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1
Viksit Bharat: Unshackling Job Creators and
Empowering Growth Drivers
Arvind Virmani*
July 2024
Abstract
This paper presents a Vision of a developed India in 2050. Two objectives drive this vision. One is fast
catch-up growth that closes the gap with countries which were at the same stage of development as
India in the 1960s & 1970s but have moved ahead since then. An understanding and utilization of global
& domestic trends is critical to fast growth, which can be used by Indian government and its people to
leapfrog to a better life. The second is equality of opportunity for every Indian citizen based on personal
motivation & inherent capabilities. Equal access to quality education, skills, public goods, social and
governance services is critical to both these objectives. Provision of social services to 1.6 billion
Indians, at the quality available to 1.4 billion citizens of the Developed countries, is only possible in 30
years through comprehensive use of digital systems like e-governance, e-learning, tele-medicine, and
artificial intelligence. AI driven expert systems like E-Kautilya, E-Chanakya, E-Manu will drive a
transformation in governance. Expert systems like E-Acharya, E-Guru and E-Vaid will drive the
transformation in education, skilling, and health services. We envision a Hybrid (Phygital) architecture
which marries India’s vast human resources to a pervasive digital infrastructure to accelerate structural
transformation and inclusive growth. Government will ensure the provision of hard & soft infrastructure
to every habitation in India, develop a policy structure that creates competitive markets in which private
entrepreneurs can innovate and thrive, and a welfare system that protects the weak & vulnerable while
giving ample scope for civil society to provide a multiplicity of non-marketable services. Proposed
Policy & institutional reforms aim to unshackle job creators and empower growth drivers.
* The author is a Member of NITI Aayog. Any views expressed in the paper are those of the author(s)
and should not be attributed to NITI Aayog or Government of India. This Working paper is based on
the policy paper, “India Vision 2050,” PP No-01/2021, EGROW Foundation, May 2021, and the
working paper, “India Vision 2050: A Civilizational Power”, WP No-01/2024, EGROW Foundation,
June 2024. TableofContents
Figures
Tables
1.Introduction
2.EqualityofOpportunity
3.GlobalTrends
3.1Demography
3.2Digitization&Phygitaleconomy
3.3ClimateChange
3.4Globalisation,de-globalisation&de-risking
3.5ComparativeAdvantage
4.Economy:Growth&Structure
4.1IndianEconomy
4.2IndiainWorldEconomy
4.2.1Connectivity&Trade
4.2.2GlobalSupplyChains
4.2.3InternationalFinance
4.3StructuralTransformation
4.3.1QualityChains
4.3.2Agriculture&Rurallabour
4.3.3Infrastructure
4.3.4Manufacturing
4.3.5Services
5.KnowledgeEconomy:EmpoweringGrowthDrivers
5.1Education
5.2DigitalTeacher(E-Acharya)
5.3EmploymentandJobskills
5.4DigitalSkilling(E-Guru)
5.5KnowledgeStack 6.Governance&PublicWelfare
7.DigitalEconomy:ExpertSystemAI
8.GreenEconomy
8.1Transport
8.2Energy
8.3Urbanization
8.4Housing
8.5CircularEconomy:Re-cycling
8.6EnvironmentalRegulation
8.7GreenStack
9.IndiaasaCivilizationalPower
9.1Defence&Deterrence
9.2BipolarWorldwithMultipolarRim
9.3TripolarWorldwithMultipolarRim
9.4Diplomacy
9.5CivilisationalState
10.PolicyVision:UnshacklingJobCreators
10.1Controls,Regulations&Regulators
10.2DigitalTaxman:E-Kautilya
10.3CapitalMarkets
10.4SupplyChainRevolution 10.6UrbanDevelopment
10.7Land&RealEstate
10.8Agriculture&Rural
10.9Transport&Energy
10.10CriminalJusticeSystem
11.SummaryandConclusion
12.References
Figures
:Globalization&de-GlobalizationofMerchandiseTrade
:Labourforceparticipationrates(total,female)India&World
:ProjectionswithaveragePcGdpgrowthof5.9%,6.4%&6.9%peryear
:GlobalEconomicPowerofIndia&ChinaasmeasuredbyVIPe
:Worker-PopulationratiobyUsualstates(US)andCurrentWeeklyStatus(CWS)
:EffectofPandemic&externalshocksWageandSalaryWorkers
:SearchunemploymentYouthunemploymentratebyagegroups
:MilitaryPowerasmeasuredbyVIPm
Tables
:ShareofOutwardFDIandManufacturedImports :Labourforceparticipation(LFPR),Workerpopulation(WPR)&Unemployment(UR)
Growthofrealwagesofagriculturalworkers2013to2023
CumulativeConsumptionDistribution
:PublicHealthBasicsDrinkingwater,sanitation&Sewage
SpecificdutiesinIndia
:StateswithgapineducationperformancerelativetotheirpercapitaNSDP
:ComparativeElectricityprice 1.Introduction
Indiaisademocraticmarketeconomy,whichhasapopulationequaltothetotalpopulationof
all78westerndemocracies(~1.4billion).With28States&8UnionTerritories,23official
languagesand456livinglanguages,itisfarmorediversethantheEuropeanUnion(EU)with
28countriesand24officiallanguages.Incontrasttothesecountrieswhichareuppermiddle
incomeorhigh-incomecountries,Indiaisstillalowermiddle-incomecountry.
Thecombinationoflargepopulationandrelatively
lowermiddleincome,makesIndiathefifthlargesteconomyintheWorld.
tobecomeanUppermiddle-incomecountryinadecadeandahigh-incomecountryin25years.
Theeconomicreformsunderwayandtheeconomic&institutionalreformsontheagendafor
thenextfewyears,willsustaingrowthofpercapitaGDPat7%duringthedecadeof2020s,to
makeIndiathethirdlargesteconomyintheWorldinafewyears.Thechallengeistobroaden
anddeepenthesereformstotransformthequalityofourhumanresources,totakeadvantage
ofthenewtrendsinglobalpolityandeconomy,sothatfastgrowthissustainedforthree
decades.
Section2laysoutavisionofequalitywhichisthefoundationoffastinclusivegrowthinafree,
open,pluraldemocracy.Section3examinesthedemographic,digitization,de-carbonization
andde-globalisationtrends,whichglobalcomparativeadvantageover
thenextdecade.Section4takesstockofthemacro-economic(includingdemandpattern)&
structuralfeaturesoftheIndianeconomy,andenvisionsitspotentialevolutionoverthenext
fewdecades.Section5examinesthecriticalissuesrel
esectionanalysestheissueofeducation
andemploymentfromtheperspectiveofmarketdemandforandmarketsupplyofskills.The
latterincludestheissueofsearchemployment.Givingthelimiteddataavailabilityitlinks
changesingrowthofemploymentandrealwagestotherelativegrowthofdemandandsupply
ofspecifictypesoflabour.
Sections6focusesonGovernanceanditscriticalroleinfurtheringpublicwelfare.Itstartswith
adata-basedanalysisofpovertyanddistributionfollowedbyhealth&PublicHealthissues.A
cross-countrycomparisonofhealthparameters,includingchildmalnutrition,setsthestagefor
policyandStateGovt.effort.Thequalityofgovernanceiscriticaltothemacro-economic
environmentforgrowthaswellasthesupplyofGovernmentservices.Thissectionproposesa digitisationofthelaws,rules,proceduresanddecisionsofthegovt.,topreparethegroundfor
useofAIexpertsystemstotransformgovernancesystems,proceduresandroutinedecisions.
ItalsoexaminesthepossibilityofusingAIexpertsystemstoraisethequalityofsocialservice
(education,skilling,health)tothedisadvantaged.
Section7delvesintoHybrid,digital-physical(Phygital),systemsthatarecriticaltotranslating
thevisionintoareality.Section8providesasketchofkeyelementsofthegreeneconomyand
GeopoliticalvisionforIndia
intheWorldof2050.Section10presentsapolicyvisionofreformsneededtoaccelerateand
sustainfastgrowthforthreedecades.Section11concludesthepaper.
2.EqualityofOpportunity
tallcitizensareequalunderthe
constitution,underthelawsenactedunderitsumbrellaandthegovernanceandadministrative
institutionswhichimplementtheselaws.TheoriginalvisionasbestexplainedbyAmbedkar,
wasthattheIndiawouldbecomereasonablyequalinafewdecades.Failuretoachievethese
hopeshasmadeitnecessaryextendconstitutionalmeasuresdecadeafterdecade.Furtherthe
administrativerealityofhowtheconstitutionandlawsareimplementedremainstoofarfrom
thevision.WeenvisionanIndiain2050inwhichtheoriginalvisionofhumanequality
embodiedinthefundamentalstructureoftheconstitutionisrestored,thelawsreflectthe
fundamentalrighttoequalityandthegovernanceinstitutionsarereformedtoreducethegap
betweenthelawsandtheirimplementation.Weenvisionthatthejungleofeconomiclaws,
rules,regulationsandcontrols,introducedinthefirstthreedecadesofindependence,will
becomeadistantmemory.
Indiansocietyislesssociallyequaltoday,thentheframersoftheconstitutionenvisagedor
imagineditwouldbe75yearsafteritspromulgation.ReservationforScheduledCastesand
ScheduledTribes,whichwasmadefor10years,withtheexpectationthatitwouldbeenough
toeliminatehandicaps&restoreequality,hasbeenextendedfor70years.,withlimitedsuccess.
Besidesofficialmeasures,partofthesuccessinreducinginheriteddiscrimination,is
attributabletofacelessnessofthemarketeconomyandtheanonymityofurbanlife.The
founderscouldneverhaveenvisagedthatinsteadofreservationbeingeliminatedafewdecades
afterindependence,itwouldbeextendedfurthertoOBCsafter40years,withfurtherdemands
forexpansionarisingafter60years.Politicaldiscourseandcontestationhavealsohampered
theeliminationofdiscriminationbasedonreligionbyeachreligiousgroup.Weenvisagean Indiain2050,whereresidualdiscriminationisreducedto,orbelow,thelevelprevailingin
otherlargepluraldemocraciesliketheUSA.
Indiawasoneofthefirstdemocraciestoenshrinefullgenderequalityintheconstitutionbut
hasfailedtotranslateitintosocietalnormsandrules.WeenvisionanIndiainwhichwomen
workingfromvillages,smalltownsandurbanhomes,providemorethanhalfthehighskill
labourforceofIndia.
isinthehighestglobalquartileandthewagedifferentialisinthelowestglobalquintile.An
OECDstudy(2015)suggeststhatgenderparityinlabourforceparticipationandwages,can
growthrateby1.5%to2.4%.TheIMFestimatesthatequalparticipationof
femalesintheeconomycouldadd16%toGDPonaverageacrosscountries.Theestimatefor
Indiaishigherat27%ofGDP.
Socialmobilityisaneconomicimperative,asfulluseoftheproductivepotentialofthe
populationbenefitsnotjusttheindividual,butincreasesthetotalproductivityoftheeconomy.
WeenvisionanIndiainwhichthereisequalityofeconomicopportunityforallcitizensand
theirchildren,independentoftheclass,caste,religionorethnicoriginsoftheparents,or
gender.Thisrequiresaneducationsystemthatprovidesbasiceducationandjobskillsof
highestqualitytoall,andskills&highereducationtoeachaccordingtohercapabilities&
talents,interests&motivation,temperedbytheneedtopromotepublic(vizpersonal)interest.
Learningtolearn,thescientificmethod,andabilitytoquestionassumptionsburiedinour
psyche,isanimportantfunctionofgoodeducation.Totheextentthathumanitiesaredesigned
toproducethisresult,theycanbeasvaluableasSTEM(science,technology,engineering,and
mathematics)inpromotinginnovation.EducationmustinculcateGandhiannotionsofsocial,
civic,andnationalresponsibility,incontrasttoStalinist-
means.
Equalityofopportunityrequiresacompetitivemarketeconomy,inwhichnaturalmonopolies
arerationallyidentifiedandprofessionallyregulated,andtheadverseeffectofasymmetric
informationonequalityofopportunityiscorrected.Societyhasattimestocreatemonopoly
rightsbecauseitisinthepublicinteresttodoso,suchasinthegrantofpatents,orthe
productionofmajorweaponssystems.Thismustbedonewithdueconsiderationofthepublic
benefitsandcosts. Socioeconomicequalityalsorequiresequalaccesstopublicgoodsofequalquality
1
,as
eofinequality.
goodsforwhich
Governmentbearsfullresponsibility.
2
CommunicablediseaseisthebestexampleofthePublic
control,sewage,sanitation,clean
drinkingwater,andpubliceducationarethemeansofcontrollingit.Controlofpollution(air,
water,land)isalsocloselyrelatedtopublic
servicestoallisafoundationalpillarforequalityofopportunity.
3
WeenvisionanIndiain
whichhealthinsurancecovers100%ofresidentsforalltesting,&treatments(includingminor
surgery),withmajorsurgery,chronicdiseaseandcurablecancerscoveredbytheGovt..tertiary
healthsystem.
4
WeenvisionanIndiainwhichallhaveequalaccesstohighqualitydrinkingwater,clean
air,andlandunpollutedbychemicalsofallkinds,whereallhaveaccesstothesameurban
facilitiesandenvironmentfromlargemetrostosmalltownsandhabitationsastheydoin
advancedcountries.WeenvisionanIndiainwhichequalityofopportunityisachievedinfact
andisvisible;Thepoor,themiddleclassandtherich,theurbandwellerandtheruralvillager,
arevirtuallyindistinguishableinpublicparks,metrorail(aquasi-publicgood),airports,and
footpaths&roads.
Weenvisionasocialsecuritysystemwhichfunctionsseamlesslyfromthepooresttothe
richest.Fromthosewhoneedtransferstothosewhopaytaxes.Anetincometransfersystem
systemwhichensuresthateverycitizenispartofitandistreatedneitherlikeasupplicantat
oneend,orapotentialcriminalattheother.
5
2
Onparwithroads&highways,judicialsystem,internalsecurity&police,anddefense.Forexamplesof
HealthisintheStatelistoftheconstitution.
3
cancer,kidney&otherorgandiseasesandfailures.Forthelatter,society&polityhavethechoiceofdifferent
healthsystems(UK,Canada,Europe,USA),oraprivate-publicpartnershipversion,suitedtoourtaxcapability
anddemandsontaxresources.
4
ThisrequireshavingStatePrimary,secondaryandtertiaryhealthcenterswhichprovidehealthserviceswhich
arecredibletopatientsandinsurancecompanies.Withtheprovisionofuniversalbroadbandconnectivity,
Telemedicinewillmakeuniversalpersonalhealthinsurancefeasible. Beingalowermiddle-
-middle&high-incomecountries.We
envisionanIndiain2050,inwhichthisgapisclosed,sothatIndianmetrosandthepeoplein
thestreets,publicandcommercialspaces,lookaswelloffasinanycityofAmerica,Europe
orAsia.ItwillbeanIndia,whereNRIsandPIOsareeagertocomebackandsettleinandto
sendtheirchildrentostudyandworkin.
WeenvisionanIndiawhichisthethirdmostpowerfulinWorld,whichneitherbowsitshead
beforeanycountrynorlooksdownonanycountry.AnIndiawhichdeterstotalitarian
aggressors,andprovidesavoicetothelowincome&lowermiddle-incomecountriesin
internationalforums&organizations.Asanexampleofthelatter,Indiahasalwaysprovided
highqualityforeignaid(grants&loans)tootherdevelopingcountries,basedontheirneeds
andrequirements,withouttryingtoextractspecialfavours&rents,asothershavedone.As
income&resourcesrises,itwillbeabletostepupthisassistance.Indiaiscurrentlythe
fifthlargesteconomy,butwillbecomethethirdlargestinafewyears,apotentialgreatpower,
part-waytobecomingapotentialsuper-powerby2050.
6
Sustained,fast,inclusive,greengrowthisnecessarycondition,forthisvisiontobeachieved.
Inclusivegrowthgeneratesprivateincomeforall,butalsogeneratesgovernmentrevenues,
whicharecriticalforprovidingthepublic&quasi-publicgoodsandsafetynetneededto
achievethevision.
3.GlobalTrends
Demographicchangeisthemostimportantdriverofchangesinglobalcomparative
advantage.Indiahasbeenunabletoutilizeitsdemographicdividendaswellasthecountries
ofEast&SouthEastAsiahavesince1960s.Theworkingpopulationofmostofthehigh-
incomecountries(HICs)andmanyoftheuppermiddle-incomecountries(UMIC),hasdeclined
inthelast30years,whilethatofIndiahasincreased( ).Theglobalshareofworking
agepopulation,forthelargestdevelopedcountrieslikeUSA,Japan,Germanywilldecline,
ssharewillincreaseby0.3percentpointsby2050.TheshareofWesternEurope
6
WemeasurepowerwithVIPeindexofeconomicpoweranddefineaGreatpowerasonewithVIPe>25%of
thestrongesteconomicpowerandsupperpowerasonewithVIPe>50-60%ofthestrongesteconomicpower.
IndiaisprojectedtomeetthistechnicalcriterionofPotentialGreatpowerby2030,andPotentialSuperpowerby
2050. inworkingagepopulationwilldeclineby-0.6%points,withItaly,FranceUKalllosingshare.
torendowments
willloseasignificant7.8%ofitsshareinglobalworkforceby2050,providinganopportunity
toattractlabourintensiveproductionfromChinatoIndia.Allpotential(UMIC&LMIC)
competitorsforlow-mediumskillintensivemanufacturingwillalsoloseshare().
Source:UNpopulationdataandprojections(2022).Authorscalculationsexcludetheagegroup15-19fromWAPonthe
assumptionthattheywouldbeoccupiedineducation&jobskilling
ThecurrentadvantageofIndia,inlowskilllabourintensiveproductionwill,however,be
erodedoverthenext10-
comparativeadvantagewillshifttosemi-skilledormediumskilllabour-intensive
manufacturingandservices,overthenext30years.Thelowratioofeducatedandskilledlabour
intotallabourforceofIndiain2020,ouble
digitsby2035.
Theglobalshareofskilledlabourforcewilldeclinealongwiththeshareintotallabourforce,
forthecountriesmentionedearlier.Inaddition,theRepublicofKorea,Brazil,restofN&S.
labourforcewillalsodecline.R&DbyMNCsin
Emergingeconomieshasincreasedsignificantlyoverthelastfewdecades,withIsrael,India
andChinabeingthekeybeneficiariesofthisdiversification. Athirdaspectofdemographyistheagingofthepopulation.Exceptforthecountriesinwhich
totalandworkingagepopulationisrising,theratioofagedpopulationtoWAPwillrise,
toWAPwilltriplein30years,from30.5%in2020to84%in2050.
toWAPwilldoubleoverthisperiodfrom18.7%to38.7%,but
remainless
medicalequipmentwillexpandrapidly.
Indiacanbecomeamajorproviderofhybridhealthservices(online&offline),medicines,
andmedicalequipmenttotheWorld.Trainingoftechnicians,nurses,physical&mentalhealth
therapistandanarmyofnicheskillslikespeechtherapist,willbenecessary.
BecauseofthePandemic,PublicHealth&publichealtheducationissueswilltakecentre
stageinthenextfiveyears.ButIndiaiswellplacedtobecomethePharmacyoftheWorldby
2035.Govt..mustprovideprofessionalregulationoftheentireprocessofdrugresearch,
discovery,testing,approval,andpost-productionpricing,tominimizeregulatorycostsand
maximizethepublichealthbenefits.
TwootherglobaltrendsareespeciallyimportantforIndiaof2050.DigitizationandGreen
economy.TheDevelopedcountriesandChinahavebeendigitizingatamuchfasterratethan
India.ImportantstepstakenbytheGovernmenttodevelopdigitalinfrastructure,likeAadhar,
UPI,ONDC,DigiLockerandfinancial&healthstacks,needtobebroadened&accelerated.
ThePandemichasgivenagreatimpetustodigitizationworldwideandinIndia;Remotework
andworkfromhome,andGlobaldemand-supplyofoverthewireservicesandexportof
services,hasgrownbyhundredsofpercentinthelastfewyearsandwillcontinuetogrow
swiftlyoverthenextdecades.WithasupportiveenvironmentprovidedbyGovt..toTech
entrepreneurs,Indiacanandmustclosethegap,andbenefitfromthenewpossibilitieslike
workfromhomeandworkfromanywherewhichhaveopened.
Digitalprovisionofhumanandsocialserviceswillbecriticaltodeliveringhighquality
education,skills,health,andgovernmentservicestoapopulationwhichismorethanthe
continentsofEuropeandNorthAmericacombined.ThetrendsinArtificialintelligence,
machinelearningandexpertsystemswillcomplementtheprocess.Hybridmodelswillbe
developedinIndiatooptimisethebalancebetweenthebenefitsofdirecthumancontact&
socializationandbetterqualityofinformation&knowledgeprovideddigitallybyafewto
many. (WFH)
facedbywomeninworkingoutsidethehome,especiallyinruralareas.Theworkfrom
anywhere(WFA)trends,providesanopportunitytoclosetheexistingandemergingskill
shortagesinIndiaandtheWorld.Indiamusturgentlyutilisetheunusedpotentialofhighly
educatedwomenwhoareconfinedtotheirhomesorlimitedtosmallhometowns,withfewjob
prospectsforthehighlyeducated.
(during1850-2019),
amountingto~1.3%ofthetotalcarbonspaceavailableunder2degreewarmingscenario.
Governmenthassetatarget
ofreducingcarbonintensityby45%between2005and2030,andincreasingforest&tree
cover,toabsorb2.5-3.0billiontonnesofcarbondioxideequivalentby2030.
ityandgeographicalspreadof
itspopulationandthediverseweather/environmentalconditions.Totheconsequentchallenges
relatedtoair,land,waterpollutionanddepletionofundergroundreservoirs,isaddedtheeffect
ofglobalclimatechangesonIndianweather.UnlikeEU,Japan,andUSA,wefaceagreater
problemofhotweather&evaporation.Theneedforcoolingandrefrigerationisextremely
highinsummer.
Indiahasdecidedtotakeonthechallenge;Ithasannounceditstargettoachievenetzeroby
2070atCOP26inNovember2021.Indiahasadoptedaholisticapproachtoachievethisgoal,
whichincludesaproactivestanceonSolarpowerandelectricvehicles,wearegearingupto
participateinawholerangeofnewactivitiesopenedbythetrendtowardsagreenereconomy.
Urbanplanningandhousingdesignmustminimizethecostofcarboncontrol&moderationto
theeconomy.Climatechangeisalsoleadingtofreakweatherconditions,whichmustbe
anticipatedandbuiltintothedesignofgovernmentprograms&projects,andintoruraland
urbanhabitation.Anoptimalcombinationofincentivesforgeneratingbetterdesignofsystems
anddisincentivesforenvironmentaldegradationwillemerge. Thetrendinde-globalizationwhichstartedwiththeglobalfinancialcrisis,hascontinuedwith
adecliningtrendintheratioofworldmerchandiseexportstoworldGDP(figure1).
7
shareofmerchandiseexports,however,continuedtoincrease,risingfromlessthan9%in2009
to15%in2021.
:Globalization&de-GlobalizationofMerchandiseTrade
Source:Worldbank,WDIdatabase.Authorscalculation.Polyisthecalculatedpolynomialtrendinthevariable
Itsshareofmanufacturedexportshasrisenatanevenfasterrate,from12%in2009to20.5%
in2021(figure2),TillChinawasadmittedintotheWTOin2001,USA,GermanyandJapan
werethetopthreeexportersintheWorld.USAshareofWorldmanufacturedexportswasthe
afterwhichtheUSAre-tookthetopspottill2003.Duringthepost-warperiodtheUSapproach
tofreetradeandindustrialpolicyhasvaried.TheriseofJapaneseexportsduringthe1980shad
ledtotheUSimposingVoluntaryExportRestrictions(VERs)onJapaneseautomobileexports,
followedbythePlazaaccords(1985),whichwereseenbymanyasareversaloftheunalloyed
freetradepoliciespromotedbytheUSAduringthethreedecadesafterWW2.Afterfacilitating theriseofChinasmanufacturingexportsfortwodecades,undertheguiseoffreetrade,another
turnofthecycleisnowathand.
Source:Worldbank,WDIdatabase.Authorscalculation.Polyistheestimated
to,(1)Exportled,importsubstituting,
Infrastructuredriven(ELISID)policy,pursuedsincethemid-1980s-early1990s.Chinalaid
outtheredcarpetforMNE/MNCanchorinvestorsinthe1990s,withfullydevelopedindustrial
infrastructure&connectivityprovidedbyEasternprovincesinmonths.Afterexportsfrom
theseenterprisesboomedinlate1990s,early2000s,investmentthrustshiftedtoimport
substitution&realestate.(2)ItsReverseEngineerandDevelop(sREAD)policyinitiatedafter
joiningtheWTOin2001.
8
providesanenvironmentin
whichCompaniesownedand/orbackedbeProvincialcommunistpartiescompetefiercelywith
thosefromotherprovinces,afterobtainingthetechnologyfromthecentrallyownedtechnology
instituteswhodomajorreverseengineering&development.Thesepolicieswerefacilitatedby
industrialpolicy. Since2018-19importingcountrieshavestartedrealisingtherisksofdependingononecountry
thatholdsavirtualmonopolyinmanymanufacturedexports,particularlyTelecomequipment,
Automaticdataprocessingmachinesandelectronicproducts(table2).
