The singular growth process of India (I)

Generally, the economic growth process is a sequence that starts with the loss of importance of the agricultural sector (either the percentage of GDP or in percentage of the workforce employed) and an increase of the importance of industry first, and services next.

As the economic growth nears maturity, the dominant sector is the services, followed generally by the industry and then by agriculture.
However, the economic growth process of India was deviated from this common process, going straight from agriculture to the leadership of the service sector.
The lack of industrial development was due in very of the presence of a stifling regulation, especially in the legislation about the work and the policies about the small size industries.
Another unusual aspect is the permanence of the same distribution of the employed population among the diverse sectors: the majority of the employed population still remain in the agriculture.

The IT related activities still represent a small parcel of the service sector. The sub-sectors that had increase considerably due to economic liberalization were the business services, comunications and banks.
However, due to high qualifications, and technic capacity of human resources in IT field, we expect that this will the sub-sector with the higher increase in the next years.
And could India have a sustained economic growth in the future, without the industrial sector? The most likely scenario is no.
The manufactured production will be a way to India have a sustentable growth, and will contribute to the poverty reduction.
One of the fundamental variables to the manufactury development will be the increase in qualifications and skills of the rural population.
A more qualificated population together with a liberalization of agriculture, would allow an exit of workforce to the more procutive areas.
This process will fortify the pruduction level of the rural areas and generate a bigger work suplly to the manufactury activity.
Through this process, India will have a economic path similar to its asiatic neighbors, and could also have a biggest urbanization of its territory.

In the last 50 years, India has change its isolation policy (namely, domestic view policy): the increasly economic liberalization and gradual opening to the world economy, boosted the economic growth rate and lifted millions out of poverty.
If these reforms are maintained and move forward at the same rytm and intensity in the next 10-15 years, then the economy could increase in an average of 6%/year.
However, if the reforms will be deeper , the GDP coul increase an average of 7-8% per year in the same period.
In 2020 India would be the economy with thw higher annual economic growth, and the 3rd biggest economy in the world (behind China and USA). Its GDP per capita also could duplicate in the same period of time.
This projection will only be possible if the demographic conditions remain the same. And these conditions will be discussed in the next message.