Day: August 18, 2024

18Aug

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Economy | In need of a booster dose

In several of his speeches at election rallies prior to the general election, Prime Minister Narendra Modi underlined a key economic prospect—that India would become the third largest economy in the world quite early in his third term. Modi, who had won the election twice before for the Bharatiya Janata Party (BJP) on the promise of a stronger economy and business-friendly policies, felt that glossy figures regarding India’s economy still resonated with the masses. The election, however, proved that Indian voters were concerned about a host of pressing issues, not least of which were the dearth of jobs and high prices. The BJP subsequently won fewer Lok Sabha seats than it expected to, making it dependent on allies to form the government. But that hasn’t stopped Modi from showcasing India’...

18Aug

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Economy | Karthik Muralidharan: From poverty line to dignity line

The best way for India to become a global power is to sustain annual economic growth rates of above 8 per cent. High growth is also the best way to eliminate poverty, improve citizens’ lives and generate the tax revenues needed to fund an effective social safety system that can support those who fall into poverty and help them bounce back. How can we achieve these high and sustained growth rates?A simple summary of the Indian economy is that the top 10 per cent of the income distribution create firms or secure well-paid jobs. The next 30-40 per cent find employment of varying quality serving the demand created by the top 10 per cent, and the bottom 50-60 per cent (mainly in rural areas) are largely excluded from India’s growth story. They rely on welfare programmes to achieve basic living ...

18Aug

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Economy | Amit Kapoor: Honing the competitive spirit

India is the fifth largest economy in the world, with a GDP of $3.2 trillion in 2023, and we have been growing at an average rate of 7.6 per cent in the past decade. However, on closer examination, certain key indicators reveal a startling picture. India’s GDP per capita, a true indicator of a nation’s prosperity, is at $2,730 (Rs 2.3 lakh). It is much lower compared to our developing bloc peers, including Brazil ($11,350), China ($13,150), Vietnam ($4,620) and South Africa ($5,970). To look at a broader indicator of India’s holistic well-being, our social progress ranks at 110 out of 169 countries in 2022; approximately five points below the global average score. Moreover, India’s GDP per capita places the country at the 111th rank out of 164 countries assessed on social progress.For Indi...

18Aug

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Economy | Amitabh Kant: The essential growth sutras

About 10 years ago, India was seen as one of the ‘Fragile Five’ economies, with shaky macroeconomic fundamentals. Confidence in the economy was plummeting, and inflation spiralling. Even though the economy had been liberalised in the ’90s, a web of regulations still existed, making India one of the toughest places to do business in. Over the past decade, we have seen all this change. India is now a ‘bright spot’ in the global economy, recording 8.2 per cent growth in FY24.However, to become an economic superpower, we must sustain this growth rate for the coming decades. Only then will our per capita incomes increase from $2,100 to $18,000+ in three decades’ time, making us a high-income country. If we do not sustain these rates, we risk being stuck in a middle-income trap. Investment rates...

18Aug

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Infrastructure | Fast lane to progress

“It’s not our wealth that built our roads. It’s our roads that built our wealth.” A version of this famous saying by former US president John F. Kennedy is displayed on a wall in the visitors’ waiting room at the office of Nitin Gadkari, Union minister of road transport and highways. Gadkari aims to build a highway network that rivals the best in the world, significantly reducing travel time for goods and passengers, and enhancing the competitiveness of Indian industry. The highways sector receives over Rs 2 lakh crore annually for the construction, upgrade and maintenance of more than 10,000 km each year. Over the past decade, the network has expanded by around 60 per cent to approximately 1.4 lakh km. India is already reaping the benefits of improved infrastructure, with transit time for...

18Aug

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Infrastructure | R. Dinesh: Building a logistics speedway

As India charts its course towards becoming a global economic powerhouse, the logistics sector emerges as a critical driver of this ambition. The efficient movement of goods and services across the country and beyond its borders is not merely a facilitator of economic growth but a fundamental catalyst. To truly unlock its potential and achieve the status of a ‘Viksit Bharat’ by 2047, India will have to continue its logistics revolution by focusing on four key areas—continuing the focus on infrastructure development, outsourcing and development of 3PL and 4PL service providers (3PL or third-party logistics manages tasks like transportation, warehousing and order fulfillment for businesses, and 4PL or fourth-party logistics oversees the entire supply chain, coordinating multiple 3PLs and pro...