,2021(%)
ThisrecognitionhasheightenedafterthedisruptioninChinalinkedsupplychainsduringthe
pandemicandafter(2020-2021).ThereisalsoarecognitionoftherelativeadvantageofIndia
asalocationfordiversificationofmanufacturingsupplychainsoutofChina.Between2017
th
highestafterVietnam,Taiwan,Canada
&Mexico.
9
ofmanufacturedexports(table2).Thekeylessonistheintegrationofinfrastructure,foreign investment,export-import,phasedmanufacturingandtechnologyreverseengineeringand
developmentpolicies.IndiahastolayouttheredcarpetforMNCs/MNEsfromUSAandEU
toquicklymakeupforalosthalf-century.
Italsoneedsacarefullycrafted&implemented,plantointegratetheentiresetof
infrastructure,industrial,trade&technologypoliciestosubstituteintermediateandcapital
goodsimportsfromChinawithdomesticproductionofthesamegoodsproducedbyChinese-
IndianJVs,followedbyfullspectrumcompetitionfromIndiancompanies,usingskills&
technologylearnedfromIndia-ChinaJVs.
Thediscoveryofmassiveleakageofadvancedtechnologyfromthehighincomedeveloped
countries(HIDCs)toChina,overthelast20-30years,andtheoverdependenceonimportsof
Telecomequipment,ADPmachinesandelectronicsgoods(IOT),withhighpotentialfor
injectionoftrojansandmalware,hasraisedseriousnationalsecurityconcerns.
10
Thisaddsto
theattractivenessofdiversifyingmanufacturingvaluechainsintoIndia.TheUS-IndiaICETis
markoftrust,withrespecttoStrategic&Dualusetechnology.Thisisparticularlyattractive
forvaluechainsinvolvingsoftwareelements,giventhatIndiaisalreadyanattractive
destinationforR&Dinsoftwaresolutions.
comparativedis-advantagevizChina,intermsofeconomiesofscaleandscope,isbeing
partlyaddressedbythenewProductionLinkedIncentive(PLI)scheme,butmorewillhaveto
bedonewithrespecttootherbottleneckandhigh-techeducation&skilling.Onlineeducation
&trainingprocessesandexpertsystemsaretheonlywayofdeliveringqualityeducationand
skillstothelargepopulationofIndiaintheshorttimeavailable.
atanytypeorqualityofskills,islargerthanthatofanymiddle-incomecompetitor&canbe
largerthanallofthemputtogether.(b)Outof28differentstatessomehave(orcanhave)a
comparativeadvantageinagriculture,othersinmanufacturingandtherestindifferenttypesof
services.Thisisreflectedintheexportofagriculturalgoodsandarangeofbusiness&
professionalservices,includingglobalcapabilitycentresdoingR&DforMNCs.However,
viewedfromanationalperspective,overallcomparativeadvantagewillshiftfromlow- skilledlabour-intensiveandmedium/semi-skilllabourintensivemanufacturingduring2020-
35,tomedium/semi-skilledmanufacturingand(high)skilledservicesduring2030-45.
AstheworkingpopulationoftheDevelopedcountriesandEmergingeconomiesdeclines(table
1),theirshareofsemi-skilledandskilledlabourforcereduces,thecostofskilledlabourwill
shifttohigh-techcapital-intensiveproductslikerobotics,automatedmachines&automated
productionlines,artificialintelligence(AI),andmachinelearningsystems.Indianeednotape
thesecountrieswithrespecttoautomationbutcanuseAIandmachinelearningtoenhancethe
qualityofitsskilledlabourforceandmagnifyitsreach&effectiveness.Researchhasalready
shown,thatincertainoccupations,lowskilledpersonscanuseAItoperformatmiddleskill
levelandmiddleskillpeopleathighskilllevel.ThiswillgiveIndiaapotentiallyunique
competitiveadvantagebetweenthecountrieswithrapidlyexpandinglabourforceinAfrica&
WestAsiaanddeclininglabourforceinAmericas,Europe&E&S.E.Asia,includingChina.
Acriticalaspectoftheexploitationofthiscomparativeadvantageisthelabourforce
participationofwomen.
lowerthanexpectedatitspercapitaGDP(pinkline,figure3),despitethefactthattheLFPR
formalesismuchhigher(Indialfpr=79%)thanexpected(greenline,figure3).Thisisbecause
ofthebiggapinLFPRofIndianfemales(30%)whichhalfthatexpectedatitslevelofper
capitaGDP.AstheLFPRofmalesisalreadyveryhigh,itisnotexpectedtoincreasemuchin
future.Increasedemploymentoffemales
potentialcomparativeadvantageinaspectrumofskills,fromlow,throughmedium,tohigh
end.Thefocuswillhowevershiftoverthedecadesfrombasiceducation&jobskillstomiddle
skillstohighendskills.
AfterIndiabecomesanUpperMiddlecountryintheearly2030s,itwillhavetoinitiatea
fundamentaltransformationoftheeconomyfromcapital-ledtoskillledeconomy,Thereafter,
asIndiamovesclosertothetechnologyfrontierduringthe2040s,itscomparativeadvantageis
envisionedtoshifttoinnovation.Thisrequiresinnovativeentrepreneursandassociatedskills
fortranslatinginnovationsintomarketableproducts&services. :Labourforceparticipationrates(total,female)India&World
Source:WorldDevelopmentindicators, (correspondinggraphformaleLFPRnotshown)
AccordingtoWIPO(2023),Indiawasthesixthhighestrecipientofpatentapplicationsin2022,
representingagrowthof25%from2021.Patentsfiledduring2022areChina(1,464,605),
USA(252,316),Japan(218,813),RepublicofKorea(183,748),EPO984,074)&India
(38,551).ThoughIndiacanaimtobecomethethirdrankedpatentproducerinadecadeorso,
theinstitutionsneededtogenerateanenvironmentthatpromotesinnovationatthefrontier,
havealonggestationperiod.Indiamustacceleratethecreationofsuchinstitutionsandgenerate
therequiredcomparativeadvantage. 4.Economy:Growth&Structure
SocialistcontrolsontheIndianeconomy,peakedin1970s,whiletaxratespeakedinthe
1980s.Since1980therehasbeengradualeconomicreformsandliberalisationofthecontrols
imposedbetween1947and1979.Consequently,therateofgrowthofpercapitaGDP(PCGDP)
hasgraduallyaccelerated,bothcomparedtoitsownpastandrelativetotheWorldgrowth
(figure4).TrendgrowthofPCGDPhasincreasedfromabout2.2%in1980toabout5.6%.
11
Source:DomesticdataseriesfromRBI,Worldcomparativedata(includingIndia)fromWB,WDI.
Therisinggrowthratehasbeenaccompaniedbyachangingstructureofrealdemand,witha
risingshareoffixedformation(GFCF)andadecliningshareofprivatefinalconsumption
(PFCE)inGDP.Theformerpeakedandthelatterreachedatroughin2010-11twoyearsafter
theglobalfinancialcrisis(figure5).
Economistshavearguedthatpostrecoveryinvestmentboomin2010-11&2011-12wasdue
tolosefiscalpolicyandlaxcreditstandardsforinfrastructure&commoditysectors;Thisled
toaninflationaryspiral,amini-BOPcrisisandtwinbalancesheetproblem,whichplaguedthe
financialsectorforseveralyears. Ifweaccountforthecreditbubbledrivencycleofboom&bustininvestment,itappearsthat
theriseoftheGFCF/GDPratiohasslowedaftertheglobalfinancialcrisis.Thedeclineinthe
realPFCE/GDPratiohasalsostoppedaftertheglobalfinancialcrisis,withtheratiointhe
processofstabilisingafterthebalancesheetcrisis(whichculminatedinNBFCdefaultsin
2019)andtheseriesofsubsequentshocks.
Theworkerpopulationratio,declinedfrom0.65in1983,to0.63in1993andfurtherto0.62in
2004and0.55in2011(Bhalla(2024),indicatingthattherateofgrowthofjobswasslower
thanrateofgrowthofpopulationduring1983-2011,intermsofUsualStatus.Subsequent
sectionswillexaminethemorerecentdatatotakestockofwherewestandtoday.
Asisapparentfromfigure4,thegrowthrateoftheIndianeconomyfluctuatesconsiderably.
Historically,droughts,oilprices(1980,1990,2008,2022),collapseofUSSR(1989-92),the
globalfinancialcrisis(2008)andthePandemic(2020-21)havebeenamongthemajorshocks.
Theseshockscausedistresstothedirectlyaffectedpopulation;farmers&farmworkersinthe
caseofdrought&ElNino,theurbanpopulation(includingmigrants)inthecaseofpandemic
andtheentirenon-farmeconomyinthecaseofoilpricerise&lockdown.Govt.ofIndia(GOI)
&theaffectedstates,havealwaystakenmeasurestominimisethedistressandlossofsavings,
andbeensuccessfulinensuringthateconomicgrowthreturnstoitstrend(figure4). Thegrowthimpactofthesefluctuations,offsettotheextentpossiblebypolicyactions,is
shownintable3.Thethird&fifthcolumnsshowthattheaveragegrowthrateofbothPCGDP
andGDPhavecycledfromdecelerationtoacceleration&backtodecelerationsince1994-
95.
12
Columnsixshowsthatthedeclineoftherationofrealprivatefinalconsumption
expendituretoGDPratiohasbeeneitherstopped(rows8&9)orincreased(rows5&6).
ColumnsevenshowsthattheratioofrealgrossfixedinvestmenttoGDPhaseitherstabilised
(rows4&6)orresumeditsuptrend(rows8&9).
Average
PFCEGFCFGFCE
change change
123456781
fy95-fy99
4.4 6.4 63.721.310.8
2
fy00-fy04
4.0 -0.45.8-0.661.524.811.2
3
fy05-fy09
5.41.46.91.157.829.110.1
4
fy10-fy14
4.9 -0.56.7-0.256.032.910.8
5
fy15-fy19
6.11.17.40.756.031.210.0
6
fy20-fy24
3.4 -2.64.3-3.157.532.810.2
7
FY95-fy04
4.2 6.1 62.623.011.0
8
FY05-fy14
5.21.06.80.756.931.010.4
9
FY15-fy24
4.7 -0.45.9-1.056.832.010.1
GDPShare(%)of
PCGDP GDP
Growthrate(%)
Nationalaccountaggregatesinconstant2011-12prices
ThequestionaftereveryshockistheseparationoftemporaryfrompermanenteffectsThe
omeways,butalsodirectlyaffectedurbanareas.Thecomplexitywasmuch
greaterbecauseoftheworld-widenatureofthePandemic&effectonbothdemandand
supply,
13
andsubsequentshocks(Oilprices&ElNino).Thenetresultwasgreaterdepletion
ofsavingsandgreaterimpactonthosewithlowerabsolutesavingsandcreditlimits.
14 Despitethis,realpercapitaGDPwashigherin2021-22thanin2019-20.Theaveragereal
privateconsumptionratioisalsohigherduringFY20-FY24(2019-20to2023-24)thanthe
averageofprevioustenyears(rows4,5,6ofcolumn6,table3),andthe.economyhasreturned
tothetrendgrowthrate(figure4).
15
This
management,inclusiveapproachandunderlyingstrengthofIndia
Sustainedfastgrowthisextremelyrare;Virmani(2012)showedthattherewereonlyadozen
non-resourcerichcountries,whichhadapercapitaGDPgrowthrateof7%orhigherformore
thanadecade,ofwhichhalfsustaineditforlessthantwodecades.
16
Another7non-resource
richcountriessustainedagrowthrateofover6%foradecadeormore.
17
Indiacansustainfast
growthinrealpercapitaGDPoverthreedecades(2021-2050),averaging6-6.5%perannum,
providedappropriatepolicyandinstitutionalreformsareundertakentoaddressstructural
issues.Catch-upgrowthrequiresinstitutionsforimitationandadaptationoftechnology,which
iswidelyavailableintheadvancedcountries,andtakesacountryfromlowermiddleincome
touppermiddleincome.Themovefromuppermiddleincometohighincomerequires
institutionswhichpromotethegenerationandimplementationofinnovationatthefrontiersof
technology.
Thefast-growingEastandSouthEastAsianeconomies(NICs,New-NICs&China),which
havemovedrapidlyfromlowermiddle-incomelevelstouppermiddleincomeand
subsequentlytohighincome,haveservedasaninspirationand
reformssince1990.
18
Whenwelookclosely,wefindthattheyhavehadawidevarietyof
experiencewithrespecttocapitalformation,FDI,exports&importsandmanufacturingvalue
added(intermsofratiostoGDP).Whiledrawinglessonsfromthem,Indiahasandwill
continuetocarveoutitsownpath,giventheglobalenvironmentin2020s&beyond.
InthiscontexttheterminationofBilateralinvestmenttreaties(BITs)during2016-2018hasnot
serveduswell.KotyrloandKalachyhin(2023)estimatea60%fallinFDI(basedonquarterly
timeseries)followingBITcancellation.HartmannandSpruk(2023)estimatea30%reduction
inFDIbenchmarkedagainstcountrieswithouttermination.Muchoftheestimateddecline
relatedtoFDIinM&A.Goldaretal((2024)confirmthesignificantnegativeeffectofBIT
terminationonFDIandapositiveeffectonimports.Indicatingacomplementaryrelationship betweenFDIandexports.Thus,restorationofthesetreatieswithFDIsourcecountrieslikeEU
members,iscriticaltoincreasein(direct)FDIandattractingmanufacturingsupplychains
GivenappropriatechangesinrulesandproceduresforFDI,BITs&FTAs,wecanexpect,(1)
ariseintherealinvestmentrateby2%ofGDPinthenext10yearsandanother3percent
pointsthereafter,(2)anincreaseinFDIfromthecurrent1.8%ofGDPto2.5%ofGDP.(3)A
riseintheshareofValueaddedinmanufacturingby3%pointsofGDPinthenextdecadeand
ariseto28%-30%ofGDPovertwodecades.Thiswillhoweverbequitechallenging.
Institutionalchanges,particularlyattheStateslevel,willbecritical.Moreambitioustargets
canbeachievedwithgreaterreformeffortatalllevelsofgovernment,particularlywithrespect
tothebehaviouroftheUnion&StateGovt..andNagarpalika/Panchaytiraj,bureaucracy
located/basedatthegroundlevel.
Reformsofproductmarkets(goods&services),factormarkets(capital,labour,land,and
management),naturalresourceexplorationproductionandmarketing,socialservices
(education,health,Govt..services)andpublicsectormonopolies&monopsonies(defence),
areatvariousstagesofimplementation.Someofthesereforms(financialsector,labour,
electricitygeneration&transmission,defenceproduction,corporatetax)havealreadybeen
undertakenbutmayneedtoberefined,overtime.
Micro,small&mediumenterprises(MSMEs)constitute85-
producers,andstart-upsandtechentrepreneurstopowerIndiainthe21
st
century,willarise
amongthem.EaseofregulatorycomplianceismorevaluableincostandtimeforMSMEsthan
forCompanies.Goodsandservicestax(GST)simplification,andrationalizationoftheDirect
taxcodearecriticaltoprovidingalevelplayingfieldtoMSMEs.Customsdutysimplification
isneededbothtoleveltheplayingfieldforMSMEsbutalsoaspartofanindustrialpolicyfor
facilitatingthegrowthofglobalsupplychainsinIndia.
Legalreforms,welfarereformsandreformsofthetransfer-subsidysystemarepending.
Furtherreformswillalsobenecessarytotransformthestructureoftheeconomy,leapfrogover
knownweaknessesandaddressnewbottlenecksthatarisewithgrowth.
WebuildthreescenariosforrealPercapitaGDP(PCGDP)growthinPPP,constant2017
internationaldollars.Aconservativeone,withaveragegrowthof5.9%perannum,amedian
of6.4%perannumandanoptimisticof6.9%perannum,whichassumesthatIndiaundertakes
therequiredpolicyandinstitutionalreforms.AveragegrowthofGDPatPPPwillbe6.5%,7% and7.5%respectively,basedonaveragepopulationgrowthof0.6%peryear.Figure6presents
percapitagrowthtill2050of5.9%,6.4%and6.9%perannum.Accordingtothemiddle
projection,IndiawillbecomeanUppermiddle-incomecountryaround2031andaHigh-
Incomecountryaround2047.
:ProjectionswithaveragePcGdpgrowthof5.9%,6.4%&6.9%peryear
Source:DatafromWDI&UNpopulationprojections.AuthorsforecastsuseIMF&OECDprojectionsasbase
18%ofUSA(figure7).Inthesamescenario,IndiawillhaveaPCGDPin2050equaltothe
Worldaverscenario
IndiawillbecomeanUpperMiddle-Incomecountry(UMIC)around2031andahigherincome
country(HIC)after2050.
19
IntheoptimisticscenarioIndiawillbecomeanHICin2047.India
willovertakebothJapanandGermanyinthenextfewyearstobecomethethirdlargest
economyincurrentUSD,behindUSAandChina.
19
CitigroupandPriceWaterhousepredictedIndiawouldbecomethelargestorsecondlargesteconomyby
2050.Ourprojectionsaremoreconservative,assumingacompoundannualgrowthofrealpercapitaGDPPPP
of6.0%forIndia,2.8%forChinaand2.0%forUSA.AsIndonesia&Romania,recentlybecameUMICand
HICrespectively,wetaketheirPCGDPPPPin2017Int$asbenchmarki.e.,UMIC($11600)HIC($31000). ,2017Int$)relativetoChina,USA,EU,World
Source:Asinfigure4.
indexwill,in2050(2035)be80%
figure8Error!Notavalidbookmarkself-
reference.).
20
Economicpoweristhefoundationofoverallpower.Itformsthebaseonwhich
layersofMilitarypower,diplomaticpower,sift/culturalpowercanbebuilt(figure9).After
buildingeconomicpower,anadditionalgoalshouldthereforebetobecomethethirdstrongest
Militarypowerwiththethirdlargestmilitary-industrialcomplexandasizableR&Dhub.
21
21
theUSA.
Economicpowerisgeometricaverageofaneconomiesrealrelativesizeandameasureofgeneraltechnological
prowess(percapitaGDPrelativetoUSA).VIP=Virmaniindexof(overall)power,isageometricallyweighted
averageofVIPe/VIPPandmilitarypower.ThisisbasedontheconservativescenarioofaveragePCGDPgrowth
of5.9%2020-2050. rest-of-worlddemandthroughnetimportsofgoods&servicesfromtherestoftheWorld.
22
It
willalsobethethirdlargestcapitalmarketintheworld,aftertheUSAandChina,attracting
largeramountsofcapitalbecauseofhighinvestmentlevelsreflectedinthecurrentaccount
deficit(=I-S).Thecurrentaccountdeficitshouldhoweverdeclinewithrisingdomesticsaving
rateafterIndiabecomesanuppermiddle-incomecountry.
IndiawillbecometheMiddleandBackofficeoftheWorldandthelargestproviderofonline,
managerial(industry,agriculture),professional(fintech,dataanalytics,advisory)&social
services(health,education),byutilizingitsdemographicdividend,aseducated,young
workforcedeclinesinrestofEurasia.Itcanalsobecomeamanpowersuppliertotheworldfor
economicactivitieswhichrequirephysicalpresenceoftechnical&professionalpersonnelat
thesite,likesurgery,physiotherapy,nursing,houseconstruction&repair.Indiawillinnovate
hybridservices,whereaworkerwithpurelyphysicalcapabilityworksunderapersonal
supervisor,whoguides,monitors,andinspectstheworkinrealtime.
IndiaisthefourthlargestproducerofmanufacturedgoodsintheWorld,butonlythe15
th
largest
exporterofmanufactures.Thislargegapreflectsthefailuresincethe1960stounderstandthe
roleplayedbymulti-nationalenterprises(MNEs)/corporations(MNCs)indrivinginternational
tradeinmanufacturedgoods,inthepost-worldwarglobalisation.EverycountryinEast&S.E
Asia,whichmovedfromLowincometouppermiddleincome&highincome,haswelcomed
MNEFDItofirststimulateandthendrivethegrowthofmanufacturedgoodsproductionand
exports.Chinawentfurther,byfirstincentivisingandthenpressuringforeigninvested
enterprisestotransfertechnologyandskillstodomesticfirmsandexpandlocalprocurement
ofintermediategoods.
23
mercantilistdriveto
reducemanufacturedimports(i.e.,increasemanufacturedexportsnetofimports)
WhetherIndiaenterstheranksofthetopfivemanufacturedgoodsexportersintheworld
dependsonbothinternaltradereformsandcoordinationoftradepolicywithEUandUSA.
Chinahasestablishedavirtualexportmonopolyovermanymanufacturedgoodsandiswell
onthewaytodoingsoformanynewand/orfuturisticmanufacturedgoods.TheonlywayUSA,
EUandIndiacancompetewithoutunsustainabledraftontheirtaxrevenues,isbycombining
22
Reflectedintheabsolutevalueofthecurrentaccountdeficit.Notethatthedegreetowhichacountrydrives
RestoftheWorldgrowth,ismeasuredbytheelasticityofROWGDP,withrespecttoanautonomouschangein
countryGDP(e.g.,fiscalstimulus).ItisdifferentfromarithmeticalcontributiontoWorldgrowth,whichIsjust
theratiooftheincreaseincountryGDPasratioofincreaseinWorldGDP. theircomparativeadvantagei.e.,thetechnologicalstrengthofUS&EUwiththeabundantlow,
medium&highskilledworkersofIndia.Thisrequiresaneliminationtariffandnon-tariff
barrierstomanufacturedgoodstradeamongthesethreeeconomise,andimpositionofspecial
anti-monopolytariffsonimportsfromChina(includingindirectimportswithmorethan10%
valueaddedinChina).
4.2.1Connectivity&Trade
Theglobaleconomicturmoilsince2008hasbeenaccentuatedbythePandemic&
geopoliticalturmoilsince2020,introducinggreatervolatilityanduncertaintyinWorld
merchandisetrade.Theseeconomic,geo-politicalandsecuritydevelopments,haverevealed,
emphasised&re-establishedtheimportanceofgeography,trustandmutualgain,in
internationaleconomicrelations.
Thegeographicaldimensionsuggestswefocusonconnectivity(transport,energy,telecom)in
(1)Indiansub-continent,(2)TheIndianOceanregion,includingtheislandsandlittoralstates.
Thetrustdimensionsuggestsweincreasetheentirerangeofeconomicrelationswith,(a)
CountriesacrosstheworldwithasignificantIndiandiaspora(connectedbyancestry,culture
orsocialrelationswithBharat),and(b)Countrieswhichshareoursecular,democratic
principles,groundedinmorethan4000-year-olddharmiccivilisationofBharatVarsha.
24
The
US-IndiaICETisamarkoftrust,withrespecttostrategic&dualusetechnology.Thisis
particularlyattractiveforvaluechainsinvolvingArtificialintelligence,giventhatIndiais
alreadyanattractivedestinationforR&Dinsoftwaresolutions.(c)Minimiseourimport
dependenceoncountrieswhichhavemadeclear,inwordanddeed.thattheywishusill.The
mutualgainsimperativesuggestswedeepenourtradeandtechnologyrelationshipwith
countrieswhosecomparativeadvantageiscomplementary(ratherthancompetitive)withus.
TheunderlyingideaistocreatesupplychainswithreducedrisksforbothIndiaanditspartners.
IndiacanbecomeahubfortheIndianOceanregion,withaweboflogisticscompanies,
shippingservices,airlinesandinternetcableslinkingallthecountriesontheshoresofthe
IndianOceanandtheGulfandtheislandsoftheIndianOcean.Thesecouldbepromotedand
co-ordinatedbyanIndianOceanLogisticscompanyunderwrittenandfundedbytheGovt..
-Pacificwillexpand,toprovidemoreoptionstoSoutheastAsiaand SouthAsia,IndianOcean,islandnations,EastAfrica,andWestAsia.
25
By2050this
organizationcouldhavespecialmarketarrangementswithASEANandGCC.TheFreeTrade
AgreementwithUAEandtheannouncementoftheIndia-MiddleEast-Europecorridor(IMEC)
haveinitiatedtheprocess.
TheTransAsianhighwayandtheTransAsianrailway,fromVietnamthroughIndiatoWest
Asia,havebeenupendedbyturmoilinMyanmar.ThesewereenvisagedbyAsiancountries
andendorsedbyESCAPdecadesago,butwillfinallycometopass,by2035. Northeast
willlieatcross-roadsofEastWesttraffic,withimportantSouthernroadsandraillinesthrough
BangladeshandMyanmartoThailandandMalaysia.Afghanistancouldbecomeanother
logisticshubwithNorth-SouthraillinefromChabaharthroughAfghanistanandCentralAsia
toRussia.GreaterconnectivitywillalsofacilitatetheparticipationofallSouthAsiancountries
in
4.2.2GlobalSupplyChains
TherearetwocharacteristicsofMNEsupplychainswhichareimportant.Oneisthereduction
inmarketriskbymatchingproduction/supplytoexistingdemand.Thesecondisthereduction
inproductionriskbybundlingFDI,technologyandhumancapital.Theresultisaconsistent
highproductquality,andtimelysupplytotheconsumer/retailer/wholesaler.Thisinvolvesa
riseinthelevelofskillsandtheproductivityoflocalsuppliers.
