All That Must Change
India has come a long way since Independence, but still has much further to go before it can truly become an economic powerhouse
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Seventy years ago when India became a new nation, we were 330 million. Today, we are nearly one and a quarter billion, and all of us — you, me and those outside the reach of business magazines such as this — can be justifiably proud of our role in the ongoing success of a bold, noble experiment, viz., the idea of India.
We have come a long way since 1947. We are the only functioning democracy in our neighbourhood, and it is entirely due to the people of this country who have kept faith in the democratic process.
But we still have a long way to go to be reckoned as an economic powerhouse. Our current GDP per capita puts us below at least a hundred countries in the world. Our energy consumption per person is again below a hundred countries. Even in the United Nations’ Human Development Index, we are ranked 131. Countries such as China and South Korea — almost on par with us in the 1950s — have left us far behind.
When asked by Businessworld for my thoughts on turning India into an economic powerhouse, I felt the canvas was wide open. There are indeed a thousand things one can think of, which, if implemented efficiently, can get us to the goal. But for the purpose of this article, I will concentrate on the foremost issues.
Mind Set: Historically, we have had a culture of not celebrating the successes of our fellow countrymen. Profit has always been looked down upon as if any profit made is made by unfair means. We do not celebrate a Steve Jobs or an Elon Musk. Everywhere else in the developed world, success is something to be proud of. Countries hold their entrepreneurial successes as a beacon to attract talent from all over the world. In India, the first aim of a businessman is to camouflage his success. Unless we bring success to the mainstream of public thought, we can only hope to become an economic success story.
Technology: Most of the skills we have trained our younger generation in, may become obsolete in the next 15 years. Various studies have estimated the impact of automation, robotics and artificial intelligence. One study says almost 25 per cent jobs lost due to automation by 2021 will be from India. Another study estimates the Indian IT industry, which has been the main driver of Indian growth, will lose about 5 lakh jobs by 2021. This is when India needs approximately 2.5 crore new jobs every year. Meanwhile, the industries are making continuous efforts to increase productivity of workers; this will further squeeze employment generation. Reskilling our workforce for the economy of the automation era is the only way forward.
Learning, Re-learning: In a knowledge-driven global economy, information will be ubiquitous. The successful nations of the future will be the ones that are hotbeds of innovation. In such an economy, a demographic dividend is not the only guarantee of growth. Smaller countries such as Israel and Estonia have marched past us in this area. To ensure that we are not left behind, we need to create world class educational institutes. A thorough review of our school and college syllabi is urgently required to prepare us for the new age economy. We need new centres of global learning excellence that will form the bedrock of this process.
Natural Resources: It has been repeated ad nasuem that India possesses a wealth of natural resources. However, we have failed to exploit them efficiently. We have the capacity to be self-sufficient in almost every critical resource, except maybe oil. Green Revolution 2.0 is required to implement cutting edge technologies such as drip irrigation, so we can become a net food exporter. Our farm productivity is among the lowest in the world. Our farmers also need to be educated in soil investigation techniques, market forces and water utilisation. We have cut down on coal imports substantially in the last two years, and we should look at being self-reliant in raw materials as well as finished goods. Indian industry is ready and is only looking for a favourable policy regime that will incentivise capacity addition and capital investment.
Infrastructure and Manufacturing: Our infrastructure system is crumbling under the weight of our population. According to finance minister Arun Jaitley, India needs an investment of almost $650 billion in infrastructure over the next five years, with almost 70 per cent of it in roads, power and urban infrastructure sectors. While services and pharma have come to our rescue, we have a missing middle in our economy — the manufacturing sector. Historically, the manufacturing sector has driven employment growth across the world. We need to invest a lot more in this space, if we want to gainfully employ almost 25 crore people who join our workforce annually.
Legal Processes: The judiciary is buckling under the pressure of unresolved cases, with some in limbo for over 50 years. The time and resource consuming legal system in the country has been a great disincentive for new businesses to flourish. Every new businessman, at one time or the other, has been threatened by the legal stick. Arbitration procedures take forever, and industrial disputes are unresolved for longer than the disputants survive. We are ranked abysmally in the ‘Ease of Doing Business’ rankings, even though there has been a considerable improvement in the last three years. The government, with its new Bankruptcy code, the implementation of goods and services tax, and the effort to tackle bank non-performing assets, has done much, but a lot more needs to be done. Continuity in policy (with no retrospective actions) will go a long way in creating a congenial atmosphere for entrepreneurs.
Yes, if we want to become an economic powerhouse within the next decade, it will take a lot of doing. But we owe it to our future generations to make a special effort. That would be Independence in its full, tri-coloured glory.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.