18Aug

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Infrastructure | Kapil Kaul: Becoming the hub of global aviation

Indian aviation is set to experience once-in-a-lifetime growth which will see both the domestic and international markets more than doubling in size over the next 5-6 years. Domestic airport passenger numbers could increase from 307 million in FY24 to 600-700 million by FY30, while international traffic could go up from just under 70 million passengers to 140-160 million over the same period.Meanwhile, the fleet of Indian carriers is similarly expected to double in size to reach around 1,400 aircraft by FY30. In short, the growth that Indian aviation has experienced in the 90+ years since J.R.D. Tata piloted Air India’s first flight, will be replicated in just the next 5-6 years. This is growth at a rate that has rarely been seen in global aviation, with China being perhaps the only compar...

18Aug

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Infrastructure | Deep Kalra: Shaping the next tourism powerhouse

As India celebrates its 78th Independence Day, it’s an opportune moment to reflect on the transformative potential of our tourism sector. Tourism is one of the largest employers in the services sector, and given its tertiary impact, the industry can be a game-changer for India. With its rich cultural heritage, stunning landscapes, and warm and hospitable people, India has all the makings of a global tourism powerhouse. The country has also significantly enhanced its stature as a global destination for business opportunities. This has helped the country claim an increasingly prominent place on the world travel and tourism map. Yet, India is currently only the 22nd most visited nation in the world. Our goal should be to climb into the top 10 within the next 20-25 years.The domestic travel an...

18Aug

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Industry | The growth factories

The first Economic Survey of Modi 3.0 dropped a bombshell when it made a case for getting Foreign Direct Investment (FDI) from China to help India improve its participation in global supply chains through exports. Even as Union commerce & industry minister Piyush Goyal quickly scotched speculations about easing Chinese capital inflows, the economic survey—tabled a day before the Union budget to provide an overview of the Indian economy’s performance—has set off a debate.China is India’s largest trade partner, with export/ import volumes exceeding $118 billion (Rs 9.9 lakh crore, at the current exchange rate) in 2023-24. But India’s trade deficit with China is also the highest at $85 billion (Rs 7.14 lakh crore), not including Chinese products reaching its shores through free trade agre...

18Aug

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Industry | Sanjiv Mehta: India as the ‘plus one’ to China

In the last several decades, many countries that transitioned from the middle-income to the high-income status benefited from either joining the large European market or being endowed with natural resources like oil and gas. There are notable exceptions, like South Korea, Taiwan and Israel, who have avoided the middle-income trap through manufacturing backed by R&D and innovations. Some countries used commodity exports or manufacturing and did well for some time, but eventually floundered. In this backdrop, India will have to create its own path to prosperity, where manufacturing will play a key role. Still, it will have to be a multi-dimensional story, with growth being inclusive and sustainable. We will have to go up the value chain based on cutting-edge innovations but will at the s...

18Aug

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Industry | Naushad Forbes: Firing India Inc’s ambition

This special issue of India Today asks: How can India become a global giant? That eventual outcome is not in doubt. If we keep growing at the 6.5 per cent we have averaged for the past 30 years, we will soon be one of the three largest economies in the world. We will go on to be a huge economy by 2047, by dint of having the world’s largest population. But we will not yet be rich—as an upper-middle income country, we will be well below today’s developed world. To do better, we must place manufacturing and the ambition of Indian firms at the heart of development.First, a word about policy: this is not an article arguing that the government must do a list of things. The state’s role, in my view, is to limit itself to only those things that only it can do. In manufacturing, the state should pr...

18Aug

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Industry | R.C. Bhargava: Making a global mark

Government policies can result in slowing manufacturing and making it non-competitive. They can encourage unethical management practices. This is apparent from the outcome of industrial policies framed after 1950. The abolition of the licence and control system in 1991, along with the creation of conditions to facilitate competition, brought about some positive change. However, it was only after 2014 that the government implemented policies that removed most of the obstacles to competitive manufacturing. The ease of doing business programme, introduction of GST (Goods & Services Tax), trusting the private sector to lead manufacturing growth, fiscal prudence and several other reforms have created a favourable environment for the growth of manufacturing activity. The budget of 2024 carri...