DevelopmentofaglobalmanufacturinghubinIndiawillbegreatlyfacilitatedandaccelerated
bysupplychaindiversificationbytheHighincomedevelopedcountries/economies(USA,EU,
EU,UK,Japan,SKorea,Taiwan).TwothirdsoftheWorldsmerchandiseexportstakeplace
withinMultinationalEnterprises(MNEs)internalsupplychains.Ithasincreasedsharply
duringlastthirtyyears.AthirdofthetoptwothousandMNEsareheadquarteredintheUSA
followedbyJapan(12%),China(10%)andUK(5%)&India(4%).
26
TheEUwithaneconomy
comparableinsizetotheUSAprobablyhasaroundathirdofthelargeMNEs.Thesharewill
likelystartrisingagainafterthepandemicisbehindus. TradeandFDIareintimatelylinked;Table4comparestheoutwardFDIandmanufactured
importsofthecountriesidentifiedaboveastheoriginofmostoftheMNEsupplychains,along
lcompetitors.Becauseofthedisruptioncausedbythe
pandemic,itshowsthedataforthepre-pandemicyear2019andthelatestavailableyear(2022).
USA,EU,Japan,UK,ROKarethesourceof~60%ofGlobalFDI,i.e.>7xChina(8%).They
Import53%ofWorldmanufacturedimports,i.e.5xChina(8.5%).Japan,UK&SouthKorea
togetherconstituteaslargeamarketforforeignmanufacturedgoods,asChina.Since2000,
ChinahasbeenmajorbeneficiaryofUSA&EUsupplychains.
:ShareofOutwardFDIandManufacturedImports
AsmostoftheWorldsMNCsareheadquarteredinUSAandtheEuropeanUnion(+UK),a
plurilateralfreetradeagreement(FTA)betweentheseeconomiesandIndiawillbenefitallof
them.TheUS-IndiaICETismarkoftrust,withrespecttoStrategic&Dualusetechnology.
Thisisparticularlyattractiveforvaluechainsinvolvingsoftware&AIelements.SuchanFTA
canhelpreducedependenceontotalitariancountries,whichhaveusedasymmetricpoliciesto
createmonopolies,andarenotshyofusingthisdependenceforgeoeconomics&geopolitical
coercion.
4.2.3InternationalFinance
WeenvisionanIndiain2035withafiscalsurplus,opencapitalaccount,doubleAArating
andacurrency(Rupee)whichisfullyconvertibleandpartofIMFspecialdrawingrights(SDR) list
oftheRupeeinneighbourhood,andthethirdlargestcapitalmarketinthefreeworld,willmake
thisanaturaloutcome.
27
GiventheexistingoligopolyofWorldratingagencies,andthefiscal
deficitcriteriausedbythem,aNationalfiscaldeficitof3%isvirtuallyapre-requisiteforthis
tohappen.Thisrequiresthecreationofaglidepathto1.5%fiscaldeficitfortheUnionGovt..
followedbyasimilarmovebythestates.
AnIndianratingagencywilldiversifyoutofIndia,tocoveralldevelopingandemerging
marketeconomies.Thiscouldbewiththeequityparticipationofratingagenciesoflarge,free
marketdemocracies,orasjointventurewiththem.GOIcanfacilitatethisprocess!
Aninternationalfinancialcentrelikepre-2020HongKong,SingaporeorLondoncanonlybe
developedifthequalityoflifeiscomparabletothatinthesecentres.Ifthesocialfreedomand
qualityoflifeavailableinthesecentrescannotbeprovidedinGIFTcity,anewcentrewill
havetobedevelopedelsewhere.
By2050Indiainco-operationwithotherfreemarket,opendemocracieslike,EU,willhavean
internationalpaymentandsettlementsystemmanagedjointlybytheseeconomies/countries.
Indiasstructuralchallengecanonlybeaddressed,byunderstandingtheconstitutionalbasisof
itseconomicsystem&thedivisionofrightsandresponsibilitiesbetweentheUnionGovt.
(Unionlist)andStateGovernments(Statelist).Theconstitutionappliestheconceptof
subsidiaritytoassignsubjectstothethreelists:Union,ConcurrentandState.Theconcurrent
listcontainssubjectswherethesubsidiarityprincipleconflictswiththeneedforanational
policyorclosenationalcoordinationbytheUnionGovt..Thus,forinstance,educationwas
movedfromtheStatelisttotheConcurrentlistinthe1970s,becauseoftheperceivedneedfor
Nationaleducationalstandardsandcertification,giventheincreasingmobilityofeducated
youth.Theresultof75yearsofpluralisticdemocracy,isanIndia(with28states&1.4billion
people),whichismoreintegratedthantheEuropeanUnion(28countries,450millionpeople)
28
andasdiverseasthesetofwesterndemocracies(78countries,1.4bipeople),butwithfar
loweraverageincome. 4.3.1QualityChains
TheconventionallensforviewingtheStructureoftheIndianeconomy
employment,and,(2)Thelargeshareofpopulationengagedinagricultureand/orlocatedin
ruralareas.Thisvisualisationleadstotheerroneousconclusionthatformalisationofthe
economyisanecessaryconditionforhigherrealwages.
Keymissingelementisthequality/capabilitydimensionofjobskills.Thereislarge&variable
gapbetweenalevelofeducationdefinedbycredentialsandmeasuredcapabilitywithrespect
tothatlevel.Thisaffectstheabilitytolearnonthejobaswellasacquirejobskills.Another
underratedelementisthequality/capabilitylevelofeveryskill,whetheritisthoughtofaslow,
mediumorhighskillbasedonsector,occupation,orprofessionaltype.Thismeansthatavery
capable,low(medium)skilltypeworker,canbemoreproductiveandthereforeearnmore,than
asubstantialfractionoflesscapableworkersinmedium(high)skilloccupations.
TheQualitychainortechnologybubble:Thequalityofaconsumerproductdependscritically
onthequalityleveloftheentiresupplychain.Thus,alow-qualitysupplychainwilluseolder
technology,lowcapability/qualityeducated&skilledworkers&managers,lowerqualitytools,
equipment&machinery,andlow-qualityintermediategoods&rawmaterials.Thisisreflected
inlowerwageratesandcheaperfinalgoods.Correspondinglyforhigh-qualityproducts,with
mediumqualityproductsrepresentingatransitionfromlowertohigherqualityproducts.These
Qualitychainsarepresentineverysector(agriculture,industry,services)andeveryindustry
(textiles,housing)withpredominanceoflow-qualitychainsintraditionalconsumergoodsand
mediumqualityonesinrelativelynewindustries(likeelectronics&consumerdurables),
Thelowerqualitysupplychainsareassociatedwiththeunorganisedandinformalsectorsand
thehigh-qualityoneswiththecorporatesector.SMEsfallinbetween,withthemajority
producinginmediumquality,butspanninglowqualityononesideandhighqualityonthe
otherside.Whencethewrongconclusionthatformalisationisnecessaryforraisingrealwages.
Ouranalysisleadstoadifferentconclusion;Raisingthequalityofjobskillsatlow&middle
skilltypewillleadtohigherwagesforthemassesofinformal/unorganisedworkers.
ThoughGovernmentisconsideredapartoftheformal/organisedsectoroftheeconomy,it
containsmanylow-qualitychains.TwochainswhicharecriticaltothefutureareUrban
governanceandregional,non-urbangovernance.Thequalitychainrequiredforanupper-
middleincomecountryisqualitativelydifferentfromthatinalower-middlecountrywhichis differentfromthatofalowerincomecountry.Manyofourlocalgovernance(e.g.urban
planning,servicedelivery&maintenance,crimeforensics)®ional-ruralgovernance
(Firefighting,Panchayats)governancechainsaretrappedatthelowincomequalitylevel.The
paperwillreturntotheissueofeducation,skillsandquality,insubsequentsections,after
analysingsectorspecificissues.
4.3.2Agriculture&Rurallabour
OneoftheuniquenegativeaspectsofIndianeconomyisthefailuretofollowtheconventional
economicdevelopmentpatternseeninhistory.AshiftinemploymentfromAgricultureinto
Industry,withacorrespondingdeclineofAgriculturevalueaddedintotalGDP.50%oflabour
forceremainsinAgriculture,thoughValueAddedhasdeclinedto20%ofGDP.
29
Labour
productivityinAgricultureistherefore40%ofaverageandseasonalunderemployment
remainsasubstantialproblem.
30
Femalelabourforceparticipationislow,evenlowerthanin
urbanareas,becausesocialconstraintsandprejudiceismuchmoreconstraininginruralareas.
Amongthereasonsforthelackofstructuralchangehasbeenthecontinuationofcontrolson
allaspectsofagriculture(inputs,land,farmmanagement,outputsale),whichhavestifled
innovationanddiversification.Subsidypolicieshaveencouragedover-useofgroundwater,
electricityandpollutingfertilizer,andunder-useoffarmwaste(&consequentopenburning).
Reformshavestalled,butmustbetakentologicalconclusion,tocreateastructurally
transformedruraleconomyby2050.
Decontrolofdomestictradeinagricultureandalliedproductsiscriticaltocreationoffornew
cropsandnon-cropagriculture.SomeoftheSouthernstateshavealreadypavedtheway.A
stableEXIMpolicyforagriculturegoods,withAd-Hocbansreplacedbytariffprotectioncum
exportduties,toguardagainstwideswingsinglobalpricesisneededforinvestmentin
exportablegoods.Forcommerce&industrytoflourishinrural&semi-ruralareas,itmustbe
easyforfarmerstoconvertlandfromtonon-farmuse&rentorsellittoentrepreneurs.
Highwaysandroadsarethepathwaystogrowth,itmustbeeasytoacquirelandforconstructing
them,withlandpoolingtoensurefairness.
Thesereformsmustbecomplementedbyupgradingofpublicgoodsinfrastructurelikeroads,
R&D,agriculturalextension,24x7electricity,telecomcables,digitaldataconnectivity,water
29
2/3
rd
ofpopulationremainsdependentonagriculture.
30
Peaklabordemandoccursinsowingseasonandalowerpeakduringharvesting,thoughthispeakhasreduced
duetomechanization.Thereisdisguisedunemploymentorunderemployment,duringmostofthegrowing
season. supplygrid,drainage,andgroundwaterrechargesystemsforsustainableagriculture.
Transformationoftheruraleconomyiscriticaltoeliminatingpoverty.
ModernizationanddiversificationofAgriculturewillhavetobecomplementedbyfaster
growthoflow-skilledlabour-intensivemanufacturingtoabsorbtheunskilled&lesseducated
populationintheruralareasofthepoorerregionsoftheheartland.Thequalityofthesupply
chainfromfarmtomarketisverylow.OnereasonisthepoorqualityofjobskillsThequality
ofbasiceducationmustberaisedtoensure100%ofstudentscanreadattheprimaryeducation
level.Jobskillsappropriatefortheruralareas,suchasagro-processing,farm&agoservices,
logistics,constructionandmaintenancemustbecreated.Thesustainableandcost-effective
waytodothisisthroughuniversaldigitalconnectivityandonlineeducationalservicesfor
teachers,teachingassistantsandstudents.Severalofthejobskillscouldalsobeprovided
online.
4.3.3Infrastructure
IndiawillhavenationalmultimodaltransportandlogisticssystemmatchingthebestinAsia,
intermsofcostsandtransit&turn-aroundtime.Roads/highways,ports,airports,waterways,
raillineswillbeupgradedtoHICstandardsandquality.Therewillbeoneortwodeepwater
portswhichtakethelargestcontainerships.Electricitygeneration,distributionand
transmissionoperationswillbeoptimizedbyintelligentsystems,whicharefullyisolatedfrom
foreignCyber-attacks.Railwaylinesandsignallingsystems,gasandoilpipelines,electric
goodswillberunonthecommoncarrierprinciple,withopenaccesstoallsuppliersforrunning
trainservices,transportingoil&gasandelectricpower,respectively.Powergenerationwill
dependincreasinglyonnuclearfuel,solar&wind,andhydrogenfuel.
UniversalBroadbandconnectivityiscriticaltofastproductivitygrowth,giventhatrateof
returnindigitalinfrastructureisevenhigherthaninroadsandhighways.Theobjectiveofa
nationalbackbone,offibre-opticlandlinesforweb/internetconnectivitytoallblocks&
taluks/tehsils,isasoundone.Mobile/digitalnetworkfor99%geographicalcoverageincluding
infrastructurethatisthoroughlyfirewalledfromhostile&unfriendlycountriesand
internationalmafiaoperators.
ThefirstphaseoftheSwachhBharatmissionfocussedonprovidingtoiletfacilitiesto
householdstoreduceopendefecation.TheHarGharJalmissionaimstoprovidecleanwater
tohouseholdstoreduceincidenceofwaterbornedisease.ThenextphaseofSwachhBharat shouldtakeasystemsapproach,tocreateState&National,Watergrids,Sewagegridsand
solidwastegrids.Everyurbanandruralhousehold,&everyvillage&townwillhaveamodern
sewageandsolidwastecollectionsystem,connectedtoStaterecyclingandhazardouswaste
disposalsystem.Thesemeasureswillwipeoutenvironmentalenteropathy,whichisthemain
causeofchildmalnutritioninIndia.
4.3.4Manufacturing
Thehistoricalpatternofstructuralchangewithrespecttoagricultureandmanufacturinghas
beenremarkablysimilaracrosscontinents.TheshareofmanufacturinginGDPandtotal
employmentrosewiththedeclineinagriculture,reachedapeakanddeclinedthereafter.There
were,however,differencesindetail.ComparedtothestandardpatterninEurope&USA,in
LatinAmericathepeakwasearlierandlower,whileinEast&S.E.Asiaitwaslaterandhigher.
Indiaisamajorexceptiontothispattern,withshareofmanufacturingValueadded&
employmentshares,risingandthenplateauingearly(&thenfollowingawavypattern).The
reasonforthiswasahostofanti-manufacturingpoliciesintroducedduring1950-1980,which
wereslowlyreversedandcorrectedduringthefollowingtwodecades.
Duringthelastdecadeapositivepolicy&institutionalenvironmenthasbeencreated,fora
revivalofmanufacturingtoitspotentialpeak.Theformalmanufacturingsectorhasresponded
tothischangingpolicyenvironmentthroughagradualaccelerationoftherateofgrowthof
employmentandrealwages.
31
Thetrendgrowthrateofemploymenthasacceleratedfromabout
3.4%in2000-01to3.8%in2021-22(pinkline,figure10)andofrealwagesfrom1.0%in
2000-01to2.4%peryearin2021-22(blueline,figure10).
32
Anecessaryconditionforfastergrowthoflow&semi-skilledlabour-intensive
manufacturing,isalargeimprovementinthequalityofbasiceducation(functionalliteracyand
numeracy)andskillingofruralyouthforfactoryjobs,includingsemi-skilledjobslikelathe
operator,welder,riveter,stampingmachineoperator.ThescaleofIndianmanufacturingfirms
isexceptionallylowcomparedtothatofChina,becauseofinflexiblelabourlaws,asthedate
fromwhichnewlabourcodesbecomeeffective,remainsun-notified.Anexcessivelyhighshare
ofproductionisintheinformalsector,whosesupplychainsareoflowquality,producingfinal
goodsarecheapastheyuselowqualityintermediateinputsandunskilledworkers.Thereisno demandfortheoutputoftheselow-qualitysupplychainsininternationalmarkets,soexport
shareinmanufacturedexportsislow.
Source:Authorscalculationsbasedon,ASIdataonmanufacturingandPFCEconst&curntseriesfromRBI.
ThePLIschemehasstartedtheprocessofraisingthescaleofmanufacturingofconsumer
goodstominimumefficientscale(MES).Thenextstageinthisprocessisthesettingupof
specialindustrialestates,withgoodqualityinfrastructure,toincentivisebackwardintegration.
Forinstance,commonfacilitiesforprocessingofchemicalwaste,wouldreducecostsof
regulatorycomplianceforchemicalindustry.
Thethirdlevelisthegrowthofspecializedindustrialtowns,withoverlappinginputsuppliers,
commonsetofinputservicesandlabourskills,sothatbackwardlinkagecanextendtocommon
trainingfacilitiesandeventuallytoR&D.Suchtownshavetheaddedadvantageoffacilitating
economiesofscopeandforwardlinkagestointernationalmarkets,bybuildingreputationand
facilitatingbranding.
AreformedandsimplifiedGST,Customstariffstructureanddirecttaxcodearecritical
complementstoasuccessfulindustrialpolicy.Digitalizationandintegrationoftherelevanttax
systemswithforeignexchangemanagementandcreditflows,facilitatesexportsbyreducing
thecostofdeveloping&servicinginternationalmarkets.ThiswillfreeSMEstofocusonthe
criticalchallengeofraisingthequalityoftheiroutput. Onthedemandside,theglobaldiversificationofSupplychainstoreducerisksofdisruption
andover-dependenceonsuppliesfromonecountry,providesaonceinagenerationopportunity
forIndia.Adualtradepolicy,whichdifferentiatesbetweenimportsfromcontrolled,non-
transparenthighriskandhostilecountriesandtherestoftheworld,iscriticalatthisstage.This
mustbereflectedinourExport-Importpolicyandcustomsdutystructureandtariffrates,as
wellasinourapproachtofreetradeagreements,preferentialtradeagreementsandplurilateral
agreementssuchasRegionalcomprehensiveeconomicpartnership(RCEP)and
comprehensiveandprogressiveagreementfortrans-pacificpartnership(CPTPP).
33
Asmentionedinearliersections,thebenefitsofglobalizationcanbemaximized,andcosts
minimized,ifthegroupoffreemarket,open,transparent,democracies(QUAD+EU+UK)
jointlyadoptadualistictrade&investmentpolicyframework.
34
Asthetraderiskislargely
confinedtomerchandisetrade,atraditionalfreetradeagreement(FTA),withzerotariffson
manufacturedgoods,subjectto70-80ofvalueadditionbeingwithinthesetofFTAcountries,
isanidealwhichcanbeachievedinthisdecade.Givenourcomparativeadvantageinlabour
intensiveandsemi-skilledlabour-intensivegoods,anFTAwiththesetoflabourscarce
countriesismorebeneficialtousthananFTAmiddle-income
element.
Valuechaindiversificationcanalsobeachievedifthefocusisongoods,servicesand
technologyrelatedtothemanufacturingsector,asIntellectualPropertyagreementswillbe
easierforserviceswhichcomplementmanufacturingthanforunrelatedservices,suchas
movies,books.Art.AnagreementonPatentsandintellectualpropertyisnotharmfultousif
theDevelopedcountriesarewillingtocompromiseonthedurationofpatentsandthenumber
ofgenerationstowhichtheycanbeapplied.
35
4.3.5Services
ModernServicesarelikelytoplayamuchmoreimportantroleinthestructural
transformationoftheruraleconomythanisthecasehistorically.Twoissuesneedtobe
33
NotethatCPTPPisquitedifferentfromRCEPwhichincludesacountythathasmonopolizedtheexportof
manymanufacturedgoodsthroughasymmetrictrade,technology,investment,andeconomicpolicies.Itisalso
differentfromTPPPwhoseprimaryobjectiveistoimposeasymmetricIPagreements,whichfavorwealth
Incontrast,any
plurilateraltradeagreement,whichincludesChina,raisesfurtherissuesofmanufacturingmonopoly,potential
economiccoercionandnationalsecurity
34
QUAD=GroupconsistingofUSA,Japan,India,Australia.
35
Longduration,andmultilevel/multigenerationalpatentsfavorwealthy,netexporters,ofIP,whileshorter,
morelimitedagreementsfavorpoorer,netimporters,ofIP. addressedtoacceleratetheprocess.Oneistheprovisionofthejobskillsneededinagriculture
andtheruralservicesectorandtheotheristhesocialconstraintsonfemalesworkingoutside
thehome.Thesecanonlybebuiltonafoundationofgoodbasiceducation.Publicinstitution
must,promulgatestandardsforthe5000-6000globallydefinedtechnicalskills.Theninco-
operationwiththeprivatesector,acomprehensivesystemofcertificationandskillingmustbe
created.Thedigitalandonlineservicerevolutioncanbeusedtoleapfrogtheprovisionof
qualityeducation&traininginjobskillsinruralareasandtoprovidethedigitalinfrastructure
forfemalestoworkfromhome.
ThePandemichasbeenabigshocktodomesticandinternationaltravelandtourism.Theshock
mmarketisverypoorlydevelopedand
consequentlyhasgreatunexploitedpotential.Medical,religious,andnaturalresourcetourism
hasgreatpotentialindifferentregionsofIndia,giventhegreatgeographical,human,cultural
andreligiousdiversity.Giventhealmostvirginterritory,dueattentionmustbepaidto
developingenvironmentallysustainable,greentourism.
Servicesprovideanopportunityforarangeofpotentialjobswiththeentirerangeofskillsfrom
lowtomediumtohigh,eachwithmultiplelevelofcompetence.Thegeneration&useof
mediumlevelskills(e.g.,forconstruction)hasbeenrelativelyneglectedandmustreceive
greaterattention.Evenlow-mediumskillsofferunexploitedopportunity(e.g.,inwellness,
primary&pre-schooleducation,primarycare,agedcare).
Electronicallydrivenservices(e-services)arethefastestgrowingpartofservicetrade.Ithas
grownbyover250%inpastfewyears.Fortunately,theshareofIndiainthese(business)
servicesisrising.Overthenextdecade,demographicdecline&anti-immigrationsentimentin
HIDCswilldriveunbundlingofSocial(Health,education,Govt..)&personalservices,andthe
growthofe-servicesrelatedtothem.Wemusttakeapro-activeroleinattractingtheseservices.
ThisneedsachangeGovt..regulations&Govt..practicesinUSA,EUetc.toallow(a)
unbundlingofservices,&on-lineprovisionfromIndia,(b)Provisionofphysicalserviceslike
surgeryinIndia,throughmedicaltourismpackages.
Indiashouldhavepro-activeWorkfromhome,tofacilitatetheparticipationofeducated,
marriedwomentoworkfromhome.ItshouldalsohaveaWorkfromanywherepolicy,for
encouragingsupplyofservicesonlinetotheWorld.Removehurdles(e.g.,taxpolicyfor
allowableexpenses),andprovideincentiveswherenecessary. Thereisawidegapbetweenthequalityofeducation,healthandotherservicesprovidedin
ruralareascomparedtourbanareas.Animportantreasonisthatgeneralqualityoflifeintowns,
andtheopportunityavailabletobetterskilledpersonstofindemploymentthere.Thoseskilled
persons(doctors,teachers,nurses)workinginGovt..whoareassignedtoworkinruralareas,
usuallyhavehighlevelsofabsenteeism.Resultispoorqualityofhealthandeducationservices
comparedtothatavailableinUrbanareas.Digitalconnectivityinallvillagescoupledwith
availabilityofexpertsystemsfordiagnosis&prescription,andprovisionofteachingmaterial
&teachingaids&tools,canhelplesseducatedorlesstrainedhealth&educationproviders,to
vastlyimprovethequalityofservice.
AmissioncanbelaunchedforprovidingonlineaccesstoExpertAIsystemsinhealth(digital
DoctorSusharataorDigitalVaidPatanjali)andexpertAIsystemsineducationandskilling
(DigitalProfDronaorGuruEklavyaorE-Acharya).Theseshouldbeaccessibleinevery
panchayat,andfromeveryPrimary&Secondaryschoolandhealthcentre!
36
Theeducation,wageandLFPRgapbetweenunmarriedwomenandmen(unmarried,divorced
ornevermarried)isclosing.However,theLFPRgapbetweenmarriedmenandwomen
remainswide.Onereasonisthechildandagedcareresponsibilityimposedbysociety.Union
andStateGovt.smustincentivethecreationofmarketsforchildcareandagedcare.Thelatter
willbecomeprogressivelymoreimportantastheshareofolderpeopleinIndiaincreases.
Twootherreasonsarematernityandmobility.Surveysshowthatwomenhaveapreference
forhowfartheywanttotravel(commute)fromhometowork.Thepreferenceisfora
maximumcommuteof20minutes,thoughsomewomenarewillingtospendmoretimeto
commute.Govt..canincentivize,(i)thecreationofcreches,insideandoutsidecompanies,(ii)
ProvisionofCompanytransportfromvillagestofactorypremises,(iii)Provisionofcompany
housingforwomenwithintheindustrypremises,(iv)Lastmileconnectivitybetweenpublic
transportandhome/workplace,and(v)Maternityleavepolicies. 5.KnowledgeEconomy:EmpoweringGrowthDrivers
innovationandentrepreneurship,forwhich
thefoundationisalreadybeinglaidbythestand-upIndia,start-upIndiainitiativeoftheGovt..
ofIndia,whichgivingacentralroletotechstart-upsandnewentrepreneursingenerating
employment.Innovationisenvisionednotjustatthefrontiersof(manufacturing)technology,
butinthetrenchesoftheunder-developedeconomy;Innovationby
transformagriculture,rural
uptoamarketof1.6billionpeoplewithoutdilutingquality.Innovationinhybridphysical-
digital(Phygital)systems,thatbalancethesocialvalueofhumaninteractionandthecost
effectivenessofweb-basedservices.Thefoundationofinnovativeentrepreneurshipisgood
educationtheabilitytolearn,think,question,findsolutions&takerisks.
37
Thesecondpillar
isacompetitiveeconomy,withoutvetopowerbyoligopolistsalsoplaysaroleinfructification
ofinnovations.Establishedoligopolistswhoseprofitsarethreatenedbynewinventions,can
stopthemfromfructifyingandspreading,bydirectinterventionorindirectlythrough
regulatorycaptureorcollusionwiththepoliticalestablishment.
