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The Human Capital of India

There is a cultural dilemma and the question of nationality and sense of belonging which evolves differently in these people. Despite this, human migration will continue to happen and only increase with literacy from countries of high density to low density.

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India is well poised for coming to the 2nd world category but it can take a while and the growth can be stunted by many factors and accelerated by a few, and one of them is our human capital. In the case of India, illiteracy, health factors, complex political systems and up until recently slow and badly governed judiciary have played the role of termites eating into the body that is of this magnificent nation that unites on many fronts. Bollywood, cricket, ghazals, cuisines, hatred towards politicians and criticism of Indian bureaucracy all bind the nation together.

With a staggering population of 1.3 billion and a small percentage of 25.7% (as per RBI in 2019) its population below the international standard of poverty line (earnings below $1.90 a day), growth definitely is a distant reality and rising from third world status beyond the visible horizon with status quo. It is around 6.9% as per national poverty line as per World Bank data of 2019. What India needs is a shift, a gradual introduction, and by gradual I mean realistically in a few years, of these people towards a decent income and lifestyle, and efforts towards this should be accelerated. We need these vast masses along with the middle class to be consumers of Indian goods as that is where lies true prosperity as they are in majority. Investing in these people holds the key to India’s growth. If they are able to buy clothes, televisions, cars and other goods, avail the insurgence in broadband services, hospitality and be a part of the increase in tele-density, then just imagine what that will do to do the local industries that today are at the behest of the rich and the upper middle class or exports. So many more local businesses will come up and those that exist will flourish. The huge population of India can be a boon or a curse depending on what the policymakers hold in store for them.

By simple law of demand and supply, labour cost in India is very cheap, cheaper than China as well. India pays as low as  INR 176 (US$2.80) per day as minimum wage, which works out to INR 4,576 (US$62) per month, largely applicable to household workers, factory workers, miners and junior staff level labourers who do most physical work. With a population of 61% only that is literate, that is bound to happen. This, however, is very unhealthy for the economy as the average purchasing power of the country falls low. This means the middle class and the lower middle class are not consumers of national industries and the goods produced here. If everyone is able to purchase goods produced by the nation, it is in definite overall interest and will add to the national GDP figures which today is at $1.87 trillion (2020), significantly low for a country of our population size  How is exploitation of the poor and needy possible to avoid in a country ailed by corruption, poverty and illiteracy? How else do we bridge the vast gap between the rich and the poor in this country?

The demographic fact of population density is astronomically different between India and some countries like Australia, New Zealand, Canada and Russia among many others where farmers need planes to spray insecticides & pesticides as they don’t have enough manpower. There the service industry is significantly more expensive and they are in need for labour. I definitely see the need to apply the simple laws of basic demand and supply across borders to this situation. Manpower recruitment from India, skilled and semi-skilled, is a huge industry in the making as farming, mining, carpentry, construction, plumbing and things like that are easy skills for a lot of Indians. Loads of drivers, carpenters, construction workers and other physical, skilled labourers are sent to the middle-east in thousands to work in construction and infrastructure companies. That is very fruitful as these high earning labourers plough back into our economy. Their basic needs are taken care by the companies that recruit them  and they are paid significantly higher for their jobs than most people do for the same job profile in India. The reason is that they are in demand where they are being sent and also a stronger currency. Manpower resource is actually our country’s biggest strength. It should be harnessed both for domestic and international needs. People are at their best when they are close to their cultures, and that goes without saying, but if it’s a matter of choice and they want to go overseas, they should be facilitated. Our local strength will stay large enough for domestic needs.

B-grade cities of India are seen as melting pots for real estate investments as they are bound to prosper. I believe the day we see these cities, which are almost all cities besides Mumbai, Chennai, Kolkata, Delhi and Bengaluru, developing and attracting businesses, we will know India has arrived. The vast population of India that resides in the five major cities is because of their global and domestic positioning. There are of course new metros springing up in Hyderabad, Ahmedabad and others but we still need to give them time. Mumbai has a large population of 19.2 million people. We also need more cities to spring up to compete with these cities to show for the development of suburban lifestyle-the main consumer for national businesses currently. Better airports, railways, roads, port facilities, power supply and other amenities are the need of the hour. After all what is the difference between India and China? The reason why it is preferred by global manufacturers for outsources work is the better infrastructure and government policies made available to them than India. Otherwise, Indians have a higher population, friendlier language as more people speak English and all other ingredients to be a more prospered recipe of a nation.

India still has beggars and homeless on the streets of Delhi, and slums are next to the most expensive residential areas of Mumbai. We still see the vast populace struggling with public transportation and undue political hindrances to progressive industries. Towards the end of manpower resources, we could definitely use deals with other countries to ensure manpower and immigration commitment from India. That could create a paradigm shift.

Let us take it step at a time, an Indian kid grows up going to schools without much computer education in majority of suburban schools, not counting the recent insurgence in cities and bigger towns, but for most part; and yet we’ve produced the best computer engineers and software programmers. Around 20% of Microsoft engineers, 30% of Google and about 36% of NASA scientists are of Indian origin. They’ve taken citizenship in US now and are not Indians technically. As for schooling, Indian education is more rigid and difficult than most of the western countries. Counting the number of days Indian students attend school or college per year, I found out that it is significantly more than in the West.

Indian students then try for IITs, IIMS, medical schools, other engineering colleges entrance for which are very competitive. So they do go through a more rigorous and hardship filled life than their foreign counterparts. Over and above they see parks not so good, life not so automated and environment which is substandard. Getting into top Indian institutes is difficult and the education is supposed to be extraordinary but I feel like there is so much more emphasis on theory and so little on practice. When does the whole personality development of a youngster take place? In what sphere of his life till after university life is a person supposed to have breathing time get polished in various skills important in life. That is where human capital management and harnessing of India’s manpower comes in, efforts of development lacking yet. We need overall development at university and school level, not just academic.

Job market in India is not bad and often people are hired on merit. I believe capitalism has its advantage as the stakeholder gain creates a strong desire to hire the best. We Indians are, however, underpaid compared to foreign economies where salaries are multi-fold times high, sometimes 100 times for the same qualification. Take away inflation and currency difference, it is still too high. The underlying cause for that is our population difference. In India people are abundant in supply and demand is just that much even among qualified people. In other countries besides the subcontinent and China, labour is not so cheap. African countries and some South East Asian countries like Philippines are huge exporters of human capital. A vast majority of people come to work from other countries in geographically large, which means that people there are not enough to cater to the Demand. It’s the opposite. Best brains from India go to these high wage countries resulting in what may seem like a deficit but if even a small percentage come back and start a company, which happens, they create many jobs making up for that deficit. We see top performing start-ups by foreign graduates and people who worked in big companies. This makes the professional culture stronger and system cleaner and more conducive to work in in India. We begin to attract good quality and well educated and qualified professionals back the day we change our system and make it equal for all, just and fair.

For the less skilled labour forces, we have a plethora of supply I feel. These people often come back with rich experiences or sometimes settle elsewhere, a choice many have made. 1.3% of US population is of Indian origin and approximately 9% of London comprises of Indians. There is a cultural dilemma and the question of nationality and sense of belonging which evolves differently in these people. Despite this, human migration will continue to happen and only increase with literacy from countries of high density to low density.

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.

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Vaibhav Maloo

The author is Managing Director of Enso Group. He resides in Mumbai. He holds an undergraduate degree in business from Carnegie Mellon University and a postgraduate diploma in global business from Oxford University.

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