India is today hard on the heels of claiming
its stake as a top economic powerhouse. Already a top-three economy in PPP
(Purchase Power Parity) terms, it is projected to surpass France and United
Kingdom by 2018 and 2019 respectively and solidify its spot as a top-five economy
in MER (Market Exchange Rate) terms as well.
India’s growth story has strong
correlations with that of its neighbour, China. While India opened up its
economy in the 1990s, China’s head start came in the 1970s. Their GDP (MER)
stands at $11.93Tn whereas India has a GDP of $2.44Tn as at 2017. Juxtaposing
the economic growth trends of these two neighbouring behemoths, it certainly
looks like we are trailing China by 10 years. However, China’s growth delineates
India’s prospects if we make the right moves today. It is estimated that by
2030, China and India will together account for 45% of the nominal gross world
product – restoring the prominence once held by the two countries before the
dawn of the Industrial Revolution.
The groundwork has been laid for India to leverage its
strong industrial foundation and demographic composition and lead its way into
the forthcoming phase of economic proliferation in the next dozen years. In
addition, the low borrowings by the Government and a healthy gross saving rate of
29% will help safeguard India against adverse global shocks.
India has well-founded recognition for its strong macroeconomic fundamentals
and sturdy growth prospects. The third largest producer of steel and the second
largest producer of cement in the world, India today has the architecture in
place to support robust growth. On the back of the government’s recent support
for infrastructure and real estate development, India will be able to ramp up
the deployment of capital-intensive projects
required to buttress economic prosperity.
consumption is 70% of GDP. With a population of 1.31Bn
and a per capita income of close to $1,700 in nominal terms, internal
consumption and investments will stabilise India’s growth over the next decade.
advantage to bolster India’s footing is its demographic distribution. By 2020, the average age in India will stand
at 29 years, Europe at 45 years, China at 35 years, and the US at 31 years.
We are the youngest country in the
world with a sizeable population, and we will have a young consuming population
for the next 25 years. A large, capable working class boosts the economic productivity of a nation. India’s share
of its working-age population (15 to 64) is larger than most other prominent
economic nations. Furthermore, India will elude a steep decline in this proportion,
the contrast of which can be seen causing severe economic burdens on countries
like Japan. China too will be plagued by these concerns in the coming years,
trailing from the gestation periods of their infamous one-child policy.
To truly reap
these demographic dividends, however, India
needs to make its working class more productive. India
will have to prepare not just its job seekers but also create an enabling
environment for job creators. This is where India’s fundamental impediment
India has 800 universities, 51,000
colleges, with 35Mn youth in college. By 2030, there will be close to 70Mn students
in colleges, making India the largest college-going
population in the world. 18Mn young people will enter the workforce annually
for the next decade. Against this need, only 5.5Mn organized sector jobs are being
created every year.
Getting into some more data to strengthen
this context, of the 5Mn techies employed in the United States, 1Mn are Indian.
Additionally, US-based companies employ
close to 2Mn techies in India through outsourcing partners. These facts surmise
the quality of the engineering talent generated by India. Of the world’s top 10
software services companies in terms of market value, five are Indian. These
companies generated $175Bn in revenues in 2016, of which $115Bn was through exports. Providing employment to
4.2Mn people, these companies have been the hotbed for the quality training of young
Indian employees in new technologies. But there is only so much value they can
create for our country when better jobs to match their improving skillsets are
hard to come by. Further, labour mechanisation due the emergence of Automation,
AI, ML, and Robotics are posing big threats to jobs in Indian IT.
There are just not enough good jobs
being created to fulfil the true productivity that India can, rather, must
leverage from our talented young workforce.
With the onset of Industry 4.0, India
is in the midst of its biggest economic transformation of the past 250 years. Through
game-changing initiatives like India Stack and Digital India, and with the
mass-democratisation of information access through Jio, knowledge repositories
and frictionless communication has been brought to the doorsteps of every
household. The opportunities created here must be tapped, and doing just that
are the job creators of tomorrow – entrepreneurs through their metaphorical
arcs, startups. It is in the interests and the responsibility of the policymakers to support the growth of a
structured ecosystem to encourage the genesis of this movement. It is to this government’s
merit that they have recognised this requirement and shown initiative with the
launch of Startup India and Jan Dhan Yojna initiatives.
tolerates poor productivity of labour, inadequate automation, high supply chain
costs, and a significant portion of the population not being connected to
markets. The mobile revolution in India, with affordable data charges, will
connect 1Bn Indians to the Internet by 2020; up from 730Mn today. Startups are
playing a distinct role in improving supply chain efficiencies to reduce costs
and time to market, increasing consumption by lowering costs and connecting
customers to markets and driving volumes
up. They are increasing labour productivity in manufacturing, financial
services, health and education services, and several other areas of the economy.
They are enhancing sustainability by reducing energy consumption. Finally,
these startups are creating one single virtual national market for the first
time in India’s history.
Over the next decades,
India’s growth will be fuelled by its startups. Today, there are over 26,000
startups in India that have created a value of $90Bn, already employing over 325,000
people. With a run rate of adding nearly 7000 startups every year, there will
be close to 100,000 startups in the country by 2025, creating over $500Bn of
value and employing 3.25Mn people.
India is optimizing to empower problem
solvers. Startups will be the force multiplier to catapult the country into a
USD 10 Trillion economy by 2030.