Can India have a growth strategy this time?
For India to aspire to double-digit growth, it needs the clear strategic framework it has never had. We need to take the time to develop such a strategy and build a modicum of consensus around it.india Updated: Aug 14, 2014 22:58 IST
At 67 years India is young and we can feel good about where we are for several reasons. First, the idea of India is alive and well despite the centrifugal forces of caste, religion, income, language. Indians today realise the power that comes from being one country and the attraction of a global scale market. Second, it has matured as a democracy. Voters have learnt to provide an opportunity to those who promise a better quality of life. Equally to punish them when they do not deliver as evidenced recently. Third, since 1991 economic reforms have catalysed growth rates and enabled hundreds of millions to rise above poverty. However India was pushed to reform from the brink of economic collapse and did not have a clear strategic pathway to sustainable growth. Not surprisingly, this process has stalled in recent years.
Having returned from India this week it is clear to me that we have a very decisive prime minister who is already acknowledged as providing clear leadership to his ministers, bureaucrats and party. There is enormous focus on improving execution. Both these will lead to a change in our growth rate from its current anaemic level.
But for India to aspire to double-digit growth it needs the clear strategic framework it has never had. We need to take the time to develop such a strategy and build a modicum of consensus around it.
Why do we need this?
We need a point of view on many issues. What are the sectors that will drive our growth? What is the minimum growth we need from the agriculture sector and in range of produce to contain food inflation sustainably? What are the enablers and barriers to growing manufacturing? How many jobs will the traditional sectors contribute? How will we educate and skill our workforce, young and old? How will we generate the resources required to invest in our infrastructure whilst containing the deficit? How will we manage natural resources? How will we reduce subsidies without impacting those who need these the most? All these are interrelated issues and actions on one can even have an adverse impact on the other.
I would advocate the following key principles as a start in developing this blueprint.
First, we need to have transparent and fair policies in place to use key resources such as land, labour and natural resources. We can learn from recent events and refine those that exist and create new ones. For example the recent land acquisition policy needs refinement. Labour policies are archaic and hold back entrepreneurship. And there is little consensus on how to allow the commercial use of coal, oil, gas, airwaves, etc.
Second, the increasing population and income is growing demand for a range of foods far ahead of supply. Agriculture is very inelastic and will require the full engagement of central and state governments to step up supply. Finding the pathway to stepping up supply; increasing the range of supply to include what people aspire to eat and need for nutrition; providing widespread and free availability across India is the only sure way to contain food inflation which will lead in turn to reduced interest rates and industrial growth.
A third big challenge is the creation of jobs. Indians are natural entrepreneurs with the necessary inventiveness and passion and will create employment for themselves with some help and skills to enable them to create their own businesses, however small they may be. They also need easy access to capital and ease of starting up which is related to the myriad of labour and other permissions required.
How should this be developed?
Such a blueprint requires detailed knowledge on all these topics and hence the involvement of domain experts beyond the bureaucracy. It will benefit from seeing how this is done in other countries like China. But above all it needs strong leadership from the top. Many of these experts will have differing views. These will need reconciliation and prioritisation; and finally a decision on the choices that are to be made. This needs then to be led by the PMO.
Once a straw man is evolved the PM himself can leverage his consummate and powerful communication skills to take it to the people and persuade them of its essentials. This will help build pressure on other political parties not to oppose for the sake of opposition.
Drawing up and gaining consensus on a strategic blueprint for sustainable growth can be the real game changer by this government.
MS ‘Vindi’ Banga is Partner, Clayton, Dubilier & Rice and former Unilever Executive Board Member
The views expressed by the author are personal