38
Policymakersandregulators
mustremainalerttosuchandinstitutionsmustremainalerttothwartsuchactions.
Thehighereducationandresearchsystemreforminitiatedrecentlyisonlythefirststep.The
entiresuperstructurewillhavetobere-engineered.FurtherreformofGovernmentresearch
institutions,includingtheagriculturalresearchsystemundertheStateGovt.s,iscriticalto
meetingtheneedsoftheknowledgeeconomy.TheStrategic&DefenceR&Dsystemneedsto
bereformedbysettingupaDefenceR&DCommissionpatternedonthesuccessfulSpace
commission.Suchacommissionwouldidentifyanddevelopfuturistictechnologiesfrombasic
research,trainingofhigh-levelprofessors/teachers,todevelopingprototypesandhelping
productionizethem.Thiswouldincludepuredefencesystemslikehypersonicvehicles,satellite
defencesystems&high-poweredlasers,todualuseitemslikesemi-conductors,robots,
autonomousvehicles,Artificialintelligence,machinelearning,expertsystems&cybertools.
ThegloballearningofIndianresearchsystemsandIndianUniversitySTEMdepartmentneeds
tobestrengthened,byconnectingthemtoresearchcarriedoutintheuniversitiesandresearch
labsandincorporatedinnewstart-ups,ofthedevelopedcountries.
37
Incontrasttocredentialism,directedatgettingajobbasedonadegreeorschoolcertificate.
38
PhilippeAghionetallhaveprovidedresearch- Themedicalanddrugresearchsystemneedstobeoverhauledtorestoretheprivate
developmentofnewandmodified,drugsandtheirtestingandtrials.Public Private
partnershipwillbeessentialtodevelopnewmedicaltechnologies.Dueattentionandsupport
shouldbegiventotraditionalsystemsofmedicinesuchasAyurvedaandUnani,andto
preventive(physical&mental)healthsystemssuchasYoga.
Agriculturalresearchandextension,basiceducationandmassskillingiscriticalto
transformingtheruraleconomy,wheremorethan2/3
rd
ofthepopulationlives,andhalfthe
workforceisemployedandeliminatingpovertyandmalnutrition.Traininginlogicalanalysis
andthescientificmethod,coupledwithaccesstoinformation&knowledgeavailableinIndia
andtheworld,alongwithappropriateincentivesforlocalstart-ups/innovationtosolvelocal
problems,willhelptransformthiseconomy.
Drugs,pharmaceuticals,andmedicalequipmentsectorisoneoffewmanufacturingsectorsstill
subjecttopricecontrols.
39
Thespateofreformsduringthe1990sandearly2000swasreversed
sincethenandevennewonesadded.Italsosuffersfromextremedualism,withlarge
companiesfacingexcessiveregulationandsmall,informalproducersofdrugsand
pharmaceuticalsoftenescapingthequalitynormsoftheregulator.Giventheenormous
possibilitiesofnewmedicalandpharmaceuticaldiscoveriesduringthenext30years,theentire
regulatorysystemfromR&D,drugtesting&trials,productionandmarketingneedstobe
modernizedintoaprofessionalFoodandDrugsAdministration.
AlothasbeenwrittenaboutthedemographicdividendinIndiaandtheneedtoensurethatit
istranslatedintorealitythisrequiresanationalfocusonbasiceducation(functionalliteracy
andnumeracy)andjobskills.
40
Apre-requisitefor,evenlow-leveljobs,istheabilitytoread,understandandfollow
instructions.Researchshowsthat45.3%ofchildrenarenotproficientinreading,writingand
arithmetic(FLN),attheendofprimarylevel(row1-2,table5).Low-mediumtohigh-medium
skilledjobswouldrequirehigherlevelsofproficiencyinreading,writing,speaking& understanding,attheloweroruppersecondaryschoollevel.Inbothprimaryandsecondary
educationourperformanceisworsethanexpectedatourlevelofpercapitaGDP(table5).
LaggingStatesneedtocorrectthisgapandreach(orexceed)thelevelsindicatedundercolumn
headedUMICby2031-32andthoseundercolumnheadedHICby2047-48.Theearlierneglect
ofoutcomesandcapabilityissoughttobecorrectedthroughSpecialPlatformssuchas;
NIPUN,theNationalInitiativeforProficiencyinReadingwithunderstandingandNumeracy,
providesacoreforFunctionalLiteracy&NumeracyN(3Rs)whichcouldbeenhanced/
expandedtoincludemodulesforfunlearning,socialization&self-control;Theplatformmust
provideinformation&knowledgeforallstakeholders[teachers,parents,students,school
administrators]inpre-school&primaryeducation.Aswithothercriticalsocialplatforms,it shouldbecloudbased,modular,&withflexibilityforStatestopick&,chose&adaptvarious
modules.NISTHA,theNationalInitiativeforSchoolHeadsandTeachers,Holistic
Advancement,forcapacitybuildingisalsorelevant.
PrathamisusingsomeofthesemethodsinUPandotherStates,buttheycouldberecordedand
usedmorewidely.TherearealsoexamplesfromothercountriesofsuccessfulTV/video
linguisticconditions.
Intheinformationage,muchoftheneweconomyisrelatedtothedigitalworld.Amongthese
willbethefuturesystemsofeducationandimpartingskills.InnovationsinTele-educationand
thedevelopmentofhybriddigital-physical(Phygital)systemswillplayanimportantrole.
Three-leveldeliverysystem.(1)Designofcoursesateveryclass/levelinalllanguages,(2)
Implementationandcontinuingprovisionofcomplementaryservices(includingvirtual
experiments,training,testing,counselling),and(3)localteachingassistant/helperswhoare
attunedtothesocietyandcultureinwhichthechildrenlive.
Otheraspectsofeducationwhichwillremainrelevantandimportantarepublichealth
education(nutrition,hygiene,sanitation),Social,civic&moralresponsibility,andeducating
theeducatorsinpedagogy(i.e.,howtoteach),whichiscriticaltothequalityofeducationand
skillingoflargemassesofstudents.
41
expectforacountryatourlevelofpercapitaGDPatPPP.Partoftheproblemisthat45%of
studentsfinishPrimaryschoolwithoutbeingabletoreadandwrite,makingitvirtually
impossibletolearnatthenextlevel.ThesecondproblemisthatStateGovt..hiredteachers
dislikebeingpostedtoruralareaswherelivingconditionsareusuallyinferiortothoseinurban
areas,sodoeverythingintheirpowertoavoidorminimiseteachingthere.Manythingshave
beentriedtocorrectthissituation,tolittleornoavailThethirdproblemisthatteachertraining
neglectsthecriticalroleofeffectiveteachingmethodsandmaterials.
ExpertAIcansolvetheseproblemsforallclassesofteachingandlearning,frompre-schoolto
Highschool.Suchanexpertsystemcanbedesignedforamultiplicityoftasks,likeproviding
teachingaidsandmaterialstoqualifiedteachers,directinglocalteachingassistantsinrural
41
Citizens,oldoryoung,menorwomen,willhaveFoundationalLiteracyandNumeracy(FLN). areastoperformatteacherlevel,anddirectlyhelplaggingstudentstocatchuporstimulate
advancedstudents.TheCentreandStateGovt.sshouldsetupanNGOtodesignandmaintain
theDigitalProfessororE-Guru.TheE-Gurushouldbe,multilingual,capableofmodification
toStateandlocalphysical&socialenvironment,andallowprivateandNGOdesignedlearning
toolstobelayeredontopofit.
SkillsandJobsaretwosidesofthesameissue.Likecreditavailability,availabilityofjob
skillsiscriticaltosustainedgrowthofjobs,productivityandrealwages.Marketsforjobskills
arecharacterisedbyinformationasymmetriesandmoralhazard,similar(butnotidentical),to
creditmarkets.Marketsforskillsarehighlyfragmentedandcharacterisedbymissing,
imperfectandinefficientsub-markets,almostlikecreditmarketswereaboutahalfcenturyago.
Theeconomicagentsonthedemandsideofthemarketarethesameasthoseonthedemand
sideofthemarketforcredit:Thesearefragmentedintotheformalandinformalsectors;Within
theformalsectorcorporation&largeunincorporatedfirmshavedistinctcharacteristic.
Similarlyintheinformalsectortherearelargedifferencesbetweentherequirementsand
capabilitiesofsmallfirms,microenterprises&self-employed
Thesupplysideisevenmorecomplexwitheverymemberoftheworkingagepopulationa
potentialsupplierofskilledlabour,andeachdiffersfromtheotherintermsofliteracy,quality
ofeducation,andjobskillsacquired.Giventhisdiversityandlackofinformation/knowledge
abouttheskillsrequiredfordifferenttypesofjobs,indifferentsectors&differentindustries,
tworelatedservicesarecriticaltoimprovingthefunctioningofthemarketforskills:Skill
providers(Govt.institutions,societies&non-profitcollegesandprivatetraininginstitutes)
whoimpartjobskills,andintermediarieswhomatchtheskillsofthejobseekertotheskills
requiredbytheemployer.Theconnectivitybetweenthesefouriscriticaltoreducing
informationasymmetriesandcreatingefficientmarketsforskills.
Theskillindustryisincrediblycomplex.Therearemanyreasonsforthiscomplexity.(a)The
massivesizeofourworkingagepopulation,(b)thelargeinformalsector,characterisedbyself-
employmentinHouseholdenterprises&under-employment&disguisedemployment,(c)
Differentleadingsectorsindifferentstates(e.g.,agriculture,manufacturing,traditional&non-
traditionalservices).(d)Thedemandsideisequallycomplexgiventhelarge,multi-layered
informalproductionsystem. Skillingisamulti-dimensionalproblem,withmultipletypes,levelsandprovidersofskills.A
highlysimplifieddepictionofthecomplexskillingindustryisshowninFigure11.Thereare
threeAxesrepresentingfirmsize,degreeofformalisationandskillrequirementsintermsof
type(fromunskilledthroughsemi-skilledtohighskill)&competencelevelfromlowto
mediumtotop).Marketsdonotexistintheinnermostcircle,requiringamuchgreaterrolefor
theStategovernments.Marketsarereasonablyefficientintheoutermostcircle,andtheGovt.
roleistofacilitatetheirfunctioning.InthemiddlethereisabigroleforNGOstohelpimprove
skills,inpartnershipwithGovt.ontheinnersideandpartnershipwiththeprivatesectoronthe
outerside.
Source:Authorsdepictionbasedoninteractionwithmarketparticipantsandstakeholders
Fromabroadnationalperspective,themajorityofworkerswillmovefromunskilledjobsto
lowskilledjobs,tomediumskilledjobs(UMIC)andfinallytohighskilledones(HIC).
However,global&IndiandemographicssuggestthatIndiacanprovidetheentirerangeof
skills(low,middle,high)totheHighincomedevelopedcountries(HIDCs),eitherphysically
or
(Private,NGO,Publicsector)willplayavitalroleinactualizingtheseopportunitiesand meetingthechallenges.ItisunclearwhethertheCentralandStateGovt.s,arefullyawareof
andgearedupto,meetthechallengesandgrabtheopportunity!
Akeyelementofinclusivegrowthisthegrowthofjobsandemploymentopportunities.
Changesinsurveydesign,theappearanceofprivatecommercialdataorganisationsand
pandemicdisruptionshaveresultedinalotofconfusionaboutemploymentandwages.The
purposeofthissectionistounderstandtrends(indemandandsupplyofjobs)thathaveemerged
inthepastdecade,withaviewtodrawingpolicylessonsforthefuture.
Inaneconomywithaveryhighshareofinformalsectorjobs, necessarytostartwitha
pictureoftheemploymentscene,withthelittledataavailableonthissector.Thenewseriesof
Labourforceemploymentsurveysprovidesaconsistentseriesoflabourforcedataforthe
Agriculturalyears(AY)2017-18to2022-23(AY23=July2022toJune2023).Theseshowa
trendincreaseinLabourforceparticipationrateof3.1%peryear(2.7%from2020-21)and
WorkerPopulationratioof3.7%peryear(3.1%from2020-21),andatrenddeclinein
Unemploymentrate(rows1,4,8,table6).
:Labourforceparticipation(LFPR),Workerpopulation(WPR)&Unemployment(UR) ThetrendriseinWorkerpopulation(figure12),showsthatjobsarerisingfasterthan
population,duringtherecentpast.
:Worker-PopulationratiobyUsualstates(US)andCurrentWeeklyStatus(CWS)
ThegrowthofWorkerpopulationratioaccordingtocurrentlyweeklystatus,isevenhigherat
3.3%peryearfor2018-19to2022-3and&3.5%peryearfor2020-21to2022-23(row13,
table6).Withpopulationgrowthaveragingabout1.1%ayearduringthesesixyears,
employmenthasgrownatanaveragerateof4.4%peryearduring2018-19to2022-23.
Therateofgrowthofemploymentintermsofcurrentweeklystatus(row13)whichiscloser
totheconceptofemploymentinaformaleconomyhasgrownfasterthanforusualstatus(row
4,table6).Jobcreationduringthisperiodhasclearlybeenfasterthanthegrowthofpopulation
andtheworkingagepopulation.Muchofthisjobcreationhasbeenforfemaleworkers,with
thefemaleLFPRrisingfrom23.3%inAY2017-18to37%in2022-23(row2)andtheWPR
risingfrom22%to35.9%duringthesameperiod(row5,table6). TheILOmodeldataascontainedinWorlddevelopmentindicators,doesnotgiveustheworker
populationratio,onlythelabourforceparticipationrate,overalongerperiod.Thelabourforce
participationrateincreasedrapidlyafterthe1990sreforms,peakingin2000.Duringthenext
virtuallyflat.Thereseemstoanotherspurtintheyearsfollowingthepandemic,theyearswhich
alsosawaspurtinreforminitiatives(figure13).DetailedanalysisofPLFSunitleveldataby
Goldar,Bhalla,andothers,suggestsasignificantincreaseinfemalejobs,jobsinruralareas
andjobsinmanufacturing,afterthefirstwaveofPandemic.
Labourforceparticipationrate
Source:Authorscalculation,basedonWorldDevelopmentIndicatorsdataonemployment&population.
Theevolutionofrealwagesbetween2017-18&2022-23givesusanindicationoflabour
productivityandalongwithchangesinWPR,aboutdemand-supplybalances.Duringthis
periodjobshavegrownbyanaverage4.4%peryear,whileweightedaveragerealwagehas
grownby0.6%peryear,despitethepandemicandotherexternalshocks(table7).
42
Thefastest
growthofrealwagesisforcasuallabour(2.8%peryear),whilejobgrowthisslow(0.6%per
year),indicatingariseintheproductivityofcasuallabourinthefaceofrisingexcessofdemand
oversupply(rowsheadedcasualincolumn1,table7,andfigure14).Detaileddatashowsthat
realwagesofcasualworkershaveincreasedacrossalleducationcategories,alldefined
industriesandalloccupationsexceptclerksandprofessionals. Data:PLFS,unitrecorddata&CPI.AuthorscalculationsbasedontablesmadebyBhalla,Bhasin&Das(2024) Theratioofwagesofcasualworkerstothatofsalariedworkershasincreasedfrom38%in
2017-18to45%in2022-23,contradictingthepopularassertionthattheshareofcasualworkers
isincreasinglargelyduetounavailabilityofwageandsalariedjobs.
Jobgrowthhasbeenthefastestfortheself-employed,atasimpleaverageof5.1%peryear
(compoundbetweenend-pointsis5.3%peryear),accompaniedbyamodestincreaseinreal
wagesat0.6%perannum(rowswithself-employedincolumn1,table7).Therealearningsof
self-employedworkers,acrossindustry,educationandoccupationsfellsharplyduringthe
pandemic,butarenowwellonthewaytorecovery(figure15).
43
Thisindicatesthatduring
2017-18to2022-23,thesupplyofworkershaskeptpacewithincreasingdemandfortheir
services,withoutdilutingworkerproductivity.
Sourceasinpreviousfigure
Thebiggestsurpriseisthatthedemandforwageandsalariedworkershasdeclinedrelativeto
theirsupplyalongwiththeirrealwages,despiteadoublingofformalemploymentbetween
2018-19to2022-23(asmeasuredbyEPFO).Thepatternofdeclineinrealwagesforallwage
andsalariedworkerssuggests,thetwowavesofpandemic,globalsupplydisruptions&
commoditypricevolatilityin2022-23hasplayedarole,butthetimingoftheimpactwaslikely
differentindifferentindustriesandprofessions(figure16andtable7).Asregularworkersare likelytobethemostskilledonaverage,thisalsosuggestsaproblemwithskillacquisitionand
matchingandmatchingoffdemandandsupplyofskills.Detaileddataonrealwagesby
educationandoccupationseemstoconfirmthishypothesis.
:EffectofPandemic&externalshocksWageandSalaryWorkers
Sourceasinpreviousfigure.
Amongsalariedworkersrealw-
44
Similarly,outof10occupationcategories,realwagesofwage&salary
workershaveincreasedonlyforlegislators(MPs,MLAsetc)andplant&machineryworkers,
andoutofsixindustryclassificationsrealwageshaveincreasedonlyforagricultureand
services-1,duringthesesixyears.
45
Anotherindicatorofweaknessinthejobskilling&
matchingsystemisthatprofessionals(andclerks)aretheonlyoccupationinwhichrealwages
havedeclinedacrosseverytypeofworker-self-employed,salariedandcasual.
46
Firm-providedtrainingisanimportantelementofworkerproductivityandrealwagegrowth
ofregularsalariedemployeesindevelopedcountries.Ma,NikabandVidart(2019)foundthat,
-relatedtrainingandthatallthistraining
Further,,accountsforalmost 43%ofcross-countywagegrowthdifferencesand10%ofcross-countryincomedifferences.
Itisthereforecriticaltoremoveallhinderancestofirmsapprenticeshipandworkertraining
programsandcreateafavourableincentivestructurefortrainingmoreworkersthantheyneed
themselves.
47
Dividingruralworkersintotheavailablecategories,wefindthat,overtheperiodfrom
November2013toNovember2023,thefastestgrowthofrealwages(2.4%per/year)isof
Handicraftworkers(table8).AsmanyHouseholdworkersareself-employedthisappearsto
beconsistentwiththedataintable7.Thelistofnon-agriculturaloccupationsinwhichreal
wagesaredeclining(table8),suggeststhateither,someoftheproductstheymake(bidis,
Wovengoods,bamboobaskets,Agriimplements)orsomeoftheirtraditionalskills
(constructionservices),orboth,arebecomingrelativelyobsolete.Forinstance,ifplasticgoods
enteredtheruralmarket,thedemandforwoodenstools,beds(Charpies),metalbuckets&
mugs,andothertraditionalitemscouldbedisplaced.However,thedemandforcarpentersin
makinghousedoorsetcmaynotbeaffectedyet.
Realwages,Rural,self-employed,non-agricultural,maleworkers
Occupation RealGrRtSkillsProductCompetition
HandicraftWorkers2.4NoNoQualit yupgrade
Blacksmith0.2PartiallessAgriimplements
Mason0.0PartiallessTypeofhousing
Carpenter-0.2PartialMorePlasticproducts
Electrician-0.5YesNoQuality
Plumbers-0.8YesNoQuality
Bamboo,Canebasketweavers -1.8YesYesNewprds/material
Weavers-4.1YesYesNewprds/material
Obsolesence
GrRt(compound,annual):Nov'13toNov'23
Data:LaborBureau,DeptofLabor&DeptofStatistics(CPI).Authorscalculations.
Similarly,theremaybenewelectric&plumbingproducts(electronicswitches,plasticpipes)
whichtraditionalelectriciansandplumberscannothandle,sotheirrealwageswilldecline
unlesstheyupgradetheirskillstohandlethem.Traditionalweaversofbaskets&otherproducts
maybeaffectedbybothproductandskillobsolescence.
ThesamelabourbureaudataforAY18toAY23showsthat
fasterthanmen,exceptinoneoccupation.Boththelowestandthehighestfemale/malewage ratiohaveimproved;from0.49to0.84andfrom0.61to0.90respectively.Thevarianceof
wagesacrossoccupationshasdeclinedsignificantlyformen,andmarginallyforwomen.
Theincreaseinthelabourforceparticipationofwomen(LFPR)ofruralwomenduringAY18
toAY23(notedbymanyeconomists),maybepartlyresponsibleforaslowerriseinthereal
wagesinunskilledagriculture(0.9%to1.5%peryearindifferentoccupations),andlow-skill
agriculture(0.4%to0.8%indifferentoccupations)(table9).
48
Growthofrealwagesofagriculturalworkers2013to2023
Youthunemploymentisanotherareaaboutwhichthereisalotofmisunderstanding.The
conceptofsearchunemploymentiscriticaltounderstandingthehigherunemploymentrate
amongyouth,educatedyouthwhohavefinishedtheirgeneraleducation(highersecondary
schoolorcollegedegree).Indianmarketsforskilledjobs,areimperfectandincomplete,dueto
severeinformationasymmetries.Studentswhohavepassedoutofcollegeorevenhigher
secondary,donotknowtheskillrequirementsofthejobstheyareseekingandassume,
mistakenlythattheymeettheserequirements.Potentialemployersdonotknowthequalityof
learningbackingthedegrees/credentialsthattheyhaveandtheirabilitytoacquirethejobskills
actuallyneededinthejobstheyaretryingtofill.
49
Somejobseekersgraduallylearntheactual
requirementsofthejobtheyseekandadjusttheirexpectationtotheircapabilitiesandjobskills.
Therefore,theunemploymentrateisveryhighaftergraduationanddeclinesgraduallytothe
generalunemploymentlevel.Studentswouldgenerallyconcludetheirschoolingorbasic
collegebetweentheagesof17and21sotheunemploymentrateishighest,at17.6%(CWS)in
theagegroup19-22.Itthendeclinesto13.3%inthe23-26agegroup,andthenmorerapidly
OccupationRealGrRt
GeneralAgriculturalLabourers(inclWatering,Irrigationworkers)
PickingWorkers(Tea,Cotton,Tobacco,othrcommercialcrops)
Growthrate(%)ofRealwagesofRural,maleworkers:Nov2013toNov2023 to5.6%intheagegroup27-29(figure17).Thisrateis1.4percentpointhigherthanthetotal
unemploymentrateof4.2%,in2022-23.
:SearchunemploymentYouthunemploymentratebyagegroups
Sourceasinpreviousfigure.
Ascollegeenrolmentrises,youthleavetheworkforceandarethereforenolongerunemployed.
Thisreducesunemploymentrateinthecollegeagegroup.Astheseyouthgraduate,theyjoin
theworkforcewithhighercredentialsandheightenedexpectations,whetherornottheypossess
anyjobskills
.
Thus,searchunemploymentincreaseswiththerising%ofcollegeeducated
youth.Theunemploymentratethereforeincreasesforthepost-BAagegroups.Thissequence
ofchangesisevidentfromthefirsttwoagegroupsdepictedinfigure18,forthethreenon-
pandemicyearsAY18-19,AY21-22&AY22-23.Oneofthemanychallengesofskill
developmentistoimprovetheflowofinformationbetweenallstakeholders(students,
employers,skillprovidersandskillexchanges/skillmatchers). Sourceasinpreviousfigure.
52.6percentofworkingagepopulationwithbasiceducationiscurrentlyinthelabourforce.
Thenumberis45.2%forintermediateeducationand63.5%foradvancededucation(table10).
Thismeansthatthelabourforcecanexpandrapidlytomeetincreaseddemandformaleand
femalelabourwithintermediatequalificationsandfemaleswitheitherbasiceducationor
advancededucation.Asshownearlier(table5),thesupplyofnewgraduateswasalsohigh. Therearebroadlytwotypesofskills.Thosethatrequireworkingonphysicalmaterials,and
thosethatrequireworkmostlymentalworkorintangibleslikedesign.Theformerrequires
traininginanIndustrialtrainingfacilitywherethematerials,tools,equipmentandmachinery
thatistobeusedfortrainingisavailable.Tosomeextentsimulatorscanbeusedtoimprove
thequalityoftraining,reducematerialrequirements,andscaleupthetraining,byincurring
highercapitalcost.
Thelatterrequirebooks,penandpaperandcomputers,andcanbecarriedoutinanycoaching
centreorsecondaryschoolorintercollege,whetherrunbyGovt..,NGOSorprivatesector.In
thiscaseadigitalore-trainercanbeusedtoenhancethequalityofthetraining,scaleitup
easilybyaddinglesswell-trainedtrainers,andevenprovidethetrainingdirectlytothestudent
sittingathome.Thedemandfortrainingintheseskillsisrelativelystrongbecausethesociety
isbiasedtowardswhitecollarjobs.Consequently,parentsarewillingtopayforthefeesneeded
tohirecompetentteachers&basiccomputers&programs.Themainchallengeisthelackof
informationabouttheimmenserangeofskillsandjobswhichcanbegeneratedthrougha
marketsystemforcertificationandstandardisation,trainingandplacement,insectorslike
education(includingsports,arts&crafts),health(includingpreventive,nutrition,mental, physical&mentaltherapy).NGOsofvarioushuescanplayakeyroleincreatingandrunning
suchmarketstillprofitabilityisdemonstratedandattractivefortheprivatesector.
