※Translated with Notion AI. (Plus version)
India’s future is said to be bright.
A rapidly growing economy, an expanding population, excellent IT talent, and potential as a global manufacturing hub—hearing about these attractions would make anyone want to invest in India.
However, if we focus only on surface-level figures and expectations, we might miss some important truths.
In this article, we will focus on the realities hidden behind India’s growth and examine them from a calm perspective.
India’s economic growth has been attracting global attention in recent years, with high growth rates driven by the development of IT industry, manufacturing sector, and startup ecosystem.
However, behind this growth lie several serious social and economic challenges, and it cannot be said that the country’s development is reaching all segments of society equally.
Below, we will explain in detail the realities behind India’s growth.
Risk 1: Economic Growth and Widening Disparities
While India is one of the fastest-growing major economies in the world, the concentration of wealth and the gap between rich and poor remain significant problems.
Rapid economic growth in urban areas has given rise to many middle-class and wealthy individuals, but poverty persists stubbornly in rural areas.
Urban-rural divide:
While high-paying jobs are increasing in urban areas, low-wage agricultural labor still dominates in rural areas.
This gap is deepening economic inequality.
Concentration of wealth:
According to a 2020 report, the top 1% of India’s wealthy own about 40% of the country’s total wealth, indicating that wealth is concentrated among a limited number of people.
Mumbai, India’s largest city, is a microcosm of this inequality.
In northern Mumbai, Asia’s largest slum, “Dharavi,” spreads out, where an estimated over one million people live in harsh conditions.
Homes lack adequate water and electricity, with many families living in cramped spaces across generations.
It’s not a place to visit casually, as outsiders entering the slum could face personal danger.
My friend, an Indian who holds a top position at a US investment bank in Asia, says that when he travels to India on business trips, he avoids wearing expensive attire, including watches.
On the other hand, in southern Mumbai, there’s an affluent residential area called “South Mumbai,” where luxurious mansions line the seafront, equipped with private pools and gardens.
Although these two districts are physically separated by only a few kilometers, the difference in living standards is immeasurable.
This contrast can be seen as a symbol of the wealth disparity India faces.
Among G20 and BRICS countries, perhaps only India has such a stark contrast between rich and poor.
It’s not easy to be optimistic about the future path of this great nation where growth and poverty progress simultaneously.
Risk 2: Inadequate Infrastructure
While infrastructure is improving with economic growth, many regions still face a lack of basic facilities.
Power supply:
Especially in rural areas, there are still many regions without stable power supply.
This constrains agricultural productivity and industrial development.
Transportation infrastructure:
In urban areas, traffic congestion and lack of public transportation are serious issues, hindering economic activities.
Meanwhile, in rural areas, road networks are insufficient, and many regions have limited connectivity with cities.
Known as an IT powerhouse, India is rapidly transitioning to a digital economy, but the benefits are mainly enjoyed by the urban middle class and above.
For example, in Delhi and Bangalore, high-speed 5G internet is available, and technology-related startups are growing rapidly.
However, in rural areas, internet access is limited, and many schools and medical facilities struggle to use online services.
This digital divide is creating significant differences in education, business opportunities, and access to information.
Do you know the real reason why the demand for gold is so high in India?
Many people answer, “It’s needed for religious ceremonies,” but that’s not sufficient.
The true reason lies deeper. Especially in rural areas without electricity or banks, gold functions as a de facto circulating currency.
Do you remember when Prime Minister Modi suddenly announced the demonetization of high-value banknotes in 2016?
In a late-night speech, he declared, “From tomorrow, these two banknotes will be unusable,” giving only four hours’ notice.
This policy was intended to expose hidden tax-evading assets of the wealthy, and as a result, hidden income worth 1 trillion yen came to light.
Even in India, touted as an IT powerhouse, there was a reality that made us want to cover our eyes.
In the shadow of rapid urban development, there are people in rural areas who remain untouched by this wave.
When the government suddenly demonetized the currency, many people in rural areas weren’t even informed and continued to accept the demonetized notes, leading to numerous cases of fraud.
