“Social Policy Is Needed To Enable Economic Growth": Christian Ketels, Professor, Harvard Business School

In an interaction with Urvi Shrivastav, Editorial Lead, BW ESG, BW Businessworld; Dr. Christian Ketels, Professor, Harvard Business School talks about India@100 Action Report, the process of framing it, and his suggestions for leading India to the pathway of socio-economic success.

How did the idea of India@100 come about, and what was the process in framing this report?

It started a couple of years ago. I head the team at Professor Michael Porter's team for strategic competitiveness at Harvard business school. He used to make several trips to India, during which he had an interaction with Prime Minister Modi who invited him to deliver a speech in front of NITI Ayog about a competitiveness framework and how it can impact India. He then invited us to do an analysis of where India stands today, and the specific actions in the next 25 years. Hopefully it will help India in the coming years.

What were your key findings in this report?

There is a section on diagnostics in the report, which is very important today for India. There is no single blueprint that looks the same for every country, which is why we need individual parameters. As we think about this roadmap, there are two key pieces that we hope will shape the thinking in the years to come. The first is, what are the aspirations the country has for its economic development? There are different ideas about the size of the economy, the growth rate, etc. We need to aggregate that in a holistic way. We also talk about the ‘4S’ principles, first is ‘share', where GDP growth can reach a wide swap of Indian society. Second element is ‘sustainable', India has vast energy needs, and is subjected to climate change at the same time. The need of the hour is to create a strong renewable energy base. Third we talk about ‘social' progress, including education, healthcare, freedom of speech and the like. The fourth piece is ‘stable' which we often equate with resilience. We have just gotten out of a pandemic but the risk remains along with unpredictability.

Second issue is, what are our key development models. Economic development of the future will have to be an integration of social and economic development. In many places we argue that social policy is needed to enable economic growth. For example, is we talk about employment of women, it is possible only if you make an offer around child care services, and public safety. The other aspect is, how economies are developing differently. We have coined a phrase ‘Structural Transformation 2.0'. India has ramped up its tertiary services way faster than secondary sector. Many in India see this as a problem, but globally trusting industry growth is often connected with export and manufacturing growth. In India we need to think about the wider array of sectors to create the kind of jobs India needs, which we have laid out in the report as well.

Since we are talking about the 4S, social aspect is key to economic development. India presently ranks 133 out of 188 countries in Human Development Index. How can we bridge this gap by 2047?

We have some suggestions and proposals in the report, first of which is taking economic and social developmental parameters together and not in silos. What we have seen is focus on job creation the most, because what matters most is the entry of the poor in the labour market. For this the social setup needs to be conducive. We have identified sectors which are good entry level opportunities for those who need it. The other is providing jobs via pathways that provide a formal entry into the workforce from where they can grow into more productive jobs. If that happens India can make significant strides.

Do you foresee these development reaching the last man standing by 2047? And how does being competitive help?

There is no guarantee, but what can be guaranteed is if India does not pay heed to the report, and our suggestions, there is very little chance that automatically growth is going to reach all the people. We are trying to create the opportunities that people can actually persue on this roadmap.

You said “How India tackles its challenges will have a bearing on how the world tackles these challenges. India's performance matters.” What do you think are India's unique challenges that increases its value in front of the world?

Let me first point out the global challenges that are very relevant in India. First we talked about where will the jobs for next generation of individuals come from, which is a very real question for India, and many parts of the world, like Africa. There is no simple answer to that. We have laid out a path which will hopefully help India to solve this problem. The other is moving towards net zero economy. India, like other economies needs for affordable energy, and we have the opportunity of creating this energy by renewables, and create economic activity along the way. If India manages to do this, it will become a symbol for other countries. That is why India's success is so important for the world.

As far as competitiveness is concerned, we need a more effective system for policymaking and implementation to address these challenges. In the report we talk about the implementation structure also called competitive government. India has announced policies which are spot on, they are trying to identify key challenges. The struggle is in the implementation. The idea is to increase co ordination across 52 ministries as well as inter state functioning. Further, we need to create the right choices locally, as the factors which impact job creation are local.

Apart from internal coordination, what are the external shocks that can throttle India's journey to prosperity?

First of all the major determinants of India's success are domestic. It is a huge country, so you are influenced by the world, but long term it is in India's own hands. Reality is, we are living in difficult times. Climate change is a global issue that affects all of us. India will have to respond and find global coalitions. Geopolitical tensions are a concern, they affect global trade, they affect energy supplies. India is a value based and non aligned economy in this value system, so you will have to balance between the pressures. Then we have the older type of trade disruptions, for example US-China trade war. We have just got through covid, though cases are rising in India. We have to be careful aboit what the future has in store for us.