Thechallengeisfargreaterwithrespecttobluecollarjobsinmanufacturing,construction,
installation,assembly,repair&maintenanceandlogistics!TheIndianmiddleclass,evenatthe
lowestendseemsuninterestedinsuchjobswhichrequirephysicalworkwiththehandsand
arms.Thereisalreadyagapbetweendemandandsupplyinsomeoftheoccupationswithin
thesesectors,andthegapwillincreaseifthepaceofmanufacturingandconstruction
acceleratesasexpected.Thisrequiresbringingskillinginstitutionsgeographicallyclosertothe
potentialsources(poorerruralareas)andusersofskills(industrialunitsinsmalltownsand
alonghighways)andaswellcreatetheinformationnetworksconnectingcompaniesandcreate
theinformationplatforms,whichbringthesetwotogetherwithskilltrainers(e-gurus)and
govt..agencieswhocanhelpchangetheimageofblue-collarwork,byawardingexcellencein
physicalskills.
Thequalityofskillsavailableinandto,theinformalsector,alsoneedstobeupgradedifthe
productivity,realwagesandincomesaretoincreaseintheself-employmentsegmentofthe
labourforce.ThecreationofDigitaltrainersandE-Guruscouldhelpexpandaccesstopoor
andlesseducatedchildrenacrossthecountryincludingremotevillages.Thesecouldalsodirect
trainingofworkersonsimulatorsforwelding,lathework,millinganddrilling
showedthattheoneareainwhichIndiaisdoingwellrelativetoitspercapitaincome,
graduates,whoseparticipationinthelabourmarketiscurrentlymuchhigherthanforwomen.
Tofacilitatethecreationofaknowledgeeconomyintheinformationage,theGovernmentwill
createamulti-dimensionalknowledgeexchange,withseveralsub-stackssuchasforR&D,
education,andskilling.Theknowledgestackwillhaveadigitallibrary,alibraryofpatentsand
alibraryofindigenousknowledge.
TheR&Dsub-stackwillhaveaprovisionforlistingandaccessingallpublishedIndian
researchandfordigitalpublicationofreviewedandunreviewedIndianresearcharticles.This
systemwillalsobringtogetherallthehighereducationandresearchresourcesofthe
government(s).Itwillalsohaveaknowledgeexchangewithprovisionforbothfreeexchange
amongacademia,thinktanksandresearchersandformarketingofpricedknowledgeservices. Theseconddimensionwillbeapubliceducationsub-stack,whichwillbringtogetherthetele-
education,e-learning,ande-skillingeffortsofcentralandStategovernments.
51
Atthebaseof
thisstackwillbeacentralgovernmentsystemfortheeducationofeducatorsandtrainingthe
trainers.ThenextlayerwillbeStateGovt..layersforschoolingandskilling,whichconnectto
andprovidesaccesstoeveryStateGovernmentPrimaryschool,Secondaryschool,college,and
trainingcentreintheState.ThetoplayerwillcontainalltheNGOs,privatecompanies,
educators,andtrainersprovidinggoodsandservicesfore-learning.
6.Governance&PublicWelfare
WeenvisionanIndiain2050inwhichthememoriesofthelicense-quota-permitrajofthe
1960sand1970sandthesanctimoniousattitudeoftheeconomicdevelopmentbureaucracy,
havebeenwipedclean.Asocialistbureaucracy,whichwasoncenotoriousamongthelarge
countries,willhopefullyhavereplacedSingaporeasamodelofuncorruptible,efficientand
helpfulbureaucracy.
WeenvisionanIndiainwhicheverygovernmentofficerisjudgedbyhis/hercontributionto
sustainedincreaseinproductiveemploymentsandeveryactionthatslowseconomicgrowthis
digitallyrecordedtocreateabigdatabase,whichcanbeanalysedusingAIexpertsystemsand
theproposedcorrectiveactionimplemented.
Thetaxbureaucracy,whichwasonceconsideredtheworstamongthebadwillrunthesimplest,
mostrationalsystemintheworld,inwhichfewneedhelpfromtheirCAorlawyer,tofiletax
returns.TheIncometaxActwillhavebeenreducedfrom23chaptersand298sections,toa
DirectTaxCodewithfewtensofpages,whichwillbestudiedandemulatedacrosstheWorld.
TheGSTwillbesosimpleefficient,thatitwillbestudiedinmanagementcoursesinUSivy
leaguecolleges.Thecustomstariffwillbeauniformtariffof5%amongthelowestinthe
World.Evenagriculturewillhavebecomesoefficient,thatitwillnotneedspecialprotection
intheformofQRsandhighertariffrates.
Thecriminalpenaltiesin26,400economiclawswouldbereducedtolessthanatenthandall
economiclawsrationalised,reducedinnumberandintegratedinto1/5
th
to1/10
th
ofcurrent
ones,onthepatternofthefourLabourcodes.
51
ISROsexperienceintele-educationcanbeusedtobuildacomprehensiveeducationstack. India,weenvision,willbeamongthetop10intermsofeaseofregulatorycompliance(EORC),
easeofdoingbusiness(EODB)andeaseofliving(EOL).
Acomprehensivedigitizationofallrules®ulations,formscomplianceprocedureswill
greatlyfacilitatethisprocess.Thiswillintegratecomplianceandeliminateduplicatefilingof
thesameinformationtodifferentlevelsofgovernmentanddifferentdepartmentsof
governmentanddifferentregulators.Randompost-filingauditofregulations.Incentive
compatible,integratedtax-welfaresystem(NIT).Digitizationoflaws,judicialservices,
judgements,arrest,prosecutionandconvictiondatabases,prisonpopulationisanimportant
elementofinstitutionalreform.Thedigitizationofgovernancewillhavetobecomplemented
bymodernmanagement,processesre-engineering,developmentoftechnicalcapabilities&
acquisitionofnewequipment,
52
covering;(a)Laws,Courts,Judiciary,(b)Policing,
Investigation,Prosecution.(c)Prisons.
Therearemultiple,diverse,uncoordinatedeffortsatdigitisationofGovt.-publicinteractionat
UnionandStatelevel,witheachefforthavingtostartfromscratchandprogressthrough
learningbydoing.Thesecanbeacceleratedbyreducingthecostandeffortneeded,bythe
provisionofanApplicationProgrammingInterface.ThUniversalGovernanceInterface
(GPI),wouldactasthefoundation,fortheinteractionbetweengovernmentdepartmentsand
thepublic,andalsoamongdifferentlevels&departmentsofGovernment.Thiswouldbea
quantumleapineaseoflivingandeaseofdoingbusiness,comparabletotheUPIinthe
financialsector.
WorldBankdefinitionsofpovertyaredesignedtoprovideauniformbenchmarktocompare
povertyratesacrosscountries.Onebenchmarkisforlow-incomecountries($1.9/day/person)
andanotherformiddleincomecountries($3.2/day/person).Absolutepoverty($1.9)hasbeen
virtuallyeliminatedinIndia(table11).Povertyrateformiddle-incomecountries($3.2),has
declinedsharplyfrom53.6%in2011-12towillbebroughtdownfrom21.8%in2022-23(table
11).
52
E.g.,DNAlabs,fingerprinting,recordingofstatements. :(HCR)andGini,basedonConsumption
Thisisthemostaccuratemeasureofthepercentofpopulationstillvulnerabletonegative
incomeshocks.$3.2$/daypovertywillbevirtuallyeliminatedby2035,throughanetincome
transfersystemintegratedwithpersonalincometaxes.100%coverageofAadharnumberwill
ensurethatneitherasingleperson(man,women,orchild)isleftbehind,norasingleincome
earnerfailstopayhis/herdueshareoftaxes.Povertyasdefinedinuppermiddle-income
countrieswillbeeliminatedbythetimeIndiabecomesahighincomecountry,througha
combinationofhigherpercapitaGDPandamoreefficienttax-transfersystem.
Thishasthreeimplications:(1)Thattheanti-povertyprogramshaveworked,anditistimeto
shiftthefocusofWelfarepolicesfrombasicneedstoempowermentofthelowermiddleclass
(bothactual&potential).(2)Statesneedtofocusmuchmoreonurbanisation,andkeyelements
oftheurbaneconomy,suchasavailabilityofnon-slumbased,rentalhousing,publictransport
andworkerhousinginindustrialestates/factories.(3)Thequalityofschoolingandjobskilling
needstobegreatlyimprovedtofacilitateupwardmobilityofworkers.(4)Weneedto
incentivisetheprovisionofinformationandknowledgetomicro(self-employed)andsmall
entrepreneurs,toupgradetheirmanagementskills&technology. Thetraditionalmethodofmeasuringtheeffectofwelfarepoliciesonconsumption/income
distributionistoeitheruseasummarymeasurelikeGinicoefficient,ortolookatthe
cumulativedistributionofconsumption/income.TheGinimeasureofconsumptiondistribution
hasimprovedbetween2011-12and2022-23,forbothruralandurbanareas(table12).
53
The
cumulativedistributionforUrbanconsumptionfor2022-23consumptiondistribution
stochasticallydominatesthatfor2011-12.
54
Thesameistrueforthedistributionforrural
consumptionexceptatthe20%to30%decileofconsumers(table12).Mostlikelyreasonfor
thisis,thepoor-qualityeducation
paucityofopportunitiesforacquiringjobskills.ThereisgreatscopeforexpandingE-education
ande-skillingtoreducetherural-Urbanqualitygap.
Thedataalsoshowsthattheratioofconsumptionofthetop5%tobottom5%ofconsumers
hasdeclinedfrom8.6to7.3inruralareasandfrom14.7to10inurbanareasBetween2011-
12and2022-23.Measureswhichcouldimprovethisfurtherare,(1)Reducedprotectionof
tradablegoodsproducedbyselectedcapital-intensiveindustries,throughhightariffs,(2)Better
designofauctionsforleasingnaturalresources(minerals,oil&gas,spectrum),keepingin
mindthatthereservepriceformanyresourcesmaybezero,andthatadditionallevies,fees&
chargesmaymaketheauctionpricenegative.(3)Betterdesignofsubsidyauctionforpublic
goodsinfrastructurecoupledwithintroductionofbenchmarkcompetitiontomeasure
performance.(4)LevelingtheplayingfieldforSMEsandStartupsvis-à-visCorporationsby
simplifyingtaxation®ulation.
55
Authorscalculations,basedonthedeciledistributiongiveninHCES,showsthattheruralGinideclinedby
5%pointsandtheUrbanGiniby9%points. CumulativeConsumptionDistribution
reflectsthecomplexityoftheconstitutionallydefineddivisionof
subjectsandpowersbetweentheUnionandStateGovernmentsandtheinterestsofdifferent
ministriesanddepartmentschargedwithpromotingsocialwelfare.Thereare250to350
differentState&CentralGovt.programsatthedistrictlevel,designedtohelpthepoorand
needyindifferentwaysfordifferentproblems,yetmanydonotgetthebenefitofevenone
programwhilemanyothersgetawaywithmultipleundeservedbenefits.AWelfareStack
wouldputalltheseprogramsonadigitalplatformwhereeveryonecanseewhattheseprograms
are,andforwho!AnAadharIDlinked,virtualIntegratedSmartCard(VISC),layeredontop
ofthebase,wouldshowtheeligibilityofeachpersonforalltheprogramsintheStack.
56
ThenextstepwouldthecreationofaDirectcashtransfersystem(DCT),whichcandeliver
cashinthehands(mobilewallet)ofanycitizenhurtbyanepidemic,naturalormanmade
disasterassoonasthoseaffectedbythedisasterhavebeenidentified.
Thefinalphaseofsimplificationwouldbeanincentivecompatible,Netincometransfersystem
(NIT)integratedwiththepersonalincometaxsysteminwhichadultswithanincomebelowa
certainthreshold,receiveapaymentbasedonhowfartheyarebelowthisthreshold.Sucha
56
IncludingfreeschoolingandhealthservicesprovidedinStategovt.primary,secondary&tertiaryhealth
centersandprimaryandsecondaryschools.ToensurethesecurityoftheAadharnumberandtheuniquenessof
theVISC/WelfareIdentificationnumberoftheperson,itwillbelinkedtotheAadharnumberinthedatabase.
Consumers negativeincometaxcouldstartatanincomeof1lakhwith10%andincreaseto20%belowRs
75,000and30%below50,000.
57
TheAadharprovidesauniqueidentifiertobringalladult
citizensintothisintegratedNITsystem,thoughaPAN/WIN(welfareidentificationnumber)
couldbeusedinpublicdomaintoprotectsafety&securityofAadhar.
TheframersoftheconstitutionusedtheprincipleofsubsidiaritytocreatetheState,Concurrent
andUnionlistsoftheconstitution,andrightlyput,Publichealthandsanitation;hospitalsand
dispensaries,intheStatelist,leadingtothecreationofStaterunPrimaryhealthcentres
(PHCs),Secondaryhealthcentres(SHCs),andTertiaryhealthinstitutionsThereishowevera
peculiardisconnectbetweentheacademics&healthexpertsandtheStateGovt.s.Inthe75
yearsofindependentIndia,theformerhaveseldomheldthelatteraccountableforhealth
outcomesintheirrespectiveState!
58
Theresultisaneglectofpublichealthandastateof
healthwhichisinferiortowhatitshouldbeforcountriesatourlevelofpercapita
GDP.
NumerousresearchstudieshaveshownthatthebiggapinChildmalnutrition[stunting(height
forage),under-weight(weighforage)]betweenIndiaandotherlowermiddle-income
countries(LMICs)isduetoopendefecation.Afewhaveassociateditwithpoorsewageand
sanitationsystems,suchasinslumsandsmalltowns.Mostofthesestudieshaveusedopen
defecationasameasureofaccesstoandqualityofsanitation/sewerage.Inourcross-State
analysisbasedondatafromNFHS4and5,weuseanumberofothermeasuresofaccessto,
andqualityof,thesanitationsystemsuchasunimprovedsanitationfacility,useofsharedand
unsharedfacilities,whichare,ornot,connectedtoapipedsewerlineorseptictank.Theresults
confirmthatopendefecationisasignificantfactorinexplainingCross-Statevariationinchild
(under5year)Stunting(heightforage)andUnder-weight(weightforage),andthatthequality
ofthesanitationsystemalsomatters(table13).Further,Percapitaincome(PCNSD)isnot
significantforchildmalnutrition.
59
Otherfactorslikebreastfeeding,vitaminsupplementsand
otherillnesslikeraspatorydiseasearenotstatisticallysignificantdeterminantsofcross-State
variationinchildmalnutrition(stunting&Under-weight).
57
Liketheincometax,theincometransferwouldbeindividual,nothousehold/familybased.Eventuallythere
couldbeab Independentvariables(first
difference)
Stunted
Under
weight
Stunted
Under
weight
Open
defecation
(S.E.inbrackets)
Non-sharedsanitarysystem-0.093**-0.15***-0.11**-0.17***-0.84***
(0.035)(0.035)(0.044)(0.043)(0.11)
Shareddisposalsanitarysystem-0.94***-1.06***-0.88***-1.01***-0.09
(0.29)(0.28)(0.301)(0.29)(0.92)
X=ActualOD-PredictedOD0.15**0.18***0.15**0.19***
(0.06)(0.06)(0.061)(0.06)
PCNSDP 0.0000320.000032
(0.000034)(0.000033)
Rsquared 0.450.600.470.610.68
AdjustedRsquared 0.390.550.380.550.65
No.ofobservations 29292929 29
Note:*=p<0.10;**=p<0.05;***=p<0.01.
Datasource:NFHS4and5
Dependentvariablesareinfirstdifference
PanelregressionofChildmalnutritiononSanitation&sewagesystems
Weneedaquantumleapinurbanandsemi-urbansewagecollection,processingandrecycling
systems,toeliminatethisgapandreachUpperMiddleIncomecountrystandardsindrinking
water,sanitation&sewagesystems(columnheaded2031-32&UMIC,table14 ).
TherearethreekeypublicgoodsneededtomakeBharatlook&feellikeanUppermiddle
income(UMIC)ordevelopedcountry(HIC):Anationalwatergrid,anationalsolidwastegrid
andanationalsewagegrid.TheNationalWatergridshouldensureenoughwaterforall
consumers,everywhereinthecountryatalltimes.Thenationalsolidwasteshouldbedesigned
foruniversalcollectionandrecyclingofsolidwaste.Thenationalsewagegridmustensure
sewagesystemsineverycityandtowninthecountry,collectionofsewage(includingfrom
septictanks)anditsprocessingandsafedisposal. :PublicHealthBasicsDrinkingwater,sanitation&Sewage
Lifeexpectancyatbirthisasummarymeasureofhealthoutcomes.Lifeexpectancyformales
iscommensuratewithourpercapitaGDP,butfemalelifeexpectancyislowerthanpredicted
bythecross-countryregression.Thisislikelyduetohighfemalemortalityrates(table15).
iesnotbeingtakenasseriouslyasthose
affectingmales.ThequalityofhealthcareprovidedtowomencanbeupgradedbyuseofExpert
systemsbyeducatedfamilymembersandinformalhealthproviders.Thisisparticularly
importantforruralareas.Weneedtocorrectthesegapsinlifeexpectancyandmortality,and
reach(orexceed)thelevelsindicatedundercolumnheadedUMICby2031-32andthoseunder
columnheadedHICby2047-48 population.Thiswillinclude,(a)DirecttoPatientdiagnosis&medicinedelivery,(b)
Knowledgeresourcesforpublic&privatedoctors/clinics/hospitals,(c)Directtopatient(DTP)
diagnostic&prescriptionservicesanddeliveryofmedicines.(d)HybridPrimaryhealthcentres
(pathology,X-Ray,ultrasound),SecondaryHealthCentres(CT,minorsurgery),Tertiary
HealthCentres(MRI,majorsurgery,raredisease).
Thereiswidedisparityinthequalityofadviceprovidedbyprivatehealthproviders,withrural
healthprovidersmuchworseonaverage,includingthegivingofhealthprescriptionwhich
makethediseaseworseinsteadofimprovingit.Thoughtheaveragequalityofadviceprovided
bythepublichealthsystemissomewhatbetter,particularlyforseverediseases,thereisalsoa
widevariationinquality.Bothtypesofhealthproviderscouldbenefitgreatlyfromthe
availabilityofamultilingualdigitaldoctorthatcanhelpallhealthprovidersfromthelevelof
chemisttotheGP,toimprovethequalityofdiagnosisandtreatmentthattheyprovide.The
databasesforsuchexpertdiagnosis&treatmentalreadyexistintheadvancedcountriesandto
alesserextentinIndia.TheUnionandStategovtsshouldjointogethertocreateanNGOwith
themandatetocreateandmaintainsuchanexpertAIdoctorforthe1.4billionpeopleofIndia.
ThiscouldtransformthehealthoftheaverageIndianwithin5to10years. IndiawillpioneerthedevelopmentofaHealthStackandaPublicHealthStack.Ahealth
stackisauniqueinnovationforpublicprivatecooperation,inwhichgovernmentfundsthe
designanddevelopmentofapublicgoodinfrastructurefordigitalhealth,onwhichthewhole
rangeofhealth,medicineandmedicalequipmentcanoverlaytheirproductsandservices.
ThePandemichasalsoalertedustotheneedforapublichealthStack,whichwillmirrorthe
healthstackorbeaspecializedsub-setofit,focusingonpublichealthissues.TheEpidemics
Actof1987alsoneedsreviewandoverhaultodealwithfutureepidemics.Thedisaster
managementactismoresuitedtodisasterswhichcausephysicaldamagetohumansand
property.
SocialMediaisplayinganincreasingroleinshapingsocietyintermsofbothshort-termsocio-
politicaldiscourseandexpressionofconflictandintermsoflongtermmentalandsocial
development.Indiademocraticsocietymustnotonlyregulatethismediumbutalsoprovidethe
infrastructureforahealthypositivelydirectedalternativetoacommercial,profitdrivenmedia.
WeenvisionanIndiandeveloped,multicultural,multilingual,multireligious,genderneutral
andchildsafeSocialStack,basedonthebestofIndiancommunityandfamilyvalues.Asocial
mediaorcommunitymediastack,whichusesAadharIDbasedsystemforsecureonline
interactionaswellasHybridsocialspaceswheresocialgroupscanmeetoffline.
60
Private
sectorcanusetheSMstacktobuildlayersofsocialmediaandphysicalspacesfordifferent
agegroups(minors,youths,adults,aged)andinterests(intellectual,emotional,social,
spiritual/moral,physical,mental).
7.DigitalEconomy:ExpertSystemAI
IndiaisonthevergeofaDigitalrevolution.Thisrevolutionistransformingthenatureof
consumption,production,workandsocialrelations.Fromourperspectivetherevolutioncan
beusedtoeliminatethetyrannyofgeography(remote&hillyareas),genderdisparity(skills,
workdifferentials),inequalityinquasi-publicgoods(rural-urbaneducation-healthquality)and
informationasymmetry(formal-informalfirms,govt.citizen).
population,provideanopportunitytopioneerthedevelopmentofhybridonline-offline
60
Non-residentforeigners,whoareineligibleforAadharcouldbeissuedauniqueIDnumber(UID)basedona
recognizedpassportorotherrecognizedinternationaldocument. (Phygital)systemsforeducation,health,skilldevelopment&jobmatching,government
services,finance,andbusinessservices.Expertsystemsalreadyexistfortransformingthe
qualityofeducationandhealthinruralareas.CombinedwithspecialisedAI,specialiseddata
bases,theycanmakeurbanqualityservicesavailabletoruralareas,andinternationalquality
servicesavailabletothesmallesttowns.Socialentrepreneurswillplayakeyroleindelivering
qualityservicestotheruralareas,andscalingupsuccessfulsocialprojects,withthesupportof
StateGovernmentsanddigitalpublicinfrastructure(DPI).
Regulatorysystems®ulatorsforDigitaleconomy:DataPrivacy,datasecurity,safetyfrom
(sexual)predators,hatespeech/incitementtoviolence/murder/masmurder,information
warfare(countries,non-stateideologues),globalmafias/drugcartels.Theeconomicsofdigital
economyhasfeatures,notseeninGoodsandservices,oreveninthefinancialeconomy,such
aseconomiesofscope,networkexternalitiesandpsychologicalcontrol&informationwarfare.
Regulatoryrulesmustensureagainstthesedangersandthedevelopmentofsectoraloligopolies
andservicemonopolies.
Publicgoodsinfrastructurefordigitaleconomy:BharatNet(fibreopticsystemconnecting
everyvillageofIndia)willplayacriticalroleinequalityofopportunityandinclusivegrowth.
Privatemobilefootprintwillsooncover99%oflandandexclusiveeconomiczoneandprovide
digitaldataservicestomobileworkers&consumersoutsidetheirhabitationandfixed
workplaces.Thegovernmentwilldevelopthesoftinfrabasedonopenarchitecture(likeIndia
stack,FinStack,UPI,HealthStack,Knowledgestack),toprovidealevelplayingfieldto
millionsofIndiantechentrepreneurs.
Theremustbeapublicinformationcentreineveryvillageinthiscountry,connectedthrough
afibreopticbackbonereachingeverydistrictinthecountry,sothateverycitizenhasweb-
basedaccesstoNationalandinternationalinformationbases,data,andknowledgebases.These
centreswillprovideuniversaldigitalaccesstogovernmentservicesandhealth&education
servicesonafairandequitablebasis.Theywillalsoprovideconnectivitytobusinessand
individualsonacommercialbasis.
Theeconomicsofdigitalregulationshasrevealedfourimportantelementsrelevantfor
regulationofthedigitaleconomy.(1)EconomiesandScaleandscopearemuchdeeperand
broaderthaninthebricksandmortareconomy.(2)Networkexternalitiesareuniqueto
telecommunicationsystemsandthedigitaleconomy.(3)Dataisauniquenaturalresource,(4) Algorithmscangivetheillusionofbeingneutralandmoreobjectivethanhumanbeings,but
canbeasmuchifnotmorebiased,whilebeingundetectable.Thesefourelementsraisethe
possibilityofmulti-product,multi-servicemonopolies,stretchingovermultiplecountries.
Independentprofessionalregulationiscriticaltoensuringcompetitivemarkets,withoutstifling
innovation.
Informallabourmarketsworkthroughpersonalcontactsandconnections.Amoderneconomy
requiresabettermatchingofjobrequirementswitheducationandskillsofpotentiallabour
force.Privateintermediariesaregoodatmatchingupper-leveljobstoskilledpersonnel.There
arearangeofjobswhereadigitalemploymentexchangeisanecessaryconditionforequality
ofopportunity,particularlyfortribal,Dalitsandothersocialgroups,whoarenotpartoflegacy
networks.
Suchgroupsareparticularlyhandicappediftheyaresubjecttooppressivesocialtraditionsin
villagesandruralareas.Socialconstraintshaveworkedevenmorestronglyagainstfemale
employmentasruralwomenhavewithdrawnfromlabourforceasfamilyincomeincreases.
Eveneducatedandtrainedurbanwomenhavelowlabourforceparticipationratescomparedto
themgetarounddiscriminatorysocialnorms,practices&biasesfacilitatingtheirentryintothe
labourforce.Itwillalsoimprovetheincentiveofdiscriminatedgroupstoacquirejobskills,
digitally.Training/skillingwillbekeytoincreasinglongtermlabourforceparticipationrates
(LFPR)ofruralgroups.Adigitalemploymentexchangewillhelpgainaccess.Furtherreform
oflabourlaws,rules,andprocedurestofacilitateworkfromhomewillalsobenecessary.