For them, the benefits of the IT revolution and digitalization remain distant, and this gap starkly highlights the delay in infrastructure development across the entire country.
We must not ignore this harsh reality that the foundation supporting modern India’s growth has yet to reach many regions.
Risk 3: Unemployment and Labor Market Instability
While India’s large youth population is expected to provide a “demographic dividend,” the labor market is unstable, and many people are uncertain about their future prospects.
The current situation where highly educated young people struggle with unemployment is having a serious impact on Indian society.
India is a country enjoying a “demographic dividend” with one of the world’s largest youth populations.
However, it’s hard to say that this potential strength is being fully utilized, and due to the lack of a well-organized labor market, many people have to settle for unstable jobs.
Especially in urban areas, there’s an increasing number of young people who can’t find desired jobs even after graduating from university, exacerbating the problem of “educated unemployment”.
According to the latest report on the Indian labor market by the International Labour Organization (ILO), the unemployment rate for university graduates reaches 29.1%, about nine times higher than for those who cannot read or write (3.4%).
Furthermore, the unemployment rate for young people with secondary education or higher is 18.4%, about six times higher than for those with lower education levels.
While the IT industry and service sector continue to grow in some areas, low-wage labor still dominates in manufacturing and agriculture, creating a paradoxical situation where highly educated young people find it more difficult to get jobs.
The ILO also warns that “India’s youth unemployment rate exceeds the global average.”
Moreover, non-regular employment has become mainstream in the Indian labor market, with many workers unable to secure regular employment contracts and having to rely on daily wage or short-term contracts.
These workers are excluded from social security and their rights as workers are not adequately protected.
This unstable employment environment can be said to increase social risks such as deteriorating public safety and riots.
For India to turn this “demographic dividend” into real growth potential, there is an urgent need for structural reform of the labor market and policies to expand employment opportunities for young people.
Risk 4: Environmental Issues
For those planning a trip or business visit to India, there’s a reality that’s not widely known.
That is, in the shadow of rapid economic growth, environmental problems are becoming increasingly serious.
Urban areas in India are experiencing increased air pollution, water resource depletion, and sanitation risks along with economic development, which also significantly impact tourists and business travelers.
While India’s growth appears spectacular, the hidden reality behind it is harsher than we might think.
Air Pollution:
An Urban Crisis That Can’t Be Overlooked
Major Indian cities, including Delhi, are considered among the world’s most air-polluted cities.
The combination of vehicle exhaust, factory emissions, and rural crop burning is leading to an increase in respiratory diseases.
However, these facts are rarely reported extensively.
This is often because it’s considered normal in developing countries, and it’s not seen as particularly worse in India.
However, long-term stays in India’s air-polluted areas can be extremely dangerous for us.
When I visited India for a project finance-related survey, my mask turned completely black in just five minutes, despite wearing it.
I remember that when I returned to the hotel, my nose hair had grown surprisingly long.
My throat was also very sore, making me acutely aware of how serious India’s air pollution is.
Water Resource Crisis:
An Unknown Daily Reality
India is one of the world’s most water-scarce countries. Due to overuse of groundwater and poor management, many regions continue to face severe water shortages.
For those of us accustomed to Japan’s well-maintained water supply and quality control, caution is necessary when using water in India.
It’s safer to avoid even hotel water and not use ice.
There’s a high probability that travelers will experience diarrhea during their stay.
While the situation has improved in tourist areas of major cities, it changes dramatically once you leave urban areas.
Consider diarrhea prevention impossible in India.
Sanitation Issues:
Life-Threatening Risks
Rabies remains a significant problem in India.
There are countless cases of foreign tourists who visit without vaccination and lose their lives to rabies after being bitten by stray dogs.
Furthermore, in coastal rural areas, you can see villagers defecating on the beach, and the sanitary environment is extremely poor.
On the beach I visited, human feces were left everywhere, buried in the sand and turning into compost-like matter.
Just remembering the smell sends chills down my spine.
