Changing times

The winds have changed for the Indian economy and it is a good time to upgrade the national approach to growth. Business confidence has bounced back, industrial output is up and the new government is promising pro-growth policies. India is at the cusp of remaking its economy in the post-slump world.

However, the world has changed during the past few years. Globalisation has lost its momentum, as the developed and the emerging economies lick their wounds after battling the financial and fiscal crises. Export-led growth of the leading emerging economies has been stunted and the competition for global investment and trade has expanded. India’s global brand has also diminished due to policy contortions on FDI, retrospective taxation and clearances for projects.

In fact, India has received a strong reminder to adapt to the changed economic conditions from the latest Global Competitiveness Index (GCI). India has slipped 11 places during the past year and is now ranked half way down the ranking of 144 economies, 43 places below China. This is quite a drop from the 49th rank India got in 2009.

India’s competitiveness has suffered on several counts, but the most on institutional quality and market efficiency. While India’s global competitors have made it easier to do business and embraced foreign capital, India seems to have lost its way.. India’s navel-gazing is evident from its 121st place in the global ranking on technology readiness. A key reason for that is tardy investment in digital connectivity, which is a key productivity driver in the modern world. However, the most striking reminder from the GCI report is that India ranks 98th on health and primary education parameter and that the life expectancy in India is second-shortest in Asia, after Myanmar. This should serve as a wake-up call to India .

If one were to focus on the healthcare sector, India continues to carry on with obvious anomalies. Despite having a huge public health programme, the majority of Indians are desperately short of acceptable medical care. Private healthcare remains fragmented and divided between the extremes of shoddy and cheap and excellent but expensive. India is producing about 50,000 generic doctors a year but less than 15,000 specialists, making the specialists rare and expensive. The hospital sector is growing but the supply of nurses and technicians is lagging, as regulations restrict those functions to mere tasks and disallow career growth. India urgently needs to respond to create a healthcare ecosystem where universal healthcare can become a reality and not just remain a slogan.

Education and skill development is another area for fundamental policy and investment action. It has to be a priority given India’s demographics. With the majority of the population being young, it is a once-in-history opportunity for the country to upgrade almost entire population at one go. Unfettered investment, and not pious sentiments, is going to build the pipeline of informed, articulate and skilled students from the primary to the university levels. India cannot afford to end up with millions of semi-educated and semi-skilled people just because of qualms about profits.

There are many more areas where India can reinvent itself . Physical and digital infrastructure, smart urbanization, agriculture’s industrialization and liberalization, technology adoption and development, open and participative governance are among the areas where India needs to change .

The past decade’s economic boom-bust has taught us that if change is not managed, the change will hurt.

The writer is DG, AIMA