Battles Of This Century Will Be Won On The ‘Power Of Ideas’
We live in an era of increasing interdependence and accelerating change, much of it, driven by technological advancement. The efficiency, innovation, and speed of a digitally connected world can expand and percolate the benefits not for the more endowed economies but for those that are ‘better’ prepared.
Moments of change present transformational opportunities.
Labour is increasingly becoming a commodity
The future of jobs will be nothing like now, and may benefit India. While on one hand it provides the latitude for employment opportunities, on the other it will catalyse rapid growth.
Evolving and connected world is changing the job market; the impact will be economic and social, traumatic or rewarding depending on ‘preparedness’. Geography seems to matter less, several jobs overlap, and ‘skills’ can work from anywhere, prompting labour substitution & augmentation, enhancing productivity.
Under the colonial rulers the first industrial revolution bypassed us; we suffered and were marginalised economically. Post-independence our misplaced policy framework denied many entrepreneurs an active participation of the growth milieu. It deprived a third of our people even the basic necessities.
Underperformed to our potential
Similarly we failed to capitalise on the post reform opportunity, and the early dawn of economic freedom is yet to evolve into a mature & developed economy. We have failed to transition from resource-driven growth, (featured by low-cost labour and capital) to productivity-driven growth.
However, the last 3 decades have been rewarding nonetheless. High and sustainable growth (for a period) has lifted millions out of poverty. There are several other positives at the societal level too, accentuating that policy reforms are a growth catalyst and a development multiplier.
As we rejoice there are challenges galore. A lopsided economic hierarchy has resulted in stagnation, wiping off the ‘middle’ businesses and the tributaries that link economic activities and are key contributors to growth & value ‘adds’.
Our policymakers are indifferent, and focus on economic issues narrowly. The ecosystem is beset with government intervention. There is a great deal of arbitrary power in the hands of the government, instincts of central planning are alive and growing. The licence-permit-inspector raj hurts, even chokes the job creators & growth engine i.e., MSMEs. The private sector suffers as a result, and losing faith. The government is a big litigant.
Inter-dependent; & integrating economy
The world is getting increasingly inter-dependent, driven by rapid technological changes. Seamless transaction is integrating the globe and societies are modulating to a knowledge-based platform. The focus is shifting from capital to knowledge.
While we bemoan missing out on the industrial revolution, and ‘squandering’ the opportunity from the reforms process, the immediate and (even bigger) fear is that we may miss out the digital opportunity too.
History tells us that most of the industrialized nations, having exhausted their own sources of supply, turned to others. The oil producing countries of the Middle East and the mining sector elsewhere benefited and grew too.
This pattern is unfolding again. The growth paradigm of the western economies seeks another kind of fuel i.e., knowledge and skilled professionals.
The demography of the developed world, particularly the economic giants of the last century like Japan, Western Europe is facing acute shortage of skilled professionals. The unfavourable demography (lower birth rates, increasing proportion of the elderly) takes decades to ‘right’ and seek ‘knowledge’ fuel to make up the shortfall.
Skill: fuel of the new age economy
Empirical evidence suggests that the U.S. economy of the 1990s grew on the foundation of an existing enabling ecosystem and skilled human resources fuelled productivity, triggering value addition that sustained rapid growth for years.
Every economy is vigorously pursuing policies to optimize the opportunity. However India is in a pole position; its vast reservoir of manpower provides distinct advantage and a sustainable value.
Now is different
We need to enhance capacity, develop a holistic value chain to address ‘remote’ services. Our robust IT service model is recognised, even respected for its efficient delivery. A Crux study indicates another 200-billion-dollar opportunity, additional 15 million jobs in the next decade. Similarly, the opportunity is no less in the medical, tourism, educational and, leisure sectors. We would be looking at a 100 billion-dollar sector and about 10 million related and tributary jobs.
A slice of this opportunity could raise our GDP by a couple of percentages. The multiplier could be many times more.
The IT sector grew ‘in spite’ of the government and because of the ‘pull’ (low-cost delivery, feeble competition etc).
History, particularly of the developed economies has lessons. Growth ushers in opportunities. There is strong correlation between growth and human progress. A couple of opportunities emerge every decade and it is not necessarily the most endowed but the agile, more prepared who capitalises and brings in transformational change.
From being unemployed, to becoming irrelevant
For India, growth is an imperative and a growth rate of less than 8% leads to significant unemployment (about 15 crores) precipitating a vicious cycle of low consumption, shallow demand, stubby investment, and stunted growth.
Our demography, talent and the enviable track record of highly effective, low-cost service delivery is well positioned to capitalise on this opportunity.
Rethink, prepare and act
However, this will take some doing. It is not that we are the only player in the game. Our industry faces severe headwinds and other macro challenges from the much hungrier economies; and will need help.
Our policymakers must be on the watch nevertheless, rethink and prepare. The government needs to create, stimulate and vitalize the enabling ecosystem.
Several of our institutions subtract value and most policymakers are neither keyed in nor in pace, and we could be frittering away this opportunity as a result. The government’s ‘investment’ in ‘poorly planned, badly implemented’ skill development programs needs a relook.
The PM must push for a holistic and comprehensive education policy that focusses on both knowledge and skill. One without the other is incomplete. Similarly he must create an implementation framework that energises every stakeholder and creates impact.
The next decade could be India’s opportunity if we could ‘fuel’ the digital economy that largely relies on knowledge and skill and build a platform for ‘India’s century’.
