India Economy

Soft infrastructure is the need of the hour

Eesha Kunduri Ajai Sreevatsan EESHA KUNDURI | Updated on January 13, 2018



Alongside building power plants, roads and ports, India should focus on skilling its HR

Around the time the East Asian Tigers (Singapore, Hong Kong, South Korea and Taiwan) took off in the 1960s, public investment rose rapidly in two thrust areas: physical infrastructure creation to smoothen capacity and logistical challenges, and a massive effort to skill and educate the working population.

As India tries to kick-start rapid and sustained economic growth, our focus seems to be more on building physical structures.

In the current Budget, India allocated nearly ₹4 lakh crore to build roads, railways, and to ramp up key sectors like energy and telecom. Yet, when it comes to education, skilling and nurturing human capital, it is pointed out that a mere 2 per cent of India’s workforce is skilled.

Is this because ‘soft’ infrastructure capabilities like upskilling of the existing workforce, educating incoming workers, focusing on educational quality and health services have fallen off the priority radar?

While the country is paying long-overdue attention to creating a network of ‘hard’ infrastructure like power plants, roads and ports, is it neglecting the people and institutions who will ultimately be the ones sustaining the infrastructure and driving their use as facilitators of commerce? The fallout of such neglect is rather apparent. In several recent surveys conducted by the Japan Bank for International Cooperation (JBIC), India has consistently been ranked at the top of the list of countries with the most promising business opportunities.

Yet, the number of Japanese companies actually operating in India is just 1/7th of those present in a smaller economy like Thailand and less than 5 per cent of the number of firms that have a base in China. Will this gap between India’s promise and reality be solved only by building physical infrastructure?

Quality of human resources

Addressing this very issue at a recent workshop on ‘Quality Infrastructure: Japanese Investment in India’, R C Bhargava, Chairman of Maruti Suzuki India, suggested that physical infrastructure will provide only part of the answer, and we may be missing out on the importance of ‘soft infrastructure’, especially the quality of human resources.

This, he said, was essential to ensure that the full benefits of quality infrastructure were realised over its entire design life, as well as for expanding manufacturing, a key objective of this infrastructure investment. Japan’s post-war competitiveness despite formidable odds, he stressed, was a result of the motivation and capabilities of its people, and a collaboration between government and industry to develop ‘soft infrastructure’.

For upgrading in global value chains, and to achieve manufacturing competitiveness, Indian industry needs to demand much more investment from the government and from themselves in developing the skill and capacities of the workforce.

There are a few examples like the Champions for Societal Manufacturing (CSM), formerly known as the Visionary Leaders for Manufacturing (VLFM). Founded in 2007, the initiative brings together members from the industrial, academic, and policy-making world to enable managers, particularly those from small and medium enterprises, to think creatively and innovatively about business models, processes, and products.

Through the programme, substantial improvements in quality and productivity of the participant managers and their firms have been seen over the years, as Sarita Nagpal from the Confederation of Indian Industry (CII) shared at the workshop.

Such initiatives that complement investments in physical infrastructure are, however, woefully few. Why then is the focus on soft infrastructure absent, despite the thrust on Make in India and Skill India that is directed at boosting employment, employability and skills?

The Make in India initiative, for one, lays emphasis on expanding investment in manufacturing across sectors but pays scant attention to human capital or skills training that is at the heart of creating an industrial workforce.

The Skill India Campaign, on the other hand, appears to be based on a limited perception of skills and training — one that is premised on creating a workforce with employable skills. Initiatives like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the Skill Loan scheme extend financial rewards and loan support respectively for young people to undertake skill development courses. However, creating this large workforce, or training 40 crore people in the next five years is a limited world view of competitiveness. We need institutions and programmes that envisage much more than trained or skilled workers; India needs to be able to create a vibrant, creative and critical-thinking workforce that can partake in shared development visions.

That calls for sustained investments in soft infrastructure.

Eesha Kunduri is a Research Associate at the Centre for Policy Research, New Delhi and Ajai Sreevatsan is with the ‘Urban Fellows Programme’ of the Indian Institute for Human Settlements, Bengaluru

Published on March 12, 2017

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