TheUniongovt.hascreatedanE-ShramportalforinformalworkersandaSkillIndiaportal
forskillingandmatchingofsupplyanddemandforskills.Itisintheprocessofintegrating
thesefunctionsatdifferentlevels.Therearealsonumerousprivateeffortsforskillingandjob
placement,ofdifferingquality.Thereisaneedforauniversalinterfaceforskillgenerationand
skillmatchingtouserdemand,onwhichtheprivatesectorcancompeteandinnovatewhile
maintainingsominimumqualitystandards.
WeenvisionanIndiaasaleadingproviderofFinTech,includingMobilewallets,mobile
accounts,deposit&loans,Insurance&pensions,Financial&wealthmanagementservices,
Investmentadvisory.Regulationsmustbalancetheneedtostimulateinnovationandprotecting theinterestsoflessinformedsavers.PubliclydriveninnovationslikeUniversalFinancial
Interface(UFI)andfinancialstackandFinternet,willaccelerateinnovationbypromoting
competition.Thelastenvisionsthecreationofadigitalpublicledgerforalltradableassets,
startingwithallthosewhichalreadyhavesomegovt.orotherregistrationsystem(likelandor
property)butarenotlistedonanyfinancialexchange.
Thecentralgovt.hascreatedamarketplaceforpurchaseofgoodsandservicesbyCentraland
StateGovtsandtheirsubsidiaryorganizationandPublicSectorEnterprises.TheONDChas
beencreatedinparallel.ThesecouldbeintegratedbycreatingaUniversalMarketInterface
(UMI)orMarketstackfore-commerce.TheEGOMcouldthenbeanupperlevelontopofthe
marketstack,builtonthefoundationofaUMI.Suchaplatformcanbeviewedaspublicgoods
infrastructure(openaccess,neutral),onwhichMSMEs,farmersandserviceprovidersfromthe
remotestcornersofthecountrycanmarkettheirproductscompetitively.Geographically
brandedproductswillbesuppliedtonation&world.
Anothersub-setofthedigitalmarketplacewouldbeamarketplaceforsocialservices,including
onlinemanagement&businessservices(Front,MiddleandBackoffice),Professionalservices
(fintech,architecture,dataanalytics),Socialservices(health/medical,education/skilling,
welfare)andtechnicalservices.
8.GreenEconomy
IndiahasaholisticapproachtoCarbonemissiondrivenClimatechange.Thisissueandits
potentialsolutionsarecharacterisedbyenormousrisksandlargeuncertainty.Giventhe
limitationofresourcesofalowermiddle-incomecountry,thebestwaytoreduceriskisto
distributetheseresourcesinawidevarietyofpossiblecarbonmitigatingsolutions.Theserange
fromrenewableenergytoreplacecarbonintensiveoil,energyefficientdesignofhousing
machinesandurbanareasandlifestylechangespromotinghealthier,water&energyefficient
foodslikemilletsvizrice&sugarcane.
Weenvisionagreeneconomyin2050,inwhicheconomicdevelopmentduringthenextthirty
years,createsenergyefficient,carbonneutralandlowenvironmentalpollutingdesignsfor
everything.WealsoenvisiontheDevelopedcountriestraining,financingagenerationofIndian
youthtocreateenvironmentallyefficientdesignsandtoimplementthroughthousandsofstart- ups.Thesestart-upswillnotonlyimplementthesedesignsinIndia,butalsopropagatethemto
therestoftheworld.
mereconomythatdevelopedwithmassconsumptionwillgradually
movebacktooneinwhichconsumerproductdesignismoremodular.Productswillhavesub-
systemswhichcanbereplacedwhentheybecometechnologicallyobsoleteandthosewhich
willcontinuetobeusedbecausetheyareverycarbonintensiveorenergyintensivetoproduce
&replace.Therepairandmaintenanceserviceswhichplayanespeciallyimportantroleinpoor
countriesbuthavevirtuallydis-appearedfromtherichcountries,willmakeacomeback.India
willbecomealeaderinmodulargreenproductdesign,andtheywillattaineconomiesofscale
Theprimaryincentiveforpromotingalowcarbon,lesspollutingeconomywillbeanew
CarbonTax,separatefromthethreecoretaxes(incometax,GSTandcustomstariffs)which
willreplacetheexcisesonpetrol,dieselandotherpollutingsubstance.
61
Conceptuallythiswill
providethefundingforpromotingde-carbonization,pollutionreductionandenergyefficiency
programs,aswellasruraldigitalconnectivity,whichwillhelpsubstitutephysicalmovement
(transport)withdigitalinteraction.Anindependentprofessionalenvironmentalprotection
agencywillbesetuptocalculatethecarboncontentandpollutingloadofdifferentgoods,
basedonwhichthetaxwillbeimposed.
excessiveconsumptionofimpurewaterintensivecropslikesugarandpolishedrice&wheat
tolesswaterintensive&healthiercerealslikemillets.Waterconservation,saving&recycling
arealsoimportantelementsofaholisticviewofecology,environmentandclimatechange.
TherehasbeenincreasedfocusonMasstransitsystemsandElectricVehicles(EVs)duringthe
last10years.Substitutionofphysicaltransportbyonlinetransaction,servicedelivery;The
shiftofentertainmentfromphysicaltheatrestoonline&socialmedia,andworkfromhome,
willreducetheenergyusedintransport.Similarlyofflineshoppingtoonlineorderingwill
reducetransportusethroughoptimiseddeliverysystems.Sowillonlinedeliveryof
government,education,health&otherservices.Innovationinproduction,storageanduseof
61
Oncethecarbontaxisimposed,normalGSTwillincludepetrolanddieselatthesinglestandardGSTrate
applicableto75-85%ofgoodsandservices. hydrogenwillbringdownthecostofusingitinindustry&transportinwhichgridelectricity
cannotbeused.
Thecapitalcostofrenewableenergy(Solar,Wind,seawave)isnowabouthalfthatoffossil
fuelplants,whichinturnisabouthalfofnuclearplants,Thevariablecostofrenewablesisof
courseafractionoffossilfuelsandnuclear,butitrequireslargestorage,toevenoutthedaily
andseasonalfluctuationsinavailabilityofsunshine,wind&waves,sothedeliveredcostis
higher,butstillcheaperthanfossilfuelplants.Further,decentralizedproductionanduseof
solarenergyinvillagesandremotehamlets,willreduceelectricitytransmissionand
distributionlosses.Solarindustry,includingrepairandmaintenanceserviceswillbecomean
importantindustryinthesunny,waterstressedruralareasofIndia,havingpoorlandquality.
Thesolarrevolutionhoweverawaitsadramaticreductioninstoragetechnology,whichwill
costeffectivelyevenoutthelargefluctuationsinproduction,allowingefficientmatchingto
demandpeaksandeliminationofmoreflexiblebuthighercarbonfuels.
Urbanadministrationislimitedtostatutorytowns,whichconstituted84.5%ofurbanspacein
2011census.Censustownsconstituteanother14.4%ofUrbanspace.Outgrowthorregional
arteriesofurbanisationareestimatedtoconstitute1.1%givingatotalurbanisationofabout
31.1%in2011.Currentestimatesputthisatone-thirdto36%.Urbanisationislikelytoincrease
progressivelyoverthenext10to20years.
Urbanland-usepolicyhastobesupportiveofthegrowthofeconomicactivity,withdesignof
work,residence,andsocialactivitytominimisetransportandenergyconsumption;Due
considerationhastobegiventoUrbangardens&greenerytominimisecarbonload
havebeensuggestedtoaccommodatestructuralmigrationfromruralareastourban
agglomerations.Semi-urbanareas&smalltownslocatedon,ornearrivers,couldbe
transformedintoNaturalcitiesof1.5to2millionpopulation.Urbandesignbasedonlocal
geography,weatherpatternsandlocallyavailabletraditionalhousingmaterialsisaclimate
imperative.
Thequalityofurbanplanningandurbanservicesmustberaisedtoaqualitycomparablewith
Uppermiddle-incomecountryifwearetobeconsideredaUppermiddleincomecountry.This
requiresarevolutioninUrbangovernance,andthequalitychainsofPublicandQuasi-Public
goodsandservicessuppliedbytheStates. Designofmasshousing,officesandfactoriesandtheconstructionindustryhasdeveloped
andpropagatedfromanerainwhichtherewaslittleconsiderationforlocalclimateor
geography.AsIndiaisvirtuallyatthestartofthejourneyformasshousingandcommerce,it
canpioneerdesignbasedonlocalmaterialsandclimate/weatherconditions,marriedtomodern
technologysuchasSolarrooftops,smartsensors&energycontrols.
Lifestyleforenvironment(LIFE)isanimportantelementofgreen
economy.RecyclingofWater,sewage,physicalwaste;nationalgridsforeach.Cleaningofall
suitablefordrawingdrinkingwater.Chemicalunitsgeneratingpollutingliquidwastetobein
estates,wherenormscanbestrictlyenforced,andcommonwatertreatmentfacilitiessetupfor
efficientprocessing.Wastecollection,processing,andrecyclingwillbecomeasignificant
industry,withe-marketsfordifferenttypesofwaste.Consumerdurablesdesignwillreturnto
anerawhenitwasrepairableandre-usable.
Environmentalregulationhasbeenheavilypoliticizedandtiedupinlegalwrangling.A
professionalEnvironmentalProtectionAgencyneedstobesetupwhichcollectsdata,tests
hypothesis,andprovidesscientificanalysisofbenefitsandcostsofdifferentregulatory
choices.Themandateofthisagencymustbecarefullydefined.Thiswillhelpensurethat
administrativeandjudicialdecisionsarebasedonprofessionaladviceratherthanspeculation
andmotivatedpubliccampaigns.
Therearemanydiverse,butinteractingelementsofthegreeneconomy.Toensureco-
ordinationandidentificationofgaps,IndiawillbuildaGreenStack,onwhichallelementof
thegreeneconomywillbefeatured.Thisincludesmarketsforgreendesigns,greenproducts,
andgreenservices.Thiswouldincludeaninsurancemarketforclimaterelatedevents,disaster
monitoringandmanagementsystems,openaccessGovernmentandnon-profitsystemsfor
disasterrelief,anddisasterrelieforganisationstofacilitaterecovery,Alternatively,itcouldbe
asub-stackwithintheknowledgestack. 9.IndiaasaCivilizationalPower
Ineconomics
firmsintheduopolyjointlysetpricesandcompetitivefringearepurepricetakers,withno
marketpower.WeenvisageaWorldin2050thatcanbedesBipolarWorld
withMultipolarRimTripolarWorldwithMultipolarRimThisisbasedon
nexponentiallyweightedindexof
economicpower(VIPe)andMilitarypower(VIPm).
62
Theprojectedevolutionofeconomic
power(VIPe)wasshowninfigure7.
Incontrasttoeconomiccompetition,therearefourseparatedimensionsofinter-country
competition:Geoeconomics,Technology,MilitaryandGeopolitics.WeenvisagetheWorldin
2035willbeageopoliticalversionofthisconcept,withUSA&Chinaconstitutingthe
consistingof5-6countries,havingahighrankandinfluenceinoneormoredomains.For
instance,Japan,Germany,India,UK,Francewillbeamongthe6largesteconomies;India,
ismuchweakerthanthatofJapan,Germany,UK,andFrance,butithasalargelegacy/reservoir
ofdefencetechnology.Anevolutionofthisindexformajorpowersisshowninfigure19.
next15years,toestablishmultileveldeterrenceagainstaggressionandforeignterrorism.The
levelsincludeborderencroachment/acquisitionandterroristinfiltration(L1),limitedwarin
borderregion(L2),DeterrenceofRestricted(militarybasesinborderStates)war(L3),
DeterrenceofConventionalwar(L4),andnucleardeterrence(L5).Weenvisionadefence
capitalbudgetwhichwillriseto1.5%to2%ofGDPtomakethisfinanciallyfeasible,a
DefenceR&Dcommissionwhichwilldevelopstrategictechnology(AI)andnewweapons
systemsandareformedhigherdefencemanagementstructurewhichwillmouldandorganise
humanresourcesandweaponsintocost-effectivedeterrenceateachlevel.Remainingobstacles
toprivateproduction,marketingandexportofdualuseproductsanddefencesystemswillalso
needtobeeliminated. Source:AuthorscalculationbasedonWDIandSIPRIdata.
:MilitaryPowerasmeasuredbyVIPm
Source:AuthorscalculationbasedonWDIandSIPRIdata. Theprojectedevolutionofmilitarypower,asmeasuredbytheindexVIPm,isshowninfigure
20.
63
BipolarWorld aMultipolarRimwillemergeby2035.ItwillresembletheBipolar
post-warWorldtosomedegree,butmostcloselywithrespecttotechnologybecauseof
.ThemultipolarrimwillincludeJapan,UK,France,Russia,
Germany,andIndia.TheEUcanalsobecomeanimportantmemberofthecompetitiveRim,
becauseofgeoeconomicsstrengthandauthorityovereconomic,tradeandtechnologypolicies
ofmemberStates.Itmust,however,resolvethecontradictionarisingfromtheindependent
geo-strategicandgeo-politicalroleofFrance,Germany,andotherlargemembersofEU.Other
largeeconomieslikeRepublicofKorea,Canada,Australia,andTaiwanwillalsoplayarolein
technologyandinvestment.
Weenvisagetheemergenceofaby2050.Indiais
projectedtocatch-upwithChina,byclosingthepercapitaGDPgapthatopenedduringthe30-
yearperiod,1992-2021(figure3&4).Economicgrowthwillgeneratetherevenuesneededto
closeth
,during
1980-2010.ThesecountriescannowplayanimportantroleinhelpingIndiaclosethe
technologygap,throughequallygenerouspartnerships.
ConsiderableprogresswillbemadeindevelopinganIndianprivatemilitaryindustrialcomplex
by2035.Cooperationwithfreemarketeconomieswithalargeprivatedefencesectorlike
France,Israel,UK,andUSAwillplayakeyrole
defencesectors,needtobejointlyplannedand
coordinatedtomaximizeAtman-Nirbhar.By2050Indiawillhavefull-fledgedprivatemilitary
industrialsystemwhichpartnerswiththeprivatemilitaryindustrialUScompanies,onanear
equalfooting.-sectorwillcontinuetopartnerwithcountrylikeRussia
withmuchofdefenceproductioninitspublicsector. Theefficiencyandcomprehensivenessoftechnologicalanddigitalfirewallsandextentof
economicdecoupling,between,(a)ThePeoplesRepublicofChina&itsallies&partners,and
(b)TheUSA&itsalliesandpartners,willdeterminewhetherUSAorChinaismorepowerful
(economy,military,technological)in2050.Chinahasgrownmuchfasterthananyexpert
predicted,becausenoneunderstoodthenatureandimportoftheasymmetric,economic,trade,
technology,andinvestmentpoliciesitadopted.Thesenon-transparentpoliciesallowedPRCto
extractrentsfromrestoftheworldandthuscontributedabout1/3
rd
ofthegrowthduring1980-
2010.Theserentscanbeeliminatedbytechnologicaldecouplingandthecreationofviable
competitionfor opoliesthroughsupplychaindiversification.Indiacancatch
upfaster,ifthelabour-intensivesupplychainsandhumanskillintensivevaluechains,are
incentivizedtomovetoIndiabytheUSA&itsdevelopedallies.
nterestisbeingclearlydefinedanditsnationalsecurityandeconomic
growthgoalsmoreclearlyintegratedintoIndianDiplomacy.Thiswillcontinuetoimproveand
bebettertranslatedintoforeignpolicyandactions.Everycountryhasmultiplegoals,someof
whichtranslateintoactionsovertimeandgeographythatappearinconsistentoreven
contradictory.ValuesareimportantforIndia,butitspreferabletopursuethemquietlyand
persistentlyoutsidethemediaglare,thentohypocriticallycriticizeenemiesandadversaries,
whiletacitlycondoningmoreseriousviolationsofvaluesbyallies.Nationalinterestmusttake
precedence,butphilosophicalvaluesshouldnotbeabandonedorforgotten.
TheroleoftheQUADinIndianGeopoliticsandGeo-economicsisenvisionedtoriseduring
thisdecade,plateauinnextdecade,anddeclineinthethird.
shareofworldpopulationrising,theimportanceofIndianOceanwillincreaserapidlyduring
thenextdecadeiesandlegacymustbeenhancedanddevelopedtopromote
peacefuldevelopmentofthisexpandedIORregion.
-economicsandgeo-politics.Wemust
useonecriticaladvantagewhichwehave.TheChinesecommunistpartyhaswipedoutIslam
fromPRCandcommittedgenocideagainsttheUyghur.Incontrast,Indiaisamongthehandful
ofcountriesinwhichthepercentofMuslimsintotalpopulationhasrisendecadeafterdecade
for70years.Thisargumentcanandmustbeusedwhenwegohead-to-headwithChinainthe 50Muslimcountries(includingIndonesia,Malaysia,Bangladesh,Pakistan,Afghanistan,
Nigeria).ThenarrativemustalsobeaddressedtoMuslimpopulationsinChristiancountries.
64Thequestionisoftenasked,willIndiabecomelikeChina?Seldomisthequestionasked,
whetherIndiawillbecomelikeUSA!
65
Theanswertobothquestionsisneither.Indiathatis
Bharat,isacivilisationalStatewhichwillneitherbelikeUSAtheinheritorofEuropean
colonialtraditions,norlikeCommunistChinatheinheritorofHanimperialtraditions.Awealth
ofnewarchaeologicalevidencefromtheIndo-Gangeticplains,andmoderngeneticanalysisof
thegeneticmarkersofdifferentcivilisationsoftheEurasiancontinent,tellsuswhy!Whenthe
Egyptiancivilisationwasbuildinggreatmonuments,basedonfunds&labourusuallyachieved
throughconquest,Bhartiyacivilisationwasfocussedonbuildingcitiesforitsenormous
population,developingcraftmanufacturingandtradingbothinternallyandwithitsNorth-
WesternandWesternNeighbours.AnestimatedthirdoftheAncientWorldpopulationwasin
India,athirdinChina,andtherestscatteredovertherestoftheWorld(Mesopotamia,Egypt,
Persia,Turkey,East&CentralAsia,Italy,Greece)
InanErainwhichothercivilisationssawgloryintheconquestofneighbouringterritories&
andcivilisationacrosstheIndiansub-continent(fromHimalayasintheNorthtoSriLankain
theSouth,andfromtheBaluchistandesertintheWesttoof
Bharat.
66
AnestimatedthirdoftheAncientWorldpopulationwasinIndia,athirdinChina,
andtherestscatteredovertherestoftheWorld(Mesopotamia,Egypt,Persia,Turkey,East&
CentralAsia,Italy,Greece)
IndiathatisBharatisbuiltonaSecularspiritual-socialcontract,inwhichallthetribesofthat
timebroughttheirGodstothesacrificialfire,andagreedtoaccepttheGodsofeveryother
tribe,witheachtribefreetoworshipitsowngod(ornoGod)!ThisHindu(/Indic)secularism
intermsofspiritual-religiousbeliefs,andpeacefulco-existencewithoutsidecivilisation,isthe
foundationoftheIndianCivilisationalState.Intheeconomicsphere,Indiadoesnotseeka monopolyorduopolyovermanufacturedgoodsproductionormanufacturedexports.Allit
wantsistonarrowthelargegapbetweenitsfifthrankinproductionofmanufacturedgoods,
andits15
th
rankinexportofmanufacturedgoods.
10.PolicyVision:UnshacklingJobCreators
Afterthe1990sreforms,therewasavisiblehiatusinthepaceofeconomicreformsduring
2004-2013.
67
Thelasttenyearshaveseenaspurtofeconomicreformsdesignedtopromote
sustained,fastinclusivegrowth.Someofthesereformsremainincomplete,othersneedtobe
refinedbasedonoutcomes,andothersneedtobethoughtthroughtoaddressnewchallenges.
Thissectionhighlightssomeofthepolicyandinstitutionalreformsrequiredinthenextfive
years.
Fourtransformativereformshavebeeninitiatedbutleftincomplete.Theseare,(1)thefour
labourcodestounifyandreplacenumerouslabourlaws,(2)thereformofagriculturallaws,
particularlythoserelatingtointer-stateandinternationaltradeinagriculturalgoods,(3)The
strategicindustrialpolicyforPrivatizationofPublicsectorenterprises,Publicsectorbanksand
financialinstitutions,and(4)ReformofLandlawstomakeacquisitionforinfrastructure
developmentfaster&fairer,throughlandpoolingarrangements,andmakeitpossibletochange
landusetopromotestructuralchange&productivegrowth.Oncethesearecompleted,the
2010reformswillarguablyrivalthe1990sreforms,inscopeandambition.
Threenewtransformativepolicyreformsthatwillsimplifyandautomategovernancesystems,
andthreeusesofAIexpertsystemstodramatically&speedilyimprovethequalityofeducation,
skilling&jobskillmatchingandhealth&wellness:(1)Adramaticsimplificationand
integrationoftheGST,IncometaxandImport-Exportduties,tomakepayment,collection,
monitoringoftaxpayments,anddetectionofevasionandcorruptionbyacompletelyunbiased,
expertAIsystemE-Kautilya.(2)AGovernmentPublicinterface(GPI)whichintegratesall
intra-government(ministries/departmentsofUnion&Stategovt.s)andgovernment-public
interactions,andallowsadigitalAIexpert,E-Chanakya,tosimplifycompliancewithall
economiclaws,rulesandregulations.(3)AnAIjudgenamedE-Manu,whichdramatically
reducesthecostandtimeforresolvinglitigation,(4)AdigitalAIexpertsystem,E-Acharya,
forschooleducation,whichcanhelpteacherstoimprovethequalityofeducationandstudent withawiderangeofabilitiestoimprovetheirlearning(5)Adigitaldoctor,E-Vaidfor
diagnosis,prescriptionofmedicinesandrefenceforsurgeryorhigherlevelevaluation,which
willhelptheentirerangeofhealthprovidersfromthecompoundertotheGeneralpractitioner
inruralareastotheeducatedpatient,toavoidhealthharmingadvice,andforIndiato
dramaticallyimprovethequalityofhealthoutcomes.(6)Theeco-systemforcreationofjob
skillsandthematchingofdemand&supplyofjobskills,ishighlyfragmentedand
underdevelopedinIndia.Anumberofsuccessfuleffortshavebeenmadebygovt.toimprove
jobskilling.Butamassivethrust,atmultiplelevels,isneededtocreateaHybridphysical-
digitalsystemisneededtointegratethisthree-corneredmarket.Thedigitalelementofthiswill
beanexpertsystemAI,E-Guru.
Acceleratingeconomicgrowthandsustainingitforthreedecadesisthekeytoachievingthe
visionpresentedabove.Fastergrowthisthesourceofhigherrevenues,whichwillfundthe
developmentofhardandsoftinfrastructurebytheGovernmentandprovidetheresourcesto
createaWelfaresystemthattakescareofthelessadvantaged.Acompetitivemarketeconomy
inwhichmonopolyinfrastructuresegments,andservicescharacterisedbyasymmetric
informationormoralhazard,arerationallyregulated,isanecessaryconditionforsustainedfast
growth.Governmentprovisionofpublicgoodsandanenvironmentforcompetitive
entrepreneurshipandinnovationwillhelpsustaingrowth.
Duringthefirst30yearsofindependenceIndiadevelopedajungleofcontrols,restrictions,
regulations,andprocedure,whichcametobeknownasthelicence,permitquotaRaj.There
hasbeenconsiderablede-controlandliberalizationsincethe1980s,butitsresiduestillexists
ineverylaw,rule,regulation,andprocedure,relatingtoeverysubjectandpolicydomain
AsperthecompanynamedTeamleaseRegTech1536actsandrules,69,233compliances
and6618annualfilingsareapplicabletotheaveragecompany.Ofthese,Labouraccountsfor
30.1%oftheapplicablelawsandrules,47%ofthecompliancesand68%oftheprovisionsthat
carryclausesforimprisonment.
Thereare54Centralacts,945compliancesand254filings/intimationsrelatedtotaxationand
finance.
68
TheIndiantaxbureaucracyisnotoriousamongfreemarket,opendemocracieswith
theworstreputationamongpotentialFDIinvestors.Itfaresverybadlyrelativetoour
competitorcountries.Simplificationlawsandratestructurewillmakeitmucheasiertodigitize
68
Therearealso62Stateacts,2339compliancesand736filings/intimations,whichmustbeaddressed. complianceandmonitoringsystemsandrunthemsmoothlyandefficientlytothebenefitof
bothtaxpayersandgovt.
Thecontrolmentalityisdeeplyembeddedinthepublicmind,anditwillrequireHerculean
dedicationandefforttorootitout.Thismustbecomplementedbyeconomicallyrational
regulationsandwellqualified,independent,professionalregulators.
AmodernisedIndianeconomyrequires21
st
centuryregulationsandregulatorysystems,runby
technicallyqualifiedprofessionalregulators.
69
Theserelatetopublicgoodsinfrastructure,
financialmarkets(SEBI)andfiduciaryfinancialinstitutions(RBI),socialserviceslike
EducationandHealth(FDA)characterisedbyasymmetricinformation&moralhazard,and
specificsubjectsaffectingpublicsafety(pollution-EPA,firehazards,mines)&security.
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GovernmentmustkeepdeepeningandbroadeningtherecentreformsinEducation,Medical
educationandScience,todevelopbetterregulatorsforthesecomplexsectors.
