The global supply chain is not different from the food chain context that we hear in our environment textbooks and discussions every now and then. The lower organism ultimately gets consumed by the organism placed higher in the food chain. In pretty much the same way, the country that fails to recognise its potential only increases its capital expenditure, thus creating a never-ending deficit that no surplus fund from IMF can abrogate!
Indian dreams have been realised in the most unique ways. Though we may not agree with each other on many policies, developments and changes, we know that India has grown by leaps and bounds – its citizens have grown. India of my dream may not be the same that as yours, but the dreams that we are dreaming are parallel and recurrent. Today, while the notion of the sixth mass extinction is gaining its grounds more prominently than ever– with the global economy going for a roller coaster ride due to the COVID-19 pandemic– one can’t deny but agree to the fact that this year we’ve faced too many curve balls simultaneously.
When the going gets tough, the tough get going – this has always been the case with India. We rise from the worst falls only to emerge higher and stronger. We know our strengths and our weaknesses. India houses a plethora of talent and hardworking people in the form of craftsmen, weavers, handloom makers, carpenters, painters, agriculturists, scientists, technicians, builders and masons.
Today, with the advancement in technology, easily available funds under various governmental schemes and a demographic dividend of 62.5%, which, as per the Economic Survey 2018-2019, will peak around 2041, when the share of working-age population, (i.e. 20-59 years) is expected to hit 59%. With two decades in hand, more people in the labour force and fewer children to support, India has a window of opportunity for economic growth if the right social and economic investments and policies are made in health, education, governance and the economy.
The flourishing MSME sector has been acting as a catalyst to increase the over-all exports in the country, true or false? True, if we play with the above statement a little and replace the ‘has been’ with ‘has the capability’. The MSME sector receives aid from the state as well as the central government. In our current annual financial budget also, a whopping Rs 7,572.20 crore has been allocated for this sector. Contributing almost 28% of our GDP, the MSME is not only a strong manufacturing output unit, but also showcases the dire importance of people in the growth of an economy.
With all the positive notions around this sector, why have we not been able to take it to a global scale? The MSME Development Act, which was framed in 2006, is pretty much untouched. It’s been over 13 years and it certainly needs a lot of changes. To name a few:
Many businesses and startups are attracted towards other countries mainly because of the ease of doing business and availability of better infrastructure, along with other conducive factors related to credit availability and risk mitigation policies. The main goal that has always been advocated should be to boost liquidity for MSMEs. With the Make in India ideology, we are marching in the right direction.
The scheme has given a great impetus to the growing talent in India — low income groups are coming forward and entrepreneurship is being realised in a way that was never possible before. The progress in socio-economic conditions looks promising. With khadi and village industries flourishing, in addition to the recent campaign started by PM Narendra Modi ‘Vocal for Local’, the promise of bettering the livelihoods of lacs of local artisans and talents stands on strong grounds.
The only factors that remain behind are India’s export figures. Our country’s underperformance in exports is mainly due to the following reasons:
As India makes its way towards a five trillion-dollar economy by 2024-2025, simplifying and maintaining a business-friendly regulatory environment is essential. The EODB policy that we follow needs to consider the above shortcomings in its bracket — after all, EODB is the key to entrepreneurship, innovation and wealth creation.
As of today, India stands at the 63rd position among 190 countries in the World Bank’s Doing Business Report 2020. Though India has improved in seven out of 10 indicators, which are kept in mind while ranking a country, we still lack in guidelines such as ease of starting a new business, registering property, paying taxes and enforcing contracts.
As per a news report by The Economic Times, “The EoDB index pertains essentially to two jurisdictions, Delhi and Mumbai, to gauge the overall national business environment.” We need to expand our horizon and take EDB nationwide, apart from strengthening our policy framework so that we can boost entrepreneurship globally. This would, in turn, generate better employment opportunities, improve tax revenue for the government and give an adequate rise to personal income as well. This will also regulate the savings along with spending power at the hands of the citizens.
India is a land of varied religions and regions, where a large population acts as boon and a bane in the road to development. This can be particularly seen in several frauds that happen under the properties selling and buying mechanism. It is then, not surprising at all if we still lack in registering property criterion under The Doing Business Report. The problem, though complex, can be solved by studying the approach laid out by Azerbaijan and China for improving their rank in ‘registering property’ area.
A path of public private partnership is more important now more than ever to increase the flow of FDI in India, and the best way is by propagating and broadcasting more and more CSR initiatives, under which lucrative offers and redemptions are provided to the private players that help bring in the transformation in India – be it in the MSME sector, or increasing the export of goods produced in India or suggesting ways to improve the EDB.
Under the CSR initiatives, we can settle aside a chunk of money that would go into the research or development of digital initiatives in the form of apps or other programmes to overcome the obstacles that we face in the country – ranging from an emergency distress app for people in tight situations, educational apps, etc. Research and Development wing almost always forms the backbone of any good organisation. It is here where inventions are made that attract new conglomerations, high returns and profits.
Similarly, the CSR wing also forms an important component in the growth and branding of a company. Currently, companies (with set prescriber turnover or overall valuation as per the CSR Act) are provided to contribute 2% of their profits earned in the last three years under the CSR funds, but how much of it is worth mentioning? More than the responsibility, these initiatives have become a ritual to avoid getting penalised in case of frauds.
Why can’t then we make it more elaborate and form it as a sub section of the R&D department so that the innovations (in the form of ideas, approach, techniques, products) can be grouped together for social as well as economic improvements? After all, if we look deeply, social and economic are the sides of the same coin.
The PPP model is not alien to us; the advent of private players in the aviation industry earlier and now railways is expected to generate more profit and revenue for our government along with bettering the producer-consumer relationship. With its wider coverage in our economy across varied sectors, it would help strengthen the infrastructure, ensure risk sharing benefits, ensure optimum allocation of resources, generate wider employment, bolster innovations and brand value of our country and attract FDI.
The Kelkar Committee has made robust recommendations to re-energise the PPP architecture in India, which, if followed religiously, will provide India a shot not just at regaining its former glory in the field of PPPs, but also ensuring their long-term viability.
Such reforms are necessary to build a strong economic base, specially now more than the past, since the economy has been deeply affected by the ongoing pandemic and once this is over, we also need to look into the climate change that is eating up the entire world like a termite.
The PPP model needs to be taken seriously to bolster growth and development, lessen the imports and increase global exports, flourish and modernise the MSME sector, take Make in India global with supply chain industry, and nourish the dream of a truly ‘Atmanirbhar Bharat’.
Note: The article was originally published here.