Innovation, Disruption and Entrepreneurship

Background

Buffeted by both global and domestic headwinds, the Indian economy seems to be slowing down, forcing the government to respond with a slew of reform measures to spur economic activity through innovation and empowering entrepreneurs. 

Analysis

With a huge youth dividend coming up, the nation should be poised to use it as a springboard to create success stories, while being an integral part of the global cycle chain. “The challenge for India is lifting a very young population above poverty. The Indian population will keep getting younger and younger up to 2042. If India needs both internal and external security, it needs to grow rapidly. To achieve this, India needs to be a simpler country; make things easy for citizens and businesses,” said Kanth.

NITI Aayog has been championing the cause of using cutting-edge technology to leapfrog the challenges the country it faces due to the lack of expensive physical infrastructure. But for this, it needs to attract capital and encourage innovations. Security is a function of the ability to grow rapidly, and if India grows at 9-10 per cent, then the nation will automatically take care of its security concerns both internally and externally.

In order to help achieve India's target of becoming a $5 trillion economy, the states will have to become key agents of growth. This would require major structural reforms across a wide range of sectors. Many of the eastern states such as Jharkhand and Chhattisgarh, although mineral-rich, yet economically backwards, have begun to improve their performance significantly by simplifying rules and regulations. 

The key to unfettered growth lies in making it easy and simple for entrepreneurs to conduct business. In the World Bank's Ease of Doing Business 2019 survey, India’s ranking climbed 23 places to 77 among 190 countries surveyed. For the second consecutive year, India is the only country to rank among the top 10 improvers. India has carried out massive structural reforms. Goods and Services Tax (GST) has replaced 17 different taxes. Digital processes in governance are being implemented in a big way. Direct Benefit Transfer (DBT) has been a big major structural reform. The bankruptcy and insolvency code has made it easier to run businesses. The Real Estate Regulation Act (RERA) that protects the rights of home buyers was implemented in 2016. 

India is the only country in the world with more than a billion biometrics, bank accounts and mobile phone connections. The Jandhan-Aadhar-Mobile (JAM) trinity has generated a huge amount of data. But unlike the US, where corporations own the data, in India, it is in the public highway. Enough data has been generated for young academicians to do data research with the aid of machine learning. 

In India, there are over 30,000 start-ups operating in sectors such as nutrition, education, health.  Indians have been innovating at a fast pace. They have produced low-cost ECG machines, innovated frugal engineering--turbochargers, tractors and even converted waste into BS6-grade diesel and oil. 

To get back to a long and sustained period of near double-digit growth rates, India must not withdraw and oppose globalisation. India has to be an integral part of the global supply chains. It may not be possible for us to manufacture everything, but we can certainly be a critical part of global supply chains.

It would be difficult for India to catch up with China or the developed economies in terms of physical infrastructure. “Telecom technology and 5G is the only way we can leapfrog the world. It is important we get into sunrise areas like electric mobility, 5G and electric storage.”

The time for the government bureaucracy to manage the economy is over. If we want a $5 trillion economy, the private sector will have to lead the charge through integration with global supply chains.