Deccan Herald /The Asian age, April 30, 2023
By Pradeep S Mehta
Amitabh Kant, our G-20 Sherpa, has had an illustrious career as an excellent civil servant, constantly arguing for positive changes, some liberal as well. In that process, he continues to position India as the happening place through his erudite speeches, articles and books. His latest book, under review, Make in India, begins with an interesting narrative of how India, once a leader in the global economy, later lost this role and from a position of net exporter became a net importer. Industry became less relevant and agricultural commodities comprised the main exports.
The new economic model post-Independence moved us from the British Raj to licence raj, he writes. No one can disagree with that. In view of Nehru’s push, the public sector became the prime vehicle for economic development. Alas, it could not return surpluses as envisaged, due to outdated technology and inefficient management. Foreign exchange crisis was a permanent feature and the period was a tale of missed opportunities notwithstanding the Green Revolution and establishment of good institutions of higher learning.
The tryst with reforms began in 1991 in response to a severe foreign exchange crisis wherein trade policy liberalisation, reduction in import duties and FDI liberalisation came up. This period saw growth in software and telecom industries, the BPO sector, etc. Reforms also helped the consumer goods industry evolve. Simultaneously, transformation of the financial sector also began. PPP projects made their beginning in the infrastructure sector, civil aviation opened and entrepreneurship began flourishing. However, the manufacturing sector did not keep pace with the need and agriculture remained the prime source of employment.
Post reforms, the growth improved, though with hiccups. FDI started coming in and Indian companies also made investments abroad. Within manufacturing, industries that benefitted from protection moved out and competitiveness set in, resulting in income and wealth generation. Aviation and tourism industries grew in real earnest. A substantial middle class was in the making. A large part of Indian investment was financed by debt but given inflationary conditions leading to demand, curbs combined with procedural/approval delays caused the NPA problem to rise.
The new paradigm, beginning 2014, took the reform process further with IBC, GST and RERA coming in. Digitisation of approval processes, policies to attract FDI and a revamped IPR regime happened. PLI schemes, MSME redefinition and a new labour code came in. A key feature was the emphasis laid on building infrastructure and improving governance (through the JAM trinity) which brought in a transformation. Divestments and privatisation saw light of the day and the private sector’s leading role was acknowledged. That was a tectonic change in our mindset. Earlier, we never respected wealth creators, which seems to have changed substantially.
The world of startups focusses on India’s major achievements: The launching of over 65,000 startups with multifold increase in investors and investments, resulting in creation of over a hundred unicorns valued at over $340 billion. Thus, significant innovations have come about in finance, agriculture, education and health technology sectors. The gig economy has seen a phenomenal rise and, going ahead, will be the key in defining the future of work.
Climate change is the new challenge on the horizon. Despite the high emission history of the developed world and India barely taking two per cent of the available carbon space, we have emerged as a leader in the battle against climate change. India has, already, taken a lead in the renewable energy and transport sector and is simultaneously focussing on decarbonising difficult sectors through devising a Green Hydrogen policy. India is also propagating the LIFE movement to catalyze the potential of a circular economy. India is looking at several policy options to achieve Net Zero emissions by 2070, but all this is dependent on the availability of about $1tn of climate finance. For this, it is proposing to use the G-20 presidency to help facilitate huge amounts of climate finance for the Global South.
Looking to the future beyond India@75, he finds India has built a robust innovation ecosystem and can become a “tech garage of the world”. For India to transform, it has to achieve sustained growth made possible through enhancement of investment and savings rates from the current 30 per cent to at least 35 per cent of the GDP. The PLI schemes for key sectors will enable private investment to flow in and liberalisation of sectors like space and geospatial systems will further add to private sector innovation.
Kant concludes by rightly saying that the rich countries of today grew through carbonising their economies but India faces a different challenge and has to drive a growth model that does not rely on carbonisation. It focuses more on digital and Green. India stands to benefit from all the four trends shaping the global order — demographics, digitisation, deglobalisation and decarbonisation.
In his book, Kant has spoken about “what has happened and what more needs to be done”; perhaps his next book will go deeper into the “how to do it”.
Made in India
By Amitabh Kant
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