How times change, and how quickly they change! In April 2014, who would have imagined that in another 365 days, crude prices would halve, and the US would start talking to Iran and Cuba once again? Who would have believed that India would have an absolute majority government at the Centre for the first time in 30 years? Or that a foreign rating agency would actually upgrade the country’s outlook to positive to stable after seven long years, or that the IMF would project India’s growth at higher than China?
Yes, finally, after four years of uncertainty and hibernation, and within one year of the NDA government at the helm of things, India seems to have its mojo back.
After a long time, legislative business in Parliament has regained its pre-eminence. Policy-making has become quicker, since there are no GoMs sitting in on merry-go-round meetings. There is a genuine attempt at federalism, and we might actually have a GST by April next year.
The government’s commitment to manufacturing seems sincere. I hope it is now also able to design India’s trade equations in such a way that we are able to make the most of fragmented global value chains.
Over the next 10 years, if India wants to find a place in the league of developed nations, the manufacturing sector must grow consistently by double digits, since it is the sector with the highest job creating potential. By 2025, it is estimated that India’s young workforce—if equipped with the right skills—can have 110 million jobs, and of these, 40 million will come from manufacturing alone.
Modern rules and policies are required to build a modern India. We need rules and laws that create enabling infrastructure, viz. roads, ports and railways. The development of the infrastructure sector will strengthen backward and forward linkages to the economy. In Budget FY16, finance minister Arun Jaitley proposed to increase the central government allocation to this sector by 30%. A National Investment and Infrastructure Fund was also proposed. Both measures are welcome, but the devil lies in execution and traction on the ground!
The move to let the government shoulder more risk in public private partnership (PPP) projects is a good one since these are public goods and the government’s active participation is key in ensuring such physical infrastructure projects reach maturity.
We need to make India a more productive nation. But much more important than this, India needs to become a place where citizens and businesses live and work without harassment.
The moral compunction of corruption aside, purely pragmatic concerns also dictate that corruption is rooted out of our system. It makes business more expensive, and is directly linked to how attractive our economy looks to domestic and global investors. For investors, it is not just a question of profits, but also the ease of doing business and the ability to focus productive energy on jobs that matter.
According to the Pinkerton and FICCI’s India Risk Survey 2015, corruption, bribery and corporate fraud continue to be the top-most risks affecting industry. Clearly, campaigns like Make-in-India could bite the dust if we don’t find effective ways of addressing this problem. Perhaps one way of dealing with this malady is tackling the demand for it, as well as the supply. Not only is accepting a bribe a crime, but also giving it. India should consider adopting the OCED Anti-Bribery Convention. As we integrate technology into governance, reducing human interface, we may be able to reduce the opportunities for impropriety.
The challenge of dealing with corruption in a federal system like ours is more acute, given the red-tape and poor citizen interface at the state, district and village levels in many of the states. While the NDA government has adopted several constructive policy measures during the year it has spent at the Centre, it also needs to draft appropriate reforms, keeping this dimension of the problem in mind.
Skill development is another area that requires strong and decisive leadership. India has a huge advantage over ageing economies. By 2022, India will have a quarter of the total global work-force. We need to do much more to develop this resource by focusing on the micro, small and medium Enterprises (MSMEs). This segment of the productive economy leads to livelihoods development through job creation and access to skill based employment.
PM Modi’s initiative to institute a separate entrepreneurship and skills ministry is the government’s way of acknowledging this, but much more concrete action in terms of actual support to business is required. For example, there is a need to get the entire government machinery and financial system to support start-ups and innovation-centric companies. We also need laws where companies can freely balance their workforce with adequate safety nets.
I am in total alignment with the government’s stand on streamlining this process through the digital platform. While it is a ‘single window clearance’ system we fondly desire, it is a constructive step in this direction. Business-government interface must be seeded through trust, self-certification and optimal leverage of technology.
A major area of concern at the policy level is India’s skill paradox—the situation where a majority of the workforce lacks requisite skills despite access to education. Companies spend potentially productive time, and precious resources, training this workforce, and this affects our economic productivity at a micro and macro level. We need credible certification and a readily available pool of blue-collar skills. For this, we need an overhaul in vocational education and ITI education.
There is a great sense of hope and expectation in the country today for India to grow and take its rightful place in the global community of nations to address poverty through growth and people oriented policies and, at the same time, develop talent and companies to play a leadership role in multiple chosen areas.
In sum, the path India takes in the next ten years is crucial to realising the buoyancy of the moment in tangible economic terms.
The author is joint managing director, Hero MotoCorp Ltd. & chairman, Hero Corporate Service Ltd.