Policy makers and industry should now focus more on the execution of plans and addressing structural issues than merely announcing incentives and sops to encourage economic growth in India. While the first wave of economic reforms has led to GDP growth, the real challenge now is to make the growth more broad-based to cover sectors like agriculture, education, and healthcare.
This was the sum and substance of the panel discussion on ‘Reforms: Time for Version 2.0’ moderated by Raghavan Srinivasan, Editor, Business Line .
“When 50 per cent of the world's stunted children live in India and if indeed there is 15 or 16 per cent reported unemployment then these are not good statistics. In economic terms, yes, we've got a pretty decent rate of growth of seven and a half a per cent over the last decade or so, but, relying merely on GDP growth may not be enough as it just measure one sliver of a nation's development,” said Vinita Bali, Independent Director and Former Managing Director of Britannia Industries Ltd.
Incentives and intervention
Keshav Murugesh, Group Chief Executive Officer, WNS Global Services, said the dependence on Government incentives and policies should be minimal. “We didn't wait for sops and reforms. We created a business out of what no one wanted to do. Today there are 17,000 companies, 1.3million employees directly involved, $37 billion of revenue,” Murugesh said talking about the growth in the Business Process Outsourcing sector.
BVR Mohan Reddy, Founder and Executive Chairman, Cyient, said incentives alone are not going to help industries grow. “We need infrastructure and talent. There’s a disaster waiting to happen in the education space. There are 16.87 lakh seats available across engineering institutes in the country of which only 51 per cent were taken by students and the employability is not more than 31-32 per cent. That's a big disappointment,” said Reddy. “There has to be some intervention here starting with improving the faculty,” he added.
Creating jobs
Srinivasan said while the basic philosophy behind the first wave of reforms was to ensure the share of manufacturing in GDP grew substantially, which in turn created more jobs, the real problem is being faced by the agricultural sector in terms of remunerative pricing for farmers.
Agreeing to this observation, Bali said, “We are spending too much time solving the problems of the rich. The software industry, which we are all proud of, employs 3-4 million people, but there are 35 million weavers who have no voice.”
Commenting on the policies to encourage start-up ecosystem, Murugesh said to focus on start-ups is good as it indicates the shift in thought from looking for a job to creating jobs. Bali said the focus should shift from start-up to scale up to fundamentally change the ecosystem.“We need to build capabilities that deliver on a plan. Otherwise, we have money chasing start-up and not scale-ups due to which capital productivity is low. We also have to start thinking in terms of return on labour just as much as we think about return on capital.”