Infrastructureunbundlingisrequiredtoseparatecompetitivepartslikeelectricityproduction
orrunningtrainservice,andthoselikeelectricitydistribution&transmission,docks,runways
&raillines&signallingsystems,whichneedregulation.Productionandintra-cityelectricity
distributionisstillmonopolisedbyStateelectricityboardsandmustbemadecompetitive.So,
mustpassengerandcargotrainservicesandcargohandling,fuelsupplyandotherservicesat
ports,airports&railwaystations.Withinthenon-competitiveparts,areaslikeintra-city
electricity&pipedgasdistributions,mustbesubjecttobenchmarkcompetition,andinter-city
transmissionlines(electricity,pipelines,raillines,fibre-opticcables),mustberunonpublic
carrierprinciplewithregulatedopenaccess.Turnaroundtimeforcargoatports,airports,and
stationsofthededicatedfreightcorridorsisreducedtothatincompetitorcountries.
Financialmarkets,bothdomesticandinternational,needregulationtorationallybalancethe
benefitsofinnovationandtherisksofmacroinstability&crisis.Muchoftheinterest
differentialbetweenIndiaandglobalfinancialmarkets,isduetotherelativelackof
competition,andhigherfiscaldeficits.Fiduciaryfinancialinstitutionsneedtoberegulatedto
protectmassofinvestors/depositorswithoutdestroyingfinancialincentives&efficiency.
69
Notbureaucratsandpoliticianswhoarecluelessaboutacademiceconomics,marketreality,entrepreneurial
risktakingandcomplexityofmanagerialdecisionmaking.Regulationsneedtobecommentedandcriticizedby
suchprofessionalsaswellasconsumers/users/buyersbeforetheyarepromulgated.
70
Asproposedinearliersection,wemustsetuptechnicallyproficient,FoodandDrugsAdministration(FDA),
anEnvironmentalProtectionagency(EPA)andCenterforDiseaseControl(CDC),modeledonUSand/orEU
institutions.ForgoodschoolregulatorswecouldlooktoScandinaviaandotherEuropeancountries. Theinternetandweb-basedservices,suchase-commerceandsocialmedia,arenewareas
whoseeconomicsandsocialimpactisstillnotfullyunderstood.Thereisanopportunityfor
Indiatopioneerrational,sociallybeneficial,regulationsbasedonemergingknowledge.
Reformofthelabourcodemustbetakentoitslogicalconclusionbynotifyingthefour
parliamentapprovedcodes.Considerationalsoneedstobegiventoraisingthethresholdlevel
intheIndustrialRelationscodefrom300workersto1000workers.Thereisanunintended
anomalyinthesocialcodewhichprovidesadisincentiveforemployinglabourinlabour
intensive,small-mediumenterprises(SMEs).Socialsecuritycontribution(ESI,PFetc)by
employers,foremployeeswithsalaryaboveRs.22,000amonthpay9%ofsalary,asmatching
contributionfortheemployees.Ontheotherhand,ifthe salaryislowerthanRs.
22,000amonth,theemployerhastopayupto45%ofsalaryassocialsecuritycontribution.
AsahighershareofSMEemployeesarelikelytofallintothelattercategory,thedisincentive
forhiringregularworkersismuchhigher.
EliminatingcontrolsandimprovingEaseofRegulatoryCompliance(EoRC)remainsan
importantgoal.Thisrequiresreducingandintegratingasmanyrulesandregulationsas
possible,andsimplifyingcomplianceprocedures,throughdigitalfiling,privatecertification,
andrandomauditsystem.
71
ThisprocessmustalsoproceedprogressivelyfromCentral
regulationstoUnionTerritories(UT)regulationswithmanyelementsofStateregulations,to
Stateregulations.
72
Thereare23,655centralcompliancesand1,893filings/intimationsonsubjectsotherthan
labour,taxation,andfinance,whichneedtobedramaticallyslashed.Thisshouldbefollowed
bymakingamodelregulationtoreplace35,289Statecompliancesand687intimations.The
CentralgovernmentcantestanddemonstratethemodelStaterulesbyapplyingtheminUnion
territories.
TheJanVikasBillhaseliminated40criminalpenaltiesrelatedtoeconomicoffences.26,400
stillremain.Goingonebyonethrougheachbillandremovingcriminalpenaltiescouldtake
halfacentury.Theeliminationhastobebasedonsomecommonlyacceptedphilosophical,
71
Detailsoflegalchangesathttps://prsindia.org/billtrack/overview-of-labour-law-reforms.Teamleasestudy
estimatesthattherewere937compliancesand135filingsandintimationsunderthecentrallaborlaws.These
shouldbereducedby90%.
72
AsperTeamleasestudy,Stateshave423labor-relatedActs,31,605compliancesand2,913related
filings.Mostofthesecouldbecollapsedintothefourcentrallaborcodesandtheircompliances. socialandjuridicalprinciples.Asurveyoftheliteraturecanbeusedtoselecttheseprinciples
and,thenbeappliedtotheremaininglaws.
Therearemultiple,diverse,uncoordinatedeffortsatdigitisationofGovt.-publicinteractionat
UnionandStatelevel,witheachefforthavingtostartfromscratchandprogressthrough
learningbydoing.Thesecanbeacceleratedbyreducingthecostandeffortneeded,bythe
provisionofanApplicationProgrammingInterface.This,UniversalGovernanceInterface
(GPI),wouldformthefoundationofasystem,forinteractionbetweengovernmentwithpublic
andforGovt.ministries&departmentsalsowitheachother.Thiswouldbeaquantumleapin
easeoflivingandeaseofdoingbusiness,comparabletotheUPIinthefinancialsector.
Corporatetaxeshavebeenreformedandplansforeaseoftaxfilingandcompliancehavebeen
initiatedbutmuchremainstobedone.TheIncometaxAct(1961)contains23chapters,298
sectionsandfourteenschedulesin90pages.Furthercomplexityarisesfromnumeroussub-
sections&sub-subsectionsaccumulatedover60yearsofclarificationsandamendmentsof
theAct.Thereare129incometaxrules,withseveralsub-rulesandthreeappendices,contained
in47pages.ThecomplexityembeddedintheDirecttaxActs,givesrisetomassivelitigation
(1.37lakhcasesunderlitigationinMarch2017),with85%bythedirecttaxesdepartment,and
repeatedunsuccessfulappeals,havingasuccessrateof30%.AnewDirecttaxcode,
incorporatingeconomiclogic,globalbestpracticeandsimplicityoflanguagehasbeendevised.
Itconsistsof16chapters,285sectionsandeighteenschedulescontainedin254pages
(including16-pagetableofcontents).Itisessentialforreducingthetimeandfinancialcostsof
complianceforMSMEsanddramaticallyreducingthelitigationchokingIndiancourts.
ReformCustomsdutystructuretorectifyinverteddutystructureinmanufacturingandreduce
averagetariffratestothatofpotentialcompetitorsThailand,Vietnam,Malaysia(figure21)
andspecificduties(table16).FTAswithpotentialcompetitorsmustpaycarefulattentionto
inversionscreatedbyreduced(orzero)tariffs.TheissuedoesnotariseinFTAswithdeveloped
countries.Acomprehensivereformofthecustomsdutystructure,withspecificduties
eliminatedandaverageratereducedtoASEANlevels,willnotonlysupportSMEexports,but
alsodrawglobalattention,asamajorreformoftheGovt.. Source:WorldBank,worlddevelopmentindicators.
SpecificdutiesinIndia
TheGoodsandservicestaxwasalandmarkconstitutionalchange.Buttoomuchofthelegacy
laws,rules,andproceduresthatitwassupposedtoreplacecreptintothenewlaw,rules,and
rates.Massivesimplificationoftherulesandprocedurescanbeachievedifthree-fourths(3/4
th
)
ofgoodsandservicesaresubjecttoauniform15%,rate,one-tenthtoone-eighth(10-15%)are exempt(0%)food,medicines&medicalservicesandeducationservices,toensureequity.
73
Revenueneutralityrequiresthatcars,tobacco&productsandluxuryhotels,besubjecttoa
higherrateof25%.
74
IfCessisextendeditmustberestrictedtoafewproductcategorieslike
tobacco&products,betelnut&luxurycars,otherwisetheyareundistinguishablefrom
multipleGSTrates.Eliminatecessonallgoods&servicesexceptAutomobiles,tobacco&pan
masala.Imposeuniform15%GSTonallintermediateproductsandrawmaterialsand
consumergoods&servicesproducedlargelybyMSMEs.Haveasecondrateof30%ongoods
&serviceswithhighincomeelasticityandproducedlargelybycorporatesector.Exemption
shouldberestrictedtobasicfood&beverages,medicalservices&drugsandEducation
services.Theresultoftheproposedchangesissummarisedintable17.Bringenergy
(electricity,coalNaturalgas)andpetroleumproductsintotheGST.Imposecessonpetrolto
attainrevenueneutrality.
Source:VirmaniandBhasin(2020)
AutomaticSeedingofIncometax,GSTandCustomstariffsforMSMEscanandmustbe
accomplishedinthenext3to5years.Thisrequiressimplification,standardizationand
integrationoftaxreturnsforthethreetaxes,soAIcanautomaticallycrosscheckandcreate
returnsforallthreetaxes(figure22).AnexpertAIdigitaltaxperson(E-Kautilya)wouldbe
73
Onlyexportsmustbezerorated,otherwisetheGSTsystemrapidlyincreasesincomplexity.Theuniformrate
structurewillalsoremovethediscriminationagainstmanmadeandartificialfibers,fabricsandclothwhichhas
stoppedIndiafrombecomingamajorexporterofgarmentsmadefromno-cottonandmixedfabrics.
74
Withthisratestructure,99%ofMSMEscanuseanexcelspreadsheettostoredaily/weekly/monthlydata&
filereturns;Totalvalueofinputsboughtfromeachsupplierandtotalvalueofoutputsoldtoeachbuyerwould
havetoberecordedseparatelyfor15%and25%GST.Monitoringbecomesequallyeasyasasinglesheetcan
represent(GSTN)rowsofsellersandcolumnsofbuyers,witheachcellrepresentingtotalvalueofitemsbought
duringmonth/quarter/year(at15%),withanothersheetforthosewhosellandbuyitemsat25%.
CategoryCurrent Proposal1Proposal2Proposal1Proposal2
ConsumerG&S19317782
GovtG&S171717
MixedG&S363116
Intermediate130123118
Capitalgds442
Total 380352235 Theannouncedpolicyofprivatizationof(allbutfour)PublicsectorbanksandseveralGovt.
GeneralInsurancecompanies,andreductionofgovt.equityholdinginLICneeds
implementationovernextfiveyears.Forthefourlargepublicsectorbanksremainingunder
Govt.control,theBankNationalizationActneedstobereplacedbytheCompaniesAct,to
improvetheirmanagement®ulation.Thesepolicieswillincreasecompetitionandhelp
reduceinterestdifferential.
Phasedintroductionofmoreriskmanagementproductsanddecontrolofinvestmentinthem
bybanks,willimprovedepth.Forinstance,restrictionsonspeculativetradinginforeign
exchangederivativemarketsshouldbeeasedtohelpcreatearobustmarket.Bondmarkets,
commoditymarkets,foreignexchangemarketsandmarketsforriskmanagementproductsare
currentlyeitherveryshorttermorlackdepth.Theseneedtobeopenedtoforeigninvestment
&foracertainamountofspeculativeactivity,essentialforcreatingmarkets.
DollardenominatedbondmarketsneedtobecreatedtocompetewithECB.Withtheinclusion
ofIndianBondsintheinternationalindices,thereisanopportunitytoexpandthecorporate
bondmarket.Thisrequiresthecreationofasovereignyieldcurveoffwhichcorporatebonds
couldbeprices.OnewaytodothisisthroughGOIguaranteedInfrastructurebondsorgreen
bonds.
Thesemeasureswillreduceinterestdifferentialandpavethewayforcompletecapitalaccount
convertibilityby2035.
ThereisapopularmisperceptionthatFDIpolicyisveryrestrictive.Thisissimplyuntrueand
hasbeensofordecades.IndiahaslessrestrictionsthanASEANcountries,withtheexception
ofVietnam,andeventhelatterhadmorerestrictionsthanIndiain2010(table18).Mexicohas
somewhatlessrestrictionsthanIndia,butthegaphasnarrowedoverthelasttenyears.The
approachtoInvestmenttreaties,however,needstobere-examined. Duringthepandemic,manyunconventionalmeasureshadtobetakenrestrictionsimposed,to
managethecrisiswithminimumcollateraldamage.Theseincludedrestrictionsonbank
lendingratesandprocedures,theseshouldbephasedoutandtheearliertrendofprogressive
liberalisationofbankingresumed.Reductionofstatutoryliquidityratio(SLR),CRRandother
additionalrequirementsmustalsobereducedasweintroducemorecompetitionthrough
privatisationofpublicsectorbanks.
IndianeedsaGlobalSupplychainpolicytomeetthechallengesandopportunitiesthrownup
bypost-financialcrises(2008)de-globalizationandpost-Pandemic(COVID)opportunities:
AllestablishedexportersmustbeseamlesslylinkeddigitallytoGST,customs,designated
bank,andRBI,sothatforeignexchangepayments/receipts,exportsandimport,exportlinked
credit,GSTset-off/refund,importtariffset-offarerecordedinstantaneouslyand
available/visibletoall.Thiscanensurecompletezeroratingofexports&8-hourGSToffset,
andfullcreditprovisionforexportproductionatinternationalinterestrates.
TheimporttariffscriticaltobothMNCsupplychainsanddomesticMSMEsarethoseonraw
materials,components,intermediategoods,andsub-systems.Giventheinterlinkagesbetween
differentsectorsoftheeconomy,
75
itisextremelydifficulttoensurethatnoindustry/sub-sector
isdis-protected(facesnegativeeffectiveprotection).Asingleuniformad-veloremtariffrate
onallminerals,oils,manufacturedgoodscanensurethatnotasingleindustryisdis-protected. 76
GlobalexperienceandtheexperienceofourAsiancompetitorssuggeststhata10%uniform
ad-valoremrate,willleadtorationalizationandincreasedcompetitiveness.Theratecanbe
graduallyreducedto5%.
77
Around10%ofmanufacturedgoodscanhavehigherratesforalimitedduration,topromote
importsubstitutionofgoodsmonopolisedbyChina.Theextraprotectionmustbelinkedto
attainmentofminimumefficientscaleundertheproductionlinkedincentive(PLI)scheme,so
thatsuchplantsgetawindowofthreeyearstoironoutglitchesintheirnewplantsandimprove
theirprocurement&marketingsystems,tomatchhigherproduction.
Adhocchangesinagriculturalimport-exportcontrols,quantityrestrictions(QRs),import
tariffsandexportduties,increasetheriskofdevelopingproductionforexportmarketsand
importsubstitutionofnicheproducts.Weneedatransparent,virtuallyautomaticsystemof
importtariffsandexportduties,linkedtothedifferencebetweeninternationalanddomestic
prices.ControlsandQRsmustbereplacedbysuchasystemtoreducepolicyandregulatory
riskforfarmersandAgri-entrepreneursandpromoteexportofagricultureandalliedproducts.
InternationalandDomesticconditionsareripeforasurgeininvestmentandgrowthinthe
manufacturingsector.Domesticpolicyandinfrastructurearevastlyimprovedandcomparable
toourLMICcompetitors.GlobaldesireforderiskingamongHighincomeDeveloped
countries(HIDCs)isincreasing.Theheadquartersof90-95%ofMultinationalenterprises
(MNEs)areinthesecountries,andtheseMNEsleadanddrivethesupplychains,throughFDI,
skillingandinternaltradechannels.2/3rdofMerchandisetradeoccursthroughthem.Theshift
ofsupplychainstoIndiaandmanufacturinggrowthcanbeacceleratedbylayingoutthered
carpetfortheseMNEsandco-operatingwiththeirhomecountriesindevelopingajoint
approachtodealingwithChinesemanufacturingmonopolies.
AHigh-levelcommitteeisrequired,toDevelopaTradepolicy,toreducedependenceon
importsofmanufacturedgoodsfromPRC.Strategyforde-riskingmanufacturingsector
throughmultilateralmanufacturingtradeagreementwithUSA&EU,buildingonIndia-EU
76
Textilesectorhasdozensofspecificrateswhichareofsourceofcomplexityandcorruption,andwhich
provideadisincentivetohonest,genuineexportersoftextiles.Rawcotton,silkandotherplantmaterialsusedin
industryshouldalsohavethesamerate,butthismayneedtobephasedinslowlyastheycurrentlyhavemuch
higherrates. FTA!AsUSinternalpolitics,currentlydis-favoursnewFTAs,wewillhavetofindan
alternativemechanismfocusingstrictlyonmanufacturingsupplychains.Themanufacturing
partoftheUSMCAFTA,particularlyitscumulativeoriginrule,canserveasamodel.Itcan
alsoformthecoreofaUSA-India-EUagreementforde-riskingsupplychainsbymovingthem
totrustedeconomicpartners.
Theexistingtariffpolicyhasaprovisionforimposingtaxesupto200%onimportsfrom
Pakistan.AsimilarprovisioncouldbeintroducedforimportsfromChina(innextbudget).An
importtariffof50%shouldbeimposedonallmanufacturedimportsfromChina,with
exceptionforintermediategoodswhichdonothaveanyalternativeavailablesource.Todeter
tariffevasion,byreroutingthroughothercountries,asurchargeof100%shouldbeleviedon
partners.Selective,timeboundexemptions
couldbegiventoIndianorforeignfirms,aspartofaphasedmanufacturingprogram,toimport-
substitutegoodsimportedfromChina.
WeshouldimmediatelyenterintodiscussionswithUSA&EUtojointlyintroducea50-60%
tariffonmanufacturedgoodsimportsfromChina,whilesimultaneouslyeliminatingtariffson
thesamegoodsfromeachother,basedoncumulativeValueaddedinUSA,EU,India(&
maximum10%VAinChinaorbyChinesefirmsinothercountries).
WeshouldaimtoattractatleastoneAnchorMNC/MNEtoeachlargeStateinIndia,withinthe
nextfiveyears(i.e.,minimum13MNEs/MNCs).Asanoverwhelming%ofMNEsare
headquarteredinUSAanEU+,wewillhavetomakeaspecialeffortintheseeconomies.Both
theUnionGovt.andStatesshouldsetupaSupplyChainDepartmentintheMinistryofIndustry
andCommerce.TheprimarygoalofthisdepartmentwillbetoattractAnchorinvestorsfrom
HighIncomeDevelopedCountriesandensurethattheystartproductionwithinoneyearof
decision.ThisDepartmentmustthereforehavetheauthoritytobuyandtransferland,provide
telecom,road,electricity,water&sewageconnectivityandfacilitateskillingoflabourneeded
fortheproject.Itssecondgoalwouldbetofacilitatetheshiftoftheanchorinvestorssuppliers
withinthenext3years.
78
LargeStatesintheheartland,whicharefarfromthecoast,suchasUP,BiharandMP,may
requireaspecialdispensationtoattractMNCs/MNEs.Specialmanufacturingzones(SMZs)
couldbesetupintheseStates,with100%onlinedigitaladministrationofalleconomiclaws, rules,regulations,procedures.Privatecompanieswouldbecertifiedtoundertakeperiodic
auditingoftheregisteredcompaniesinthesezones.TherewouldbenointerferenceoftheState
orGOIbureaucracywiththemanufacturingcompaniesforadecadetoletthemfocuson
buildinguptheirworkersskills,developingsupplychainsandbecomingcompetitivewith
firmsinmorefavourablelocations.
Theimpositionofretroactivetaxationledtoanumberofdisputeswithforeigninvestors.These
wereadjudicatedundertheproceduresagreedinthebilateralinvestmenttreaties(BITs)with
thehomecountries.AdversejudgementsledtheGovt.towithdrawfrommanyBITswhenthe
timecameforrenewal.ThishasledtoasubstantialdeclineinFDI;asituationwhichneedsto
becorrectedurgentlyifwearetobecomethelargestdestinationofMNEsdesiringtoderisk,
byshiftingapartoftheirexport-orientedsupplychainsfromChinatoIndia.RewritingofBITs
toforceforeignfirmstogothroughtheentireIndianlegalsystembeforeinternational
arbitration,maybeadisincentiveforexportoriented,labourintensive,manufacturing,supply
chains.Forthenext15yearsweshouldadopttheacceptedlegalnormsincorporatedin
(e.g.
EU,UK),whicharethesourceofmostofglobalFDI.
Alongwiththis,thePLIpolicyshouldbefocusedonattractingstrategicsupplychainsfrom
PRC(China)toIndia,particularlythoserelatedtoDefence,dualuseitems,telecom,ADP&
electronics&IoT,whichcanbeusedtounderminethesovereignty&securityofIndiaandits
Westernpartners.ReviewandrefinementofPLIisacontinuousprocess.
Taxreform,skillingandinformation-knowledgeplatformsarenecessarytoensurethatSMEs
areequippedtoparticipateinsupplychains,produceexportqualityproductsinatimelymanner
andfocusoncreatingjobs.Start-upscanbeviewedasamodernversionofSMEs.Theyare
goingtobecriticalindrivinginnovationandgeneratinghighqualityjobsinthe21stcentury.
Unfortunately,bureaucraticsystemsstillviewthemwithsuspicion.Start-upsmustbeprovided
alevelplayingfield.
Taxbiasagainststart-upsmustberemoved.Completelyeliminatethetaxationofunrealized
capitalgains,whichwasintroducedaround2011.Financialandotherregulationsneedtobe
purgedofanti-start-upbiases.Forinstance,somefinancialregulatorsimposeadditional
requirementsonmanagementandownershipstructureofstart-ups,whicharenotapplicableto
companies.Thesemustbedropped. Deeptechstart-upsgothroughthreestages:(i)FromIdeato
proofofconcepttoprototype,and(iii)Fromprototypetomarketableproduct.Eachstage
differswithrespecttorisk&fundingrequirements.Financial&managerialsupportneedsto
beunderstood&addressedseparately.
Primaryeducationisthebaseoftheeducationpyramid.Apersonwhocannotread,writeand
understandothers,cannotfunctioninamoderneconomy.Inclusivegrowthisdifficult,ifnot
impossible,withoutliteracy.100%functionalliteracy(FLN)mustbethegoalofeveryIndian
State,inthenextfiveyears.WemeasuretheperformanceofStatesattheprimary,tenthand
schoolpasslevels,relativetowhatcouldbeexpectedattheirlevelofPerCapitaNSDP,based
ona(powerequation)regression.Thisperformancegapisthentranslatedintonumbersof
peoplewhoseeducationlevelneedstoberaised(Table19).
:StateswithgapineducationperformancerelativetotheirpercapitaNSDP TheseStates(inred),needtomakeaspecialefforttoimprovetheirentireschoolingeducation
toimprovethequalityofteaching,includingbyadoptingdigitalteachingappslikeDiksha
program.
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TheUnionGovt.canhelpbytransformingtheexcellentDikshaprogramintoanExpertAI
digitalteacher,E-Acharya,whichcanteachtheteachersandthestudents,frompre-primaryto
thehighersecondaryschoollevel.ThiswillrequireatruepartnershipbetweenCentraland
StateGovernments,NPOsandprivatesector.TheStateswillhavetoensurethatDikshaand
E-KautilyaiscustomisedtotheStatelanguage&environment,andthereis100%digital
connectivitywitheveryprimaryandsecondaryschoolintheState.
Despiteeffortsduringthelasttwodecades,thereisawidegapbetweenthecredentialsand
skillsacquiredbyyouthandthejobskillssoughtbyemployers.Therealsoinformationgaps
andmissingmarkets.Weneedacomprehensivepolicyfordevelopmentandregulationofthe
SkillingIndustry.Theobjectiveofthispolicyshouldbetofacilitateinformationflowsbetween
allstakeholders,reducefragmentationbypromotingintegrationofdifferentsegmentsofthe
-levelsteering
groupshouldbesetuptodevelopsuchapolicyinconsultationwithallstakeholders,suchas
Industry,Skillgenerators,NGOsandGovt.organisations,involvedintheindustry.
Privatecompanies,SMEs,NGOsandGovt.aregoingtoplayacriticalroleindifferentparts
oftheskillingandemploymentindustry.Companiesshouldbeallowedandencouragedtouse
theirCSRfundstopromoteskilldevelopmentrelatedtotheirindustry,alongwiththeirpeers.
ASkillingIndustryCouncilshouldbesetup,withtheparticipationallstakeholders,tomeet
StudentsofTraining
andskillinginstitutesshouldbeeligibleforloansfromPublicSectorBanks,andforeign
applicantstotheseinstitutesshouldbeeligibleforastudentortraineevisa.Thelogicof
charging18%GSTonjobskillingandtrainingisquestionable,aslongastherearelower
bracketsforbasicneeds.
Therearenumerousministries,departmentsandagenciesinvolvedinskillingandemployment.
Thereisaneedforanintegratedreviewoftheirstrengths&achievements,andweakness&
shortcomings.Thereviewcanalsoplayacriticalroleinareasofskillingthatarefalling betweenthecracks.AsNITIiswellplacedtotakeaneutralview,aSteeringGroupshouldbe
setupunderthememberconcernedwithskillingandemployment.