18Aug

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Education | Turning a new page

India boasts a storied legacy of educational excellence, harking back to the ancient institutions of Nalanda and Taxila. Even today, it has one of the largest education ecosystems in the world, encompassing nearly 1.5 million schools, more than 40,000 colleges and over 1,000 universities, which together serve nearly 300 million students.However, this quantitative advantage has not translated into qualitative success. For instance, while India boasts a Gross Enrolment Ratio (GER) of 108 per cent for primary education (check the accompanying graphic for why it exceeds 100 per cent), it plummets to around 79 per cent for secondary education. In contrast, China maintains a 100 per cent GER for primary education and 89 per cent for secondary education, reflecting better student retention. India...

18Aug

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Education | Pramath Raj Sinha: India as a global study centre

Big is not always beautiful. With over 58,000 institutions and 43 million students, India’s higher education system is one of the biggest in the world. But the overall perception of our colleges and universities is poor and, indeed, our institutions are plagued by issues of low quality. Addressing these deficiencies requires a three-pronged approach focused on systemic change. Without this, India cannot become a global hub for higher education; we need to become high-quality locally to be perceived as an attractive centre internationally.Currently, there is a huge disparity in the quality of education. While prestigious public institutions like the IITs and IIMs and private ones such as Ashoka University and ISB take pains to maintain high standards, most colleges and universities struggle...

18Aug

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Education | Rukmini Banerji: Crafting schools of the future

Sometimes in the month of August, even during heavy rains, there are days when the sky is bright blue and the sun shines brightly on the treetops. On such days, it almost feels that you can see till far, far away. Today is a day like that. Let us gaze into the distance and in our mind’s eye, imagine what a school can be like in the future.Building foundations: The school for small children has four rooms built around a big internal courtyard. Each of these rooms has doors that connect into their neighbouring rooms. Wide verandas wrap around the school building on the outside. The rooms are brightly painted; children’s work decorates the walls. Shelves with colourful books and interesting toys and materials invite one to touch, smell, see and use. Although this is a school exclusively for c...

18Aug

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Education | Manish Sabharwal: Our new tryst with destiny

India’s twin challenges of politics and economics involved two risky experiments in 1947. The political one—votes for everyone—has worked out spectacularly, with India creating the world’s largest democracy on the infertile soil of the world’s most hierarchical society. But the economic one—embodied in the Avadi resolution of 1955 where the Congress session adopted a socialist economic path—failed spectacularly because it sabotaged mass prosperity by confiscating the entrepreneurial freedom to create jobs. Consequently, our labour is handicapped without capital and our capital is handicapped without labour. Our unfinished journey from national independence to mass prosperity requires policy innovation at the intersection of jobs and skills. The recent budget has made a great start, but ref...

18Aug

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Technology | Speeding on the digital freeway

At the Tata Institute of Fundamental Research (TIFR) in Mumbai, work to build India’s first quantum computer is nearing completion. When ready, this small-scale quantum computer will be a significant milestone for TIFR’s Quantum Measurement and Control (QuMaC) lab, established 12 years ago to address fundamental challenges in building quantum systems. Dr R. Vijayaraghavan, who heads QuMaC, sees the project as a crucial first step for India that will “allow us to get into this game”. The project they are working on, in collaboration with the Defence Research and Development Organisation (DRDO) and Tata Consultancy Services (TCS), involves designing key components, such as the quantum processing unit, electronics and software—each of which presents multiple levels of complexity.Tata Insti...

18Aug

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Technology | Kris Gopalakrishnan: Leading the world of infotech

In my book, Against All Odds, I chronicled the remarkable story of the Indian information technology industry. From just one computer in the country in the mid-1950s, we have come a long way to become the IT capital of the world. In 2024, this industry brought in over $250 billion (Rs 21 lakh crore) of revenues and contributed 7-8 per cent to the country’s GDP. As we stride confidently into the new digital age, the prospects of expanding this digital economy are bright and immense. I will discuss five such pillars that can support this growth:1. Opportunities for revenue expansion: The first pillar focuses on leveraging and scaling up India’s existing strengths in IT services and engineering R&D. As newer technologies such as Generative AI, 6G and industrial metaverse take centre stage...