Digitised Pivoted Growth Is Exponential; Truly Transformational
India’s ecosystem is marked by a ‘pyramid of scarcity’. Large sections of our people are the “bottom” of the economy and may still be in 2050.
While we pursue rapid & inclusive growth and in earnest, it is becoming increasingly clear & evident that India’s problem may not be solved by incremental growth. We need a dramatic shift and a holistic reorientation to our growth models.
Exponential growth triggers periodic expansion, sustainable ‘peaks’, creating a virtuous, robust and enormous long term value. It flattens the pyramid, and provides ‘most’ to everyone.
Youth locked in the ‘near future’
For the many, yesterday’s India has been a lost ‘generation’. Full of potential, not much achieved. Similarly most of the 25 crores young Indians are locked in the ‘near future’, despite the education, despite the capability. They are aware & connected, and want to soar. Underemployment is endemic, particularly in the northern part. The 5 crore ‘entrepreneurs’ and the job drivers of this economy are looking at a solution that scales their business so that they can move beyond the ‘middle’ and shed the MSME tag.
Even a GDP growth of 8% (highly unlikely because of the base effect and the frail ecosystem) will fail to address several economic, especially societal challenges. The poorest section of society is deprived. A majority still aspire for a life of comfort. How do we provide a life of dignity to the aged and future to the young, health for all, jobs for the employable, education and inclusion?
Most of our resources are allocated to poverty eradication.
The last three decades has been defining. The reforms of the 1990s were truly transformational. The incremental growth was driven by the mobilisation and synthesis of resources like land, labour & capital, and founded on a ‘reformist’ ecosystem. However, galloping growth has slowed. Reforms, injective and other stimulus are beginning to give us
diminishing returns. And in several sectors none at all.
Exponential growth is driven by technology adoption
We need new paradigm; futuristic mind-set. Policymakers need to be alert & agile and foresighted. Envision 50 years, work today. They must embrace, adopt the technological revolution, and imbibe. They often react, ignoring it even resenting it.
Digital technology is ‘general-purpose’ i.e. a technology that metamorphoses constantly, expands progressively, infusing productivity gains across every sector. History has seen only three similar phenomena; the steam engine, printing press, and electricity.
The rise of the western world was defined by applying machines for increasing returns and creating scale. Japan thrived on quality. China’s momentous growth was founded on scale, driven by low cost manufacturing.
India missed the industrial revolution. It lacked the agility, ecosystem and the economic scale to charge growth post the reforms. Our frail economy fragile nature compounded by externalities dragged us down.
At the cusp, but may well fade away
It has happened. The Asian tigers ran well but tired out. Brazil and Russia could not take off.
Our policymakers must appreciate that in spite of all the rhetoric, India is not the natural choice to be the ‘factory of the world’. And in all likelihood never be. Our competitors have acquired and are armed with the comparative advantage.
However the world is changing, ‘comparative advantages’ are evolving.
We are experiencing today’s comparative advantage proving diminishing returns and may well become superfluous in the digital centric ecosystem. Growth economies may neither need the ‘muscle’ to scale’, nor abundance capital, or even the ‘growth’ platform to ‘firm foot’ the development trajectory.
Digital models, unlike the traditional are exponential in nature; use network effects to not only accelerate but also scale and optimise returns. India needs to create a different type of comparative advantage.
Growing ‘Crisis of Success’
India needs to up its game. Quickly and continuously invest in relevant, robust, yet evolving technology to seize any decisive competitive advantage. Digitisation will upend the traditional theory of ‘comparative advantage’ across industries. Manufacturing is increasingly becoming digital-technology intensive. ‘Services’ are more technology-less service. Agriculture can provide more, if tech-enabled.
While we grapple to garner and muster resources to invest in technology, India cannot take its eyes off the ball and abandon what is relevant today. Automation led growth is not only jobless, it may also displace, even diminish the demand for products and tasks that are unskilled and labour-intensive. Economic disruption fuels and feeds on social anxiety; and pervades. Very quickly.
Digitisation is efficient, effective and equitable
We have experienced this.
Technology has changed the way Indians transact financially. An enabling ecosystem, and largely driven by JAM trinity (jan-dhan, mobile and aadhaar) has enabled financial inclusion for 90% of the unbanked.
While we marvel and benefit from the expanding rural road network which has empowered most of rural India and created a pathway for the farmers, the mobile phone in every woman’s hand is no less empowering. Similarly the humble, oft ignored Swachh Bharat initiatives will enhance health. Similarly Jandhan and broadband in almost every nook & corner has enhanced ‘ease of living’, added ‘muscle & mind’ and strengthened democracy.
These investments can unleash exponential economic and societal gains; and are truly transformational.
A Crux econometric analysis highlights that a 10% increase in digital activities can enhance employment rate by 6%, GDP growth by 2% depending on the sector and the region. The Crux insight also articulates that digitised pivoted growth triggers productivity and adds sustainable. Its adoption creates more inclusive societal and economic ecosystem.
Digital led growth is empowering
PM must lead, ‘guide & nudge’ the policymakers towards digitisation.
And he must do more. He must elevate digitization to the national agenda.
His government must invest in ‘enablers’, ensure governance framework, collaborate and synergies with the private sector to e-enable and create effective operational models. Above all, it must create a digital ecosystem.
Digitisation is driven both by knowledge & know-how and empowered by holistic citizen centric policies.
