The Confederation of Indian Industry (CII), in association with World Economic Forum's global risk network, has identified six possible socio-economic stumbling blocks that it perceives as key risks facing India.

These risk factors include, economic impact of demographics, depletion of freshwater resources, vulnerability to global economic shocks and oil-price peaks, geopolitical risks, climate change and societal risks that involve the spread of infectious diseases.

The CII-WEF report, India@Risk, dwells at length on the chances of these risk elements retarding India's economic growth and suggestions on how the impact of these could be resolved or mitigated.

The report is apprehensive on whether India's "demographic dividend" (a euphemism for overpopulation) will turn out to be a demographic liability for the country in case India fails to overcome the "inequality trap" and falls short of achieving inclusive growth.

The issue assumes importance in view of India's skewed demographic picture that is portrayed in the persistent imbalance in terms of income inequality and gender (e.g. mal to female birth ratio is 1.12). It is being argued that 54 per cent of India's population is below 25 years and the country's working-age population will peak from 2016. 

The report advocates that to avert the risk of confronting a "demographic liability" India must grow at 8 to 10 per cent per annum to provide jobs to this segment. Besides, in the long term, India also faces the challenge of managing an ageing population with inadequate pensions. T

he remedy, the report says, lies in education, skill development, initiating "high impact social reform policies" and public pension reforms and health insurance.

Water scarcity
Referring to the issue of how capable is India in coping with growing freshwater depletion, the report mentions that the situation seems set to spin out of control, as predicted by the National Commission on Water, by 2050 when demand for water will exceed all available sources of supply.

It notes that India has only 4 per cent of the global water resources to cater to the rising demand of 18 per cent of the world's population. Increasing stress on freshwater is not only exhausting its (groundwater) resources to alarmingly low levels, but might also worsen the country's health and humanitarian problem, increase salinisation of existing water supplies, constrict economic growth and lead to inter-state, or even, inter-district tensions as well as among users.

This, the report said, this would also have a cascading effect on India's business and investment climate. The report advocates adoption of all possible means of water conservation and a transition to drip irrigation as in Israel. The report has also warned predicted that "conserving water in India will come down to three Ps: pricing, political will and policy". 

On the likelihood of the third risk element of external economic shocks like oil price, etc, derailing India's growth, the report says that while the consensus economic outlook for India is upbeat, the country remains vulnerable to the vagaries of world currency, commodity and financial markets, primarily spiralling oil prices. To offset the oil price impact, which has cost India about 1 per cent in terms of GDP growth, there should be more dependence on alternative energy sources as well as on more offshore exploration of oil and gas.  

Anti-globalisation backlash
The fourth risk element that finds mention in the report is on whether India can attain its own aspiration levels in case of a backlash or retraction from globalisation. It has been pointed out that while India's elite has become more globally interconnected, the poor and lower middle classes are, however, still "disconnected" and "not feeling the benefits of globalisation and liberalisation".

The mismatch of interest or negative perceptions could lead to an endogenous backlash against globalisation as well as social and political tensions.

There are, however, divergent views about this particular risk element facing the country. While some see a reversal of globalisation as key risk, others posit that India is well insulated by dint of its low share of world trade (primarily due to lower export dependence), a huge international diaspora and the success in becoming an information-communications-telecommunications hub.

To ensure that the anti-globalisation backlash does not impair the country's economic progress, the report prescribes that India should pursue economic reforms to remain competitive compared to other Asian economies, finalise free trade agreements with the ASEAN and GCC blocs as well as foster trade ties with China.

The next issue that has engaged attention is whether India can balance the complex trade-off between environment and growth. With focus being more on economic growth, clean climate is a low priority for India. The country is already the fourth biggest carbon dioxide emitter in the world.

A growing carbon concentration will lead to global warming and in turn exacerbating food, water and weather insecurity. The effects are likely to be "disproportionately borne by women and poor" and this might lead to a backlash against current economic policies. It has been prescribed that clean technology should be adopted to fight climate change and global warming. Stress has been given on renewable energy and on disaster management.   

Eliminating societal risks
The sixth risk element discussed in the report is on India's ability to eliminate the societal risks that involves infectious diseases like HIV / AIDS, TB, etc. It said TB kills nearly 1,000 people daily in India and the country ranks 100 out of 131 nations in the "business impact of HIV / AIDS in India" as per the WEF Global Competitiveness Report, 2007.

It is being argued that the overall public health expenditure is low in India and not focused on the poorest regions and population. Besides, only a very small percentage of India's populace is covered under health insurance. The HIV/AIDS epidemic worsens poverty and might retard economic growth. The remedy lies in larger government spending on healthcare, involving private sector in more and more healthcare programmes etc, the report said.