The policies we should prioritize to truly transform our economy

Context: Government must ensure sustained growth that is inclusive, sustainable, regionally balanced, and primarily driven by the private sector, with the government acting as a facilitator.

Government’s reforms to ensure sustained growth:

• Manufacturing and exports:
  • Production-linked incentive (PLI) scheme: will promote export and manufacturing.
  • Changes in the definition of micro, small and medium enterprises (MSMEs): allows firms to undertake greater investments without losing the status and the benefits.
• Reforms in labour laws: will encourage companies to expand employment.
• Reforms in agricultural marketing: combined with a ?1 trillion agriculture infrastructure fund will improve links between farmers and markets, enabling them to earn higher returns.
• Mobilization of resources:
  • Commercial coal mining: will improve India’s domestic competitiveness and reduce imports.
  • Physical infrastructure: The government has planned ?100 trillion in investment.
• Development of Human capital:
  • Health: Under Ayushman Bharat, the creation of 150,000 health centres, and Poshan Abhiyaan to combat malnutrition.
  • New Education Policy: backed with adequate funding and a robust monitoring mechanism, based on outcomes, to drive human capital development.
• Ease of Doing Business: India jumped 79 positions in the World Bank’s Index (since 2014).

Challenges:

• Late catching up with emerging technology: would result in India entering in sunset industries, rather than capitalizing on sunrise sectors of growth, further dragging our competitiveness down.
• Issues with Ease of Doing Business: including high costs of logistics, overlapping regulations, multiple clearances and delays in decision-making.

Way forward:

• Lead the revolution in the field of clean, connected and shared mobility and energy storage sector:
  • Advanced chemistry cell batteries and solar photovoltaic equipment are areas where India must become a leader to enable the transition to a green economy.
• Moving from a data-rich country to a data-intelligent one: By exploiting the opportunities created by the Fourth Industrial Revolution, with technologies such as Artificial Intelligence (AI), blockchain and the internet of things.
  • NITI Aayog’s National AI Strategy notes that India is well placed to become a leader in the application of AI in social sectors.
• Principles of the circular economy: should be followed by the incumbent and new industries.
• Focusing on the development of the ‘social capabilities’ or ‘social infrastructure’: Level of human capital development is an important determinant in the adaption and diffusion of new technologies.
  • It has played an important role in the development of South Asian nations like Japan and South Korea.
• Developing physical infrastructure: that has multiplier effects; g. Reducing logistics cost by promoting multimodal transport, digitization of port, and completion of freight and industrial corridors.
• Improving efficiency in government processes: States must take the lead in instituting land and labour reforms, complementing the PLI scheme, to achieve size and scale in manufacturing.

Conclusion: India must encourage industry, innovation, and technology to make the most of new opportunities created by recent reforms.