Pendingareview,theintegratedE-SHRAMSkillIndiaPlatforms,shouldbeputonCloud
withModularstructureintwobroaddimensions(i)National&State,(ii)Modulesfor
Employment(seekers&providersofjobs,intermediaries),skilling(suppliers&usersofskills,
standards&certification),andallrelatedmarkets.Allmodulesshouldbeconnectedand
seamlesslyintegratedfortheuser.ConnectivityshouldalsobeprovidedwithPrivateSector
intermediaries,andwithNGOsinHealth,Education&Othersocialsectors.Theultimategoal
shouldbecreatinganAIpoweredexpertsystem,E-Gurutoprovideappropriatejobskillsto
everypersonaccordingtohis/hercapabilitiesandlimitations.
ThereisincreasinglikelihoodofObsolescenceofproductsusedearlier(e.g.,Bidis)and
obsolescenceofruraloccupationalskills(e.g.,carpenter,electrician,plumber).Amission
couldbelaunchedforre-skillingofobsolescentruralworkers.TheVishwakarmascheme
couldintroduceacomponenttotrain,spouseordaughterofcraftsman,inbasicmanagement/
marketing/procurement,forHouseholdenterprises.
UrbanizationandUrbandevelopmentwillbeoneofthedriversofgrowthinthenextfew
decades.TheSewageanddrainagesystemsofallcitiesandtownswillneedtobemodernised
andasystemofundergroundconduitsbuiltincities,tocarryutilitiessuchaselectricity,piped
gas,andfibreopticscables.Masstransitsystemswillhavetobebuiltincitiesandlargetowns.
DespitetheNagarpalikaAct,theplanning,developmentandrunningofcitiesishighly
fragmentedamongStategovernmentagenciesandmultiplecityadministrationModernization
anddevelopmentofcitiesandtownsrequiresasinglepolitical-administrativeauthority,with
allelementsoftownplanning&policy,andtownspecifictaxation(e.g.,land&realestate)&
expenditureunderthisauthority.TheNagarPalikaandPanchayatiRajActsmustbeamended
toensurethis.
Amongthepolicymeasureswhichneedtobetaken/propagatedare,LandPoolingforUrban
infrastructure;whichisbothspeedyandfairtothosewhoselandisacquired,LandUselaws,
rules&procedurewhichpermitmoredensification,whilestrictlyensuringavailabilityof
neededinfrastructure,bothunderground(sewage,drainage,conduitsforwires,pipes)and
overground(parking,lastmileconnectivityformetros,busstations).Abolitionofrentcontrol
lawsandfacilitateconstructionofrentalaccommodationandrentingoutofsuch accommodationfordiversegroupsandduration.ThemodelRentControlAct(2021)provides
atemplatewhichcanbemodifiedbyStatestolocalconditions.Settingupofanonlineportal
forregisteringallavailablerentalapartments&matchingdemandwithsupply(e-market).The
PPPframeworkforinfrastructure,whoseshortcomingsandfailureshavealreadybeen
reviewedbyafinanceministrycommittee,whichalsosuggestedsolutions,needstobe
revamped.
Moderncitiesmasstransportrequiresdigitalinformationsystemsandsoftware-basedplanning
systems.Smallprivateplayersandbureaucraticgovt.organizationsdonothavethecapability
orthecapitaltodothis.Statesmustallowafeworganizedprivatecompaniestorunthebus
systemsinthecitiesandlargetowns.ThiscanbedonethroughaStatewideauctionofbus
routes,organisedbygroupsoftowns,withthecompaniesbiddingontheeithertherolloutof
themodernbussystemacrosscities,orthesubsidytheywouldprovidetodisadvantagedusers.
Asystemoflastmileconnectivityfrommetro/busstationsshouldalsobedevisedby
cooperationofGovt.,Pvtsector&NGOs
ConvertallUrbanSlumsintorentalapartmentcomplexes.Existingpolicieshavefailedbecause
StateGovt.sarealwaystryingtoextractthemaximumrevenuesoutoftheconversion.They
shouldreorienttheirfocustothepropertytaxesthesecomplexeswouldgenerateaftertheyare
built.Thereshouldbesufficientincentiveforprivatedevelopersandforthoseinillegal
occupationofslumland,toagree/allowthisconversion&rebuildingtooccurexpeditiously.
TheOdishaLiveableHabitatMissionorJagaMission(2018)andtheprecedingslumdwellers
landrightslegislationcouldserveasmodelforotherStatesandcities.Thisshouldbeviewed
asanopportunitytodevelophighclassurbaninfrastructure.
80
CloudbasedModularsysteminthreedimensions;(a)Regional,City/Town,(b)Traditional
Planning(Transport,Utilities)andEconomicactivity.(c)Platformsfor,(i)Demand-Supplyof
planningservices,(ii)Creationofplanningskillsandmatchingdemand-supplyofskills,(iii)
InformationKnowledgePlatformforcriticalelementsofUrbanization(e.g.,finance,admin),
(iv)Demand&supplyofUrbanPublic&quasi-publicgoods(Sewage&watertreatment
plants,solidwastecollection,disposal&recyclingservices).
Besidesmodernizationofexistingsewagesystemsintownsandcities,themissioncould
coverentirecycle,includingsewagetreatmentandrecycling.Itisimportanttoensurethat sewagecollectedfromseptictanksisnotdumpedinopenfields,waterdrainsorwaterbodies,
asthisjusttransferstheproblemfromoneplacetoanother,withoutsolvingit.Similarlyopen
sewagedrainswhichfloodandoverflowinmonsoonsorheavyrainfallcannegatethebenefits
ofeliminatingopendefecationand95%toiletavailabilityinthesameplace.
Theplanning,digging,andlayingofnewsewerlines,shouldsimultaneouslyaccommodate,
updatingofrainwaterdrains,roaddesignfordrainagefromroadsurfaces,andconstructionof
modern,undergroundconduitsforutilities(waterpipes,electricitywires,telecom/fibre-optic
cables)topreservegoodroadsurfaces.
Efficientlandandrealestatemarketsrequireaccuraterecordsoflandownership.Thelackof
suchrecordslimitsthecontributionthatrealestatecanplayinraisingpersonalincomeand
GDPgrowth.ThedigitalIndiaLandRecordsmodernizationprogramcanplayanimportant
roleinmodernizationoftheindustry,alongwithCadastralsurveys.Urbanland-useplanning
mustbemodernisedtoprovidegreaterflexibilityinlandusechange,institutionalstructuresfor
participationofallstakeholdersandspeedierproceduresforchangeinlanduse.Rules,
proceduresandsystemsforrenting,leasing,saleandpurchaseoflandandrealestatemustbe
Doingindicatorshaveimprovedinevery
sub-categoryexceptthoserelatedtorealestateregulations,procedures,andspeedoflitigation,
largelybecauseitisastatesubject.Centralgovernmentcantaketheinitiativeincreatingand
implementingmodellegislation&systemsandimplementingtheminUnionterritoriesand
Specialexportzonesunderitscontrol.
Agricultureremainsthemostunreformedsector.Thisisnotforwantofknowledge.The
correctpolicysolutionshavebeenknownfordecades.GOIforthefirsttimetooktheinitiative
toreformRurallandandagriculturaltradelawsthathavethwarteddiversification,productivity
andprofitablegrowth.Theseeffortsshouldnotbeabandoned.
Non-agriculturalemploymentalsoneedsgreaterattention,particularlytheskillsdimensionand
keepinginmindtheburgeoningdevelopmentwithin10kmofeveryhighway&fastgrowing
CommoditiesAct(ECA)orreintroduceECA(AmendmentAct),(b)Abolish.Agricultural
ProduceMarketingAct(APMC)orre-introduceFarmerProduce,TradeandCommerce
(Promotion&Facility)Act.Considerreintroducingasuitablymodified, Farmers (Empowerment&Protection)AgreementofPriceAssuranceandFarmServicesAct.(d)De-
controlfutures,optionsandwarehousereceipts,onallagriculturalcommodities
SubsidiesforPesticides,Fertiliser,Water&electricityandonwaterintensivecrops,are
resultingincontaminationofdrinkingwatersupply,landandair,anddepletionofunderground
waterinseveralareasofthecountry.Thereisneedforacomprehensivereviewoftheliterature
toestimateandevaluatethenegativeeffects(externality/collateraldamage)ofthesesubsidies.
Aworkinggroupcouldbesetupforthispurpose.Thesamegroupcouldalsoevaluatethegains
fromclubbingallthesubsidyandgivingitbacktothefarmers,intheformaDirectcash
transfer.
InternetDataConnectivity,mustbeprovidedtoallPrimarySchools,PrimaryHealthCentres,
StateGovt.Offices(24x7).Thisshouldideallybethroughfibreopticcableswhichcanbe
accessed24x7.Itshouldalsobeprovidedtoallvillages&Habitations(100%),eitherthrough
FibreopticorSatellitedataconnection.Thereservepriceforspectrumauctionshouldbezero
forallruralarea,assupplyofspectrumisgreaterthanthedemandforspectrum.Geographically
restrictedlicensescanbegiventolocalstart-upentrepreneurstopromotesocialinnovation.
TheUniversalconnectivityfund,shouldensurelastmileconnectivitytoeveryvillage
CloudbasedModularplatformforagriculture,associatedskills,relatedservicesandnon-
farmjobskilling.Itwouldbecloudbasedwithtwodimensions;(a)National,State;(b)
Platformsfor,(i)Demand-SupplyofInputs&Outputs,(ii)Creationofskillsandmatching
demand-supplyofskills,(iii)InformationKnowledgePlatform:R&D,extension,(iv)Agro-
processing,includingskills&relatedservices
GroundwaterresourcesarelowanddepletingfastinNorth-WestIndia(Gujarat,Rajasthan,
Haryana,Punjab).ManyareasoftheDeccanplateaubetweentheWesternandeasternghats
arewaterstressed.Waterusebyindustry,commerceandwaterintensivecropslikesugar,rice
andwheatmustbechargedtoreflectitsscarcityvalueinwaterstressedregionsofthecountry.
Thefundsgeneratedcanbeusedforwaterharvesting,restorationofwaterbodies,andrecharge
ofgroundwater.
81
Maphttps://www.wri.org/insights/nasa-satellite-data-help-show-where-groundwater-and-where-it-isnt,
-termgroundwatervariationinNorth-
&Ni,May2014,https://www.sciencedirect.com/science/article/pii/S0921818114000526. Considerableprogresshasbeenmadeinprovidinghigherqualityinfrastructuretoproducers,
usersandthegeneralpublic.The
insubindicatorsshowsthis,withIndiarankedhigherthanPhilippines,Vietnam,Indonesiaand
Mexicoin2023.SomeweaknessremainsinCustomsandInfrastructure,thoughthe
improvementinPortturnaroundtimesisincredible(table20)
Source:WorldBank,LogisticPerformanceIndex
ThenewchallengeistoraiseittotheaveragequalityandaccesslevelsprevalentinUpper
middle-incomecountrieswithinadecade.Thisrequirespolicyreformstoimprovetheviability
ofinfrastructuresandtheprofitabilityofpotentiallycompetitivepartsof(unbundled)
infrastructureservices,andprofessional,wellqualifiedregulatorstoregulatethemonopoly-
duopolypartsofinfrastructure.
Socialistpricingofpassengervsfreighttrainsraisesfreightcostsforindustryabovecostof
supply,tosubsidizeconsumers.Reducescompetitivenessbyraisinglogisticscosts.Itpromotes
ashiftoftransporttomorecarbonproducingtransport.Weneedtomovetocostbasedpricing. Indiahasoneofthehighestelectricitypricesamongtheemergingmarketeconomies/Middle
Incomecountries,forpurchaseofelectricitybymanufacturingindustry(table21).
:ComparativeElectricityprice
Thisisadis-incentiveforthegrowthofValueadded&employment.Stateshavetoshiftfrom
socialistpricingofconsumers&industrytomarketpricing.Consumersubsidiesmustcome
directlyfrombudget.Thiswilleliminateanimportantsourceofcompetitivedisadvantagefor
Indianindustryvizourcompetitors(Vietnam,Thailand,Indonesia).Itwillincentiviseprivate
sectortoefficientlyintegratepeakday-timesolargenerationwithpeakeveningdemand;The
modalitywillbeacombinationof,ashiftineffectivedemandbygoodsproducers,andtheuse
ofstoragetechnologytoshiftsupply.
Anefficientmarketeconomyisbuiltontheruleoflaw.Citizensrequireanenvironmentsecure
andsafefromcriminalstoinnovateandtakeentrepreneurialrisk.Thepoorconvictionratefor
heinouscrimes(murder,rape&kidnapping)canonlybeimprovedsubstantiallyby
comprehensive,endtoendreformofthecriminaljusticesystem.Thisrequiresreformoflaws,
rulesandprocedures,police&prosecutionreform,judicialreform,reformofcourtsandprison
managementsystemsandofthepoliticalsystemtominimisethepossibilityofcriminals
becominglegislatorsorministers.
AIisalreadybringingaboutarevolutioninthelegalprofession.WeneedtouseAIexpert
system,E-ManuthathelpsidentifyandremoveanomaliesinUnionandStatelawsandrules,
identifiesandremovescontradictionsincourtjudgementsatmunicipal,highcourt&Supreme
courtlevels,andspeedsupjudgementsbycodifyingallpastjudgementsandidentifyingkey
piecesofevidenceneededtoresolvecases! 11.SummaryandConclusion
Virmani(2021)outlinedabroadvisionoftheeconomyforthenext25years.Thispaperflushes
thandpercapitaGDP
growthhavebeenonarisingtrendsincethe1980s,whenthecountryturneditsorientation
fromsocialisttomarket.Thegrowthhasalsoincreasedrelativetotheaveragegrowthrateof
theWorldeconomy.DuringthisperiodtherealGrossfixedcapitalformation(GFCF)/GDP
hasbeenonarisingtrendandtheprivatefinalconsumptionexpenditure(PFCF)onadeclining
trend.Thesetrendswerehoweverinterruptedbytheglobalfinancialcrises,withreal
GFCF/GDPfallingsharply,butrecoveringandrisingaboveitspastpeak.Thishasbeen
accompaniedbyadecliningtrendinGovt.finalconsumptionExpenditure(GFCF/GDPratio
by2%points,coupledwithanimprovementinthequalityofexpenditurestowardshighershare
ofcapitalexpenditure.ThemilduptrendinrealPFCFsincetheglobalcrisisalsoappearstobe
reversing,withrealPDCF/GDPonly2%pointsaboveitstrough.Thesefactorsindicatethat
risingPCGDPgrowthtrendissustainable.
Theemploymentdataismorelimitedanddisjointed.Theemploymentdataforusualstatus,
indicatesadecliningworkerpopulationratio(WPR)from1983to2017,suggestingthatthe
rateofgrowthofjobhaslaggedpopulationgrowthduringthisperiod.Formal/organisedsector
jobsseemtohaveincreasedfasterthanoveralljobs;TheASIdataforworkersshowsthat
employmentinman-days,hasincreasedatanaveragerateofabout3.6%,duringthelasttwo
decades.ThenewPLFSdataseries(2017-18to2022-23)showsareversalinthetrendoffalling
worker-populationratiointheinformalsector,withthetotalWPRonaclearuptrend.The
numberofjobscreatedhasexceededtherateofpopulationgrowthbyabout3%peryear.This
isawelcomechangefromthepreviousthreedecades.
Moreimportantlythefastestgrowthofemploymentandrealwagegrowthhasbeenforthe
casuallabourcategory,indicatingthatdemandforcasuallabourhasrisenfasterthanthe
supply,duringthesesevenyears,i.e.,thepullfactorismoreimportantthanthepushfactors
thatmanyanalystshavebeenwritingabout.Realwagegrowthhashoweverlaggedpercapita
GDPgrowthfortheself-employedandregularwageandsalaryworkers.Growthofrealwages
forboththesecategoriesiscriticallylinkedtotheirlabourproductivity.Thelatterinturn
dependsonthequalityofeducation,qualityofthejobskillsandlearningbydoing.Asystemic improvementintheseiscriticaltofuturegrowthoflabourproductivityandrealwagegrowth,
forthemajorityofworkers.
OuranalysisalsoconfirmsasharpfallinWorldBankdefined$1.9/dayand$3.2/daypoverty
inIndiabetween2011-12and2022-23.TheconsumptionGinihasdeclinedforbothruraland
urbanareas.Theconsumptiondistributionfor2022-23stochasticallydominatesthe
distributionfor2011-12inbothrural&urbanpopulations,anevenstrongertestof
improvementinthedistribution,thantheGinicoefficient.Theratioofconsumptionofthetop
5%tothebottom5%hasalsoimprovedinbothruralandurbanareas,duringthisperiod.
Thispaperoutlinesavisionofadevelopedfreemarketeconomy,anopen,pluraldemocracy,
inwhicheverycitizenisassuredofequalityofopportunityandprovidedthesupporttodevelop
herfullpotentialtothebenefitall.Thepaperanalysesthedemographic,digitalandgreening
overthenext30years.Itthensketchesoutaneconomicvisionintermsofaverageincomeof
thecitizensandputsintheperspectiveoftheWorldeconomy.Thegeopolitical&strategic
implicationsofthisgrowthareaddressedtowardstheendofthepaper.
Equalityofopportunitywillbedrivenbyanimprovementintheaveragequalityofthehuman
capitalanditsmoreequaldistributionofqualityeducationandtheavailability&qualityof
skilling.Bettermatchingofjobskillssuppliedanddemandedwillensureitstranslationinto
improvedoutcomes.Basiceducationandlow-endjobskillsarecriticaltoraisingtherealwages
ofilliterate,unskilledlabourers.Bettermiddleschooloutcomescoupledwithmid-levelskills
issimilarlyimportantforgrowthofrealwagesofthemassofworkers.Improvementinquality
ofeducation&skillingateverylevel,willdrivethegrowthofwagesfornewentrantstothe
relatedskills,willplay
acriticalroleingrowthoflabourproductivityandriseofrealwagesofthosealreadyemployed.
isparticularlyimportantformanufacturing,butisalsorelevantfor
modernagricultureandservices.Entryofeducatedandskilled,marriedwomen,intothework
forcewillalsohelpraiselabourproductivity.Togetherthesecanensureamoreequal
distributionofwageincome.Areformed,simplifiedanddigitallyintegratedtaxsystem(E-
Kautilya),alongwiththeproposedNetIncometransfersystem(NITS),canhelpmoderatethe
negativedistributionalimpactofaspurtineconomicgrowth(Kuznetscurve).
82 Structuraltransformationoftheeconomyentailsareductioninshareofthelabourforce
engagedinagriculture,fromhalftoafifthorlessofthetotal.Therestwillbeemployedmore
productivelyinruralservicesandindustrylocatedincurrentlyruralareas.Withless
underemploymentandgreaterlabourproductivity,agriculture&alliedsectorwillimprove,
leadingtoincreaseddemandforruralservices&industrialproducts.importanttoensure
thatasubstantialshareofthisincreaseddemandismetbyserviceprovidersandproduction
locatedinruralgeographies.Physical&digitalconnectivity,availabilityofqualityeducation
andskillsrelevanttoagriculture&ruraleconomy,andthefreedomtouselandfornon-
agriculturalpurpose,willplayacriticalroleinthistransformation.
Weenvisionakeyroleforthedigitaleco-systeminupgradinghumanresources,structural
change,andthetransformationoftheIndianeconomyfromalowermiddleincomeonetoa
highincomeone.Thedigitaleconomywillhavetwoelements,oneadigitalofarchitectureof
adozenstacksandsub-stacksandsecondamodular,multi-layeredsystemoftelemedicine,
ande-learning,tele-education&e-skillingThestacksincludeaknowledgestackwithfour
sub-stacksfocusedoneducation,rural&agriculturalinformation,R&Dandmarketingofhigh-
techskills,aHealthstackwithasub-stackfocusedonPublichealth,aWelfareStack,anda
Socialmediastack,alongwiththebroaderanddeeperfin-stacksande-marketstacks.The
stacksaredesignedtopromotecompetitioninthedigitaleconomy,byprovidingalevel
platform,withtransparent,fairandcrediblerulestonewentrepreneurs&MSMEs.Thestacks
willbeaccessibletoeveryresidentofIndiathroughanationalfibreopticcablenetworkwhich
reacheseveryblock,tehsil&taluk.
ThesecondelementconsistsofsuiteofAIenabledexpertsystemsthatimprovethequalityof
education,skilling,healthandgovernmentservices.Amongthesewilladigitalteacher(E-
Acharya),adigitaltrainer(E-Guru),adigitaldoctor(E-Vaid),adigitaltaxman(E-Kautilya)a
digitalbureaucrat(E-Chanakya)andadigitaljudge(E-Manu).Thetelemedicine,e-education,
e-skillingandgovernancesystems,areenvisionedashybridonesthatleveragethescalability
ofwebdeliverywithpersonalhumantouchcriticalformotivationandsociallearning.They
willalsocombinegovernmentandprivateserviceproviderstocomplementthestrengthsand
supplementtheweaknessofeach.Thearchitectureisenvisionedtoempowercitizens,promote
structuraltransformationofthelabourforce,anddriveinclusivegrowth.
Thegreenurbanization,housing,and
transportandtocontributetogreeningofgrowth.Agreensub-stackwillbebuilttosupportthe
propagationofgreendesigns,services,goods,andsystems. ThequalityanddistributionofGovt.providedpublicGoodsalsoaffectsthedistributionof
consumptionandincome.Oneaspectwhichwasrelativelyneglectedfor65yearswaspublic
health.Thishaschangedoverthelasttenyears,butalotremainstoedone.Giventhelarge
sizeofourpopulation,thisrequiresmassive,threelevel(national,State,local)systems,for
supplyingcleandrinkingwater,drainage,collection,transport,treatmentandrecyclingof
waterandsewage,andcollecting,processing&recyclingsolidwaste.Indiawillnotbe
consideredadevelopedcountrytilltheseareinstalledandfunctionsustainably.Thebiggest
benefitofthesesystemswillbetheeliminationofthehigh,child(under5years)malnutrition
levelsinIndiarelativetoourpeers.
Policiesandprogramscausallyrelatedtogrowthandpublicwelfare,arecriticaltosustaining
fastgrowthduringthenext25years.Theseincludethecreationofamacroeconomic,and
sectoralenvironmentinwhichprivateinitiativecanthriveandtaketheentireeconomyand
societyforward.
remainingobstaclesinthepathofjobcreatorsandnotenoughincentivesfortheeconomic
administratorstoempowergrowthdrivers.Thelastchapterbringstogetherthepolicyand
institutionalreformsessentialforacceleratinggrowthandsustainingfastgrowthforthree
decades.
TheIndia-Chinapercapitagap(ratio)hasbottomedoutandstartedclosing
populationgrowthrateandpercapitaGDPgrowthratenowaboveChina theGDPand
economicpowerratioswillstartclosingatanincreasingrate.Ifthefreeopenmarket
democracies,rejecttheasymmetriceconomic,trade,technologyandFDIpoliciesofthe
PeoplesRepublicofChinaanddiversifytheirSupplychainsoutofthePRCandintoIndiaand
otherfreeopenmarketdemocracies,theycancollectivelyreducetheriskofdisruptionand
exploitation.ThiswillallowIndiatoreformfaster,andtotransformitseconomymore
comprehensively,tocreateabetter,moreequaleconomyandsocietyforits1.64billioncitizens
by2050.Itwillalsobeinabetterpositiontoprovidemoresupportandhelptothelowincome
andlowermiddle-incomecountries.
TheWorldismovingtowardHigh-techdecouplingbetweentheUSAanditsallies(Group
USA)andChinaanditsallies(GroupChina).Thiswillbeaccompaniedbypartialeconomic
decoupling,resultingfromde-monopolisationofmanufacturedexportsandanefforttode-risk
supplychainsofeachgroupintheother.Thiseffortisgreatlycomplicatedbythefactthat
alliesofUSAnorofChina,areeconomically
dependentoninternationaltrade,FDIandeconomicinteractionwithChina,andforsecurity ontheUSA.India,ontheotherhandhasahugetradegapwithChinaandmustreduceits
importdependenceonChinaintheMediumlongterm.Intheshort-mediumterm(5years)it
cangainbypartneringwithGroup-USAtohelpitde-riskitssupplychains,bycreatinga
welcomingenvironmentforitsMNEstodiversifytheirsupplychainstoIndia.Thiswill
increasetheeconomic,technologicalandstrategicsecurityofUSA,itsallies(EU,UK,Japan)
andofIndia.
IndiathatisBharat,isacivilisationalStatewhichwillneitherbelikeUSAtheinheritorof
Europeancolonialtraditions,norlikeCommunistChinatheinheritorofHanimperial
traditions.WhentheEgyptiancivilisationwasbuildinggreatmonuments,basedonfunds&
labourusuallyachievedthroughconquest,Bhartiyacivilisationwasfocussedonbuildingcities
foritsenormouspopulation(1/3
rd
ofWorld),developingcraftmanufacturingandtradingboth
internallyandwithitsNorth-WesternandWesternNeighbours.InanErainwhichother
civilisationssawgloryintheconquestofneighbouringempires
Vedicculture,spiritualideasandcivilisationacross
theIndiansub-continent(fromHimalayasintheNorthtoSriLankaintheSouth,andfromthe
IndiaisbuiltonaSecularspiritual-socialcontract,inwhichallthetribesofthattime(2500-
3500BCE)broughttheirGodstothesacrificialfire,andagreedtoaccepttheGodsofevery
orIndic
Secula-religiousbeliefs,andpeacefulco-existencewithoutside
civilisation,isthefoundationoftheIndianCivilisationalState.Thisisstillthebasic 12.References
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