India is at a decisive turn in its existence. All political coalitions in the fray know that of the approximately 820 million people casting their ballot, a considerable figure of 23 million—approximately the population of Australia—are first-time voters. Their aspirations are vastly different from what they were even five years ago. Therefore, the new government’s approach, too, needs to be different from that of its predecessors.
I’d like to suggest two key prescriptions: First, create an ecosystem conducive to fostering first-generation entrepreneurship; this, in turn, can generate millions of job opportunities in the new sectors they venture into. Second, focus on the untapped masses of consumers in rural India to create new domestic markets. The country cannot aim for inclusive growth if the aspirations of rural India are not respected and integrated into the development narrative. Exploring India’s domestic potential can fuel India’s growth along the lines of the Chinese economic model of the past decade.
I have often been asked why I consistently evangelise fostering an environment that nurtures first-generation entrepreneurs. Most governments since Independence have focussed largely on capacity building or skill development to create livelihood opportunities as key measures for poverty alleviation. While these need to be continued, we also have to produce fresh avenues for first-generation entrepreneurs to emerge and develop. Sustained employment generation requires out-of-the-box thinking, breaking into new markets and creating new masses of consumers.
The new government needs to create plans for nation-building that span at least 10 years (optimistically assuming their vision and implementation will give them at least two terms). Brave policy calls need to be taken immediately to help realise the initial impact after four to five years of sustained intervention. Similarly, creating a strong and friendly system that encourages enterprise needs the commitment to stay the course.
The first course of action would be an urgent overhaul of the regulatory environment in the country. First-generation entrepreneurship cannot grow in a regressively tight environment. Few know that the IT revolution of the ’90s that led to the massive boom in the sector was because the then government in power had made IT among its top priorities. By easing regulatory and administrative road blocks, IT entrepreneurs were allowed to grow unfettered. The government also relaxed import/export duty on technology, gave tax breaks and tax holidays for extended periods, and allocated land and resources for establishing IT parks—in all, a highly conducive environment that encouraged entrepreneurs to venture into thus-far uncharted territory. Once the IT sector had expanded, these sops were phased out. This pattern of proactive intervention needs to be implemented in other sectors too.
In this context, the next crucial question is—where are the new markets? There are several sectors with growth potential. The government can begin by opening up consumption sectors across board. With unnecessary focus and debate on FDI in retail (so irrelevant considering the challenges facing India and we certainly do not need to keep appeasing the West), we have veered off the crucial policy focus on other consumption sectors. The government has to decide whether it wants to attract foreign investments elsewhere. I believe there must be clarity in policy decisions and the resolve to stay consistent and unwavering on them.
Our population ensures a massive consumer base; consumer appetite is humongous too. Demand, in fact, far outstrips current supply. New markets can be created within sectors such as health care and nutrition, food processing as well as other consumption verticals.
Similarly, within the impact sectors, interventions can be encouraged in water and agriculture. Entrepreneurs can be incentivised to innovate and cater to an untapped base of customers. Social development can achieve profitability. Commercial viability, in turn, will ensure scale and sustained growth. One key segment that I am certain will revolutionise life in India, impacting the ‘what’, ‘when’ and ‘how’ of our purchases and consumption, will be the internet. If internet penetration expands via broadband and with high bandwidth, consumption in both urban and rural India will witness phenomenal growth.
There is a school of thought that regards India as a unique case study—a Waterloo of several tried and tested global marketing and consumption strategies. There are many who debunk this theory too. I argue that even if it holds some truth, there are ways to make it work in our favour through indigenous innovations that match local needs with available products and technology. In our black-and-white understanding of Indian markets, we overlook the big areas of grey.