The Current Needs Of The Indian Economy

 

Professor Bhagwati Prakash Sharma was recently invited as a Guest Speaker at a seminar held by Sewa International in Mumbai. Prof. Sharma is an expert on Management and Global Trade Scenario who has been participating and studying the MTAs in the bi-annual ministerial conferences of WTO ever since the launch of Uruguay round of talks for the formation of WTO.

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I attended the seminar to get some insights on ‘Sustainable and Inclusive Growth’.

As per IMF, India is the World’s Third Largest Economy by Purchasing Power Parity and sustains the second largest population in the world (17.8 % of the world population). Though the contribution of the manufacturing sector is currently lower than what is expected to sustain the present population, according to the IBEF the manufacturing sector of India has the potential to reach USD 1trillion by 2025 and India is expected to rank amongst the top 3 growth economies and manufacturing destinations of the world by 2020.

Professor Sharma believes that Innovation and Entrepreneurship in India is an essential step forward in the current economic context.

India uses technologies owned by developed countries hence most of the funds generated in India are spent in the form of Royalties. Therefore, we need to develop our own competent technologies in order to ensure that a higher proportion of the generated funds remains in the domestic economy. Another advantage of developing our technological expertise can mean that we export our technology at a lower price than the developed countries do.

A powerful example Professor shared with the audience was that of Electric Cars with Artificial Intelligence, that will be in high demand in the near future. Countries like China are working effectively towards such innovative breakthroughs. If the Indian economy want to survive this new phase in the automobile industry the need of the hour is to work towards developing the necessary technologies and to ensure effective application of the same at affordable rates, before global giants takeover the market share of the domestic firms and claim majority of domestically generated funds in the form of profits and royalties.

It is also important that the Indian Consumer Realizes the importance of purchasing not only Made In India but Made By India products. This is how the domestic industries will get an incentive to invest in Research and Development and be able to Provide Premium Quality products.

The Current Market scenario with Patanjali dealing in toothpastes and detergents, is an apt example that was shared in the seminar. Patanjali captured a large market share off the market shares of domestic firms dealing in similar products, it had very little impact on the share of Large multinational competitors. This means that the consumers who actually chose Patanjali’s products over their regular preference, were already buyers of domestic products in the first place, there was negligible tilt towards domestic products by the customers of foreign manufacturers. This hampers growth and innovation in domestic industries.

Thus there is a need to Encourage and Nurture startups and entrepreneurial ventures in the current climate of Deglobalization that has commenced with Brexit and changing Economic Policies of United States. India is the 3rd largest startup ecosystem and We need to cope with this changing climate and use it to our advantage.

There are numerous examples of successful startups that Prof. Bhagwati Prakash Sharma shared with us one of them being the the120 employee company with an expected Rs 35 million turnover this year that was started by Rahul Gupta and , AMUL that emerged from a powerful socio-economic movement, which shook the British bureaucracy.

The professor also stressed that though the Farmer’s produce i.e agriculture sector, had a very low contribution in the GDP, farmers are one of the most significant consumer category, since whatever reaches as income to their homes is ‘Spent’ on a number of manufactured products and essential services hence generating demand for the 2 major sectors in our economy namely- Secondary Sector and Tertiary sector. Hence, it is absolutely important to understand the relevance of this category of consumers.

He explained that much of Food Produce is in surplus in many regions and the government is doing what it can by giving the excess of MSP(minimum support price) over the Price (price the produce got sold at in the market) in cash to those farmers who didn’t receive MSP, but it is very important to find new alternatives for example adding value to the surplus produce by generating by-products that could have a substantial demand in the market.

During the round of Question and Answers he made some note worthy points on the concern on effects of growing population on the Indian economy, he emphasized on 3 important points:

  1. Population Policy (Not Population Control)
  2. Quality Of Education
  3. Income

He asserted on the need of an effective population policy. He also said that quality of education is an absolute necessity to ensure that India’s population becomes its strength. For example The No detention till class 8 policy in India ( that was supposed to be similar to every student succeeds act(ESSA)  in the US) ensured that each child will be promoted to the next grade regardless of their semester scores, this he said , could’ve been better implemented if the students were encouraged  to improve their performance and academic record by conducting extra lectures for them as was done under the ESSA in the US. There are a lot of ways through which quality of education can be improved, student involvement increased , and syllabus made more practical and interesting with the joint effort of educational institutions and Academic boards. The number of students in India’s schools and colleges surpasses the populations in many individual countries, one can imagine the kind of potential our country will possess in the presence of quality education. Another point he stressed on was increasing the proportion of the middle income group in the country.

He concluded the session by acknowledging the importance of Angel Funds, Venture Capitals, Entrepreneurship Incubation Centers in India.

It was a highly insightful and interactive seminar that made me appreciate the significance of entrepreneurial ventures and the need of more domestic investors willing to invest in domestic startups. The 3 pillars on which the future of india’s population depends on reflects how this environment of innovation and economic growth can be further developed and sustained.

 

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