Reforms Power Growth; Catalyses Social Mobility
India’s better days are ahead; not behind.
Reforms of the 1990s have been truly transformational. Over these three decades she has developed a significant footprint in the global economy. In absolute numbers the GDP has been a 10 multiplier.
Equally heartening is that growth is marked by several noteworthy, more meaningful milestones. It has enabled a large section of the deprived to a dignified living. Reforms, particularly of the last decade, have stimulated sustainable social mobility.
India feeds, serves the world. Industry has potential to engine growth
India has challenges galore. We need to grow at 10% to create about 100 million jobs for the next decade. A Crux study across 14 sectors identifies several catalysts that can, and indeed are the growth-booster. Our potential lies across different angles of innovation that delivers products and services at costs that have never been achieved before.
We need to move up the value chain by intensifying the high-productivity model, focusing on value enhancing framework. Similarly move beyond ‘catch-up’ potential to several ‘vaulting’ possibilities. A 10% growth rate may seem a long shot, but history is assuring. It can be achieved from a combination of a productivity growth rate of 8% (last 7 years has been 7%) tagged by job growth of 1.5% (achieved in the first decade).
However relying on history is arduous. The Crux study recommends bold & structural reforms, robust framework to substantially scale and accelerate growth. And follow this up by injecting the appropriate catalyst encompassing high-productivity models across different themes.
At Inflection point; reforms can trigger growth, catalyse sustainable progress
India has leapfrogged technologies (3G, 4G), and that pattern is consistently repeating across different product categories.
Information Technology and telecommunication have transformed the economic ecosystem creating opportunities, and attracting a new breed of tech-pruners, with global ambitions. It provides the pathway to some, platform to many others to expand and flourish. Service industry has adopted & adapted in several ways, grown multiple times riding the telecom backbone, and IT knowhow.
Indian IT service providers have enhanced value; earned respect. They have diligently built a robust platform led largely by the impregnable moat of ‘low cost, value enhancing delivery model. The ecosystem too has helped, nurturing them with a steady supply of low-cost talent, integral to efficient delivery. The 5 biggies have the potential, resources too, to move up the value chain. They are working the future, focussing on the next generation of digital, artificial intelligence solutions. They are at the cusp of a 40 billion dollars’ opportunity.
IT scales & deepens productivity
Digital platforms have powered productivity & scale, enhanced value for the medical, tourism, retail, educational, and leisure sectors.
A Crux study articulates India is years away from becoming (if ever) the ‘factory’ of the world. However it can capitalise on the ‘assemble & hub’ opportunity. This high-productivity, growth booster has the potential to value add a trillion USD; create 100 million related & tributary jobs in 10 years.
But it will take some doing.
The government has a role to play as well. India’s fiscal is strong (rising oil notwithstanding) and she must invest in growth drivers and development multipliers. Similarly the playmakers need to stimulate corporate investment.
The Crux study highlights that India needs to develop an ecosystem that enhances competiveness, powers scale. Corporate landscape is highly fragmented. Close to 80% of the 50 million jobs providers are minuscule and small. Only a handful of the 500 ‘large’ organisations have global scale or competiveness. There is no middle primarily because the ecosystem has failed to nurture the ‘small to middle’. 90% of the small and medium-sized companies employ less than 10. Most from the remaining 10% of this universe may neither acquire the size nor the competitive edge to grow large. Government’s several functionaries continue to play the role of a monitor & enforcer. Businesses need enables and nurturers, backed by a highly robust & efficient financial intermediation.
Assembling and the logistics business depend on the ‘middle’. India needs at least 20000 mid-sized companies (We have less than 5000) to ‘link’ the larger 500 organisations, and about a lakh of the ‘biggest’ companies in the MSME universe.
The Crux study concludes that sustained growth rates are directly correlated to competitive firms.
Economic growth is a process, not an event. Not an end by itself
Economic reforms are not sufficient. While the rate of growth is important, so is the trajectory and pattern. Growth must be accompanied by a very intense focus on social mobility. If we are not able to provide a life of dignity to every citizen, jobs for every aspirer, the benefit of this growth will be concentrated at the top, manifesting into several ills.
The Crux study across 21 states presents a depressing ‘state’ of affairs. Barring a few state governments most have not taken up market-facilitating reforms, in spite of several low hanging fruits like power, land and agriculture, which are state subjects. These reforms are multipliers. Our polity is such that most state government are perpetually in election mode. Short-ism, freebies, election focussed welfare scheme are the focus. The opposition has been equally irresponsible.
The Crux study indicates blue sky.
India is blessed with low-cost telecom & internet access. She has leapfrogged several analogue technologies, created and democratised robust platforms, built abilities to launch truly transformational social reforms.
Growth powered, tech enabled development
The JAM trinity of Jan-dhan, Aadhaar, and mobile linked to the digital ID reduces cost & leakages, enhances speed. It can both propel & proliferate, almost every service. Growth powered, tech enabled development is equitable, more holistic and empowering.
This is a real leadership moment for an aspiring India. The policymaker both at the centre and the states must prioritise both economic and social reforms.
The PM appreciates it better than most that India needs bolder reforms to propel into the next orbit. He has the political capital. He needs to create a team of capable doers and thinkers to implement & scale these reforms.
