted in remote places like Arunachal Pradesh. This will boost the basic literacy rate to over 90 per cent by 2020. In turn, this will make it possible, [...]