Adieu 2022. Can We Do Better In 2023?
India, with its large population, has managed to steer its economic journey carefully over the past three years of the Covid turmoil. Added to this were global events like the prolonged Covid wave, supply chain disruptions, the Russia-Ukraine war, currency fluctuations, inflation. The Indian economic growth rate has been much better than that of almost all other global economies. But the difficulty is to assess realistically, and without political bias, if the growth rate in the next calendar or financial year will be sustained and move higher than the current rate.
The reason for this hypothesis is that the current financial year has been helped by the base-growth rate of the post-Covid spending and consumption patterns. The coming year would need focus in balancing growth. It should not just be limited to aggregate growth, but be across all segments of the population.
While some analyst calls or research papers may be exuberant in their forecast of the Indian economy in the year ahead, it is better to be pragmatic. The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) estimates growth to be at 6.8 per cent. It has factored in its concerns on global issues and inflationary worries, the higher interest rate regime globally, impact on India’s exports and services sector, and importantly, the potential slowdown of capital flows into India.
Even at these lowered growth estimates, India will shine well amongst the global economies and will be the fastest growing global economy. India’s share in the global economy is 3.5 per cent, whereas the United States and China make up 44 per cent of the global economy. To balance the arithmetic, Indian growth has to be much higher, and for a longer while, to improve the quality of living of the citizenry.
The global economic gloom and cautiousness are impacting exports including that of the Indian IT sector. Layoffs in many parts of the world, including in the technology sector, could hurt our services sector in the short to mid-term. A bit of conservatism in any growth projections need not be seen as negative or an anti-development narrative.
*Other issues
Covid done and dusted? While we have herd-immunity and have moved on, what about investments into preventive healthcare? We seem to have forgotten the Covid horrors and have moved with vengeance to our older (un)health-ways. We also need newer investments into primary healthcare –both in terms of financial, as well as qualitative care. A curative healthcare regime cannot be sustainable for a large populous nation and hence efforts in better preventive-health-literacy is needed. One would also hope for better budgetary allocation in the upcoming Union Budget towards the healthcare sector.
The economic growth journey will need upfront capex spending into newer projects and capacity expansion. This could be a good boost to local citizenry engagement, employment generation and newer entrepreneurship avenues. This will be aided by consequent consumer spends and the government’s fiscal spends. On the fiscal side, there may not be any room for the government to pitch in, as the fiscal deficit cannot be further stretched. The combined fiscal deficit of the Centre and all states is above 10 per cent of the GDP. This is possibly the trigger for all the messaging for the private sector to increase investments.
*G20 - pride to development
With the world’s focus on the Indian presidency of G20, we will have many of our cities playing host to delegations from around the world. It is a chance to showcase Indian culture and hospitality. A chance to build our travel, tourism spots with infrastructure to host various G20 events. This could also be an opportunity to quick-fix civic issues in the cities, where the events will be hosted. As we have proven many times before, we just need the political nudge and the officialdom will move those projects with speed.
*Education - softer giant
For a better shaping of youngsters, we need to push ahead with the New Education Policy (NEP) adoption. It envisages blending education, and skilling. But sadly, the adoption of NEP across India has been adamantly slow, almost to the point of denial of its existence. Hopefully the states will see merit in it and adopt it into execution.
*Digital Finance
India is a pioneer in digital innovations, as evident in our low-cost high-impact solutions. This has shaped our digital finance to make it more widely accessible, than conventional distribution and access issues. This necessitates constantly evolving regulations and better trust amongst stakeholders. Regulations in the 21st Century have to take inputs and take along all formal actors and keep upgrading their regulations as apps do ever so frequently. It is with much expectation that we will steer in the direction of principle-based regulatory philosophy, and essentially with activity-based regulation instead of entity-based regulation.
*2023 is the Year of EC
Politically, 2023 will see an active Election Commission endeavouring to ensure fair and smooth elections in as much as ten states, and if political pundits get their forecasts right, probably even an earlier national election by the end of the year. With elections come quick and visible local civic development – a good thing for the citizens. The year ahead seems action packed from all aspects – social, political, global happenings and digital. The financial aspect will depend on all of the former. In all, 2023 looks action-packed, and needs efforts from all stakeholders.
Dr. Srinath Sridharan - Author (Time for Bharat) & Corporate Advisor
Twitter : @ssmumbai
