G20 Summit in Delhi: From Moody’s to Morgan Stanley the outlook has been favourable and fresh reasons for hope dished out for India. Equally uplifting during the G20 year were orations by global and Indian business leaders.

As India enters the last leg of its G20 presidency, there could not have been a more opportune time than the year gone by to showcase India and sell its growth story to the world. That it finds itself in the spotlight in a world realigning the global supply chain geography has only added a sheen of new opportunities.

From Moody’s to Morgan Stanley the outlook has been favourable and fresh reasons for hope dished out for India. Equally uplifting during the G20 year were orations by global and Indian business leaders – from Hans-Paul Bürkner, the global chair emeritus at the Boston Consulting Group to N Chandrasekaran, the chairman, board of Tata Sons and Nandan Nilekani, co-founder and chairman, Infosys. They were among the several other A-listers from the Indian industry.

At a recent Express Adda, Ruchir Sharma, chairman, Rockefeller International, founder and chief investment officer at Breakout Capital said India, at the moment, was attracting a fourth wave of foreign interest. The first wave being between 1991 and 1994, the second between 1999 and 2000 and the third in the mid-2000s. This time what was different was that this interest wave was catalysed by a dis-enchantment with China.

India and the 4Ds

On display, a country ready with its levers of  growth anchored on 4Ds – Digitisation, Demography and Decarbonisation that despite a Deglobalising world was expected to contribute to as much as 15 to 16 per cent of the global growth in the next decade, which is more than double its current levels. But then, it takes a lot more than just slouching into a new world order or to some the Emerging World 2.0. To compete and thrive, India needs to effect suitable changes internally to ensure its levers of growth deliver.

The endogenous story

It is perhaps with good reason that Gopal Srinivasan, founder, chairman and managing director of TVS Capital Funds says, “while India leveraged the opportunity of G20 to showcase India to the world very effectively and identified the agenda items that resonate widely, now is perhaps the time to discuss the endogenous issues that will be required to realise the growth expectations.” Srinivasan, who has looked closely at the Indian digital journey, feels it is the evolving endogenous story that will now be watched even more eagerly. He sees hope in what he calls the  “democratisation of innovation” that has happened in India. By this, he means, innovation is not just confined to startups or private sector but even regulators, government and public institutions are active participants in unleashing the power of innovative interventions. The examples that he points to include UPI (Unified Payments Interface), OCEN (Open Credit Enablement Network) and perhaps in future NFIR (National Financial Information Registry).

The investment rate

The task ahead is clearly cut out. Dr C Rangarajan, economist and former governor of the Reserve Bank of India feels, focus ought to be on three elements – One, the domestic investment rate back, which needs to be raised from 29 per cent at present to 33 per cent. This, he feels, is crucial to stimulate growth. Second, aim to be in the forefront in the emerging areas of technology globally (like artificial intelligence) that are emerging as the drivers of new changes or seem critically important for industrial growth. This would be important to be able to maintain a forward stance globally.

Critical supplies

And finally, he feels, taking measures that safeguard the economy from disruptions in the supplies of certain critical supplies or components – a point that seems to resonate with the government’s atmanirbhar stance. In an impassioned speech on August 27th at the Business 20 (B20) summit of the G20, India’s external affairs minister S Jaishankar said “the endeavour now is to seek a re-globalisation that is more diversified and democratic. Where,” he says, “there would be multiple centres of production, not just of consumption.” In an apparent learning from the snarled supply chains experienced globally, he says, “we cannot be at the mercy any longer of a few suppliers, whose viability can come into question by unanticipated shocks.” A move to attract mobile phone and chip assembling and perhaps eventually also chip-making to India would be in that direction.

Also, Dr Rangarajan has maintained for long that if India is to get counted among the developed economies on a per capita income basis then India will need to maintain a tempo of 7 per cent GDP growth per annum consistently for two decades.

Policy enablers

Others have pointed to policy enablers such as ensuring that the four labour codes that look at wages, industrial relations, occupational safety, working conditions apart from social security, which were all passed by the parliament but put on hold, get implemented.

Manufacturing 

Also, so that there is emphasis on manufacturing, which economists often see as a real driver for higher employment, its share in the GDP has to increase from just about 15 per cent to 20 per cent and for that again there would be need for policy enablers such as changes in the norms in relation to the Bilateral Investment Treaties (BIT) that stipulate that recourse to arbitration abroad for disputes arising out of a BIT is possible abroad only after the exhaustion of local remedies (which many argue make be a long drawn affair). This could act as a trigger for global majors to consider looking at India not just for assembly but also for manufacturing.

Even on de-carbonisation, given that most companies will need capex to make the transition, getting in place policy incentives for de-carbonisation such as perhaps double depreciation benefits or tax credits. These and other internal changes would be crucial.

Digitisation & the vulnerabilities

On digitisation and the digital depth that many seem excited about for India, it may still be too early to claim complete success for the systems need to be made more secure for the end borrower. For example, as articles by welfare economist and activist Jean Dreze have pointed to the vulnerabilities that poor could be exposed to with Aadhaar -enabled payment systems where the poor bank customer would be sharing his or her bank details and providing the biometric authentication to a business correspondent (very loosely a bank agent) equipped with a biometric point-of-sale device (a sort of micro ATM).

Financing – Form versus quantum 

India has also been lauded for using the G20 to place crucial issues as agenda items – be it around climate change or in seeking to forge stronger ties between Global South and Global North and mooting innovative financing options and reforming the multilateral system to ensure financing of actions on climate and sustainable development goals (SDGs) though some argue that it is not so much the form of financing but the quantum of financing, which really needs to go up.

During the year of the G20 presidency, India unveiled its multidimensional poverty index estimating that 135 million people, that is close to 10 per cent of India’s population had escaped poverty between 2015 and March 2021 or that India is witness to a steep decline in poverty headcount ratio from 24.85 per cent in 2015-16 to 14.96 per cent in 2019-21. Though this was not without triggering yet another round of debate among economists and statisticians whether poverty needed to be viewed as a measure of deprivation, as this report was attempting to portray or to look at it as an income concept, was the case thus far.

Income per person

Then, there has been an India awaiting its ascent from the fifth to the third largest economy in the world. Already, at over 6 per cent growth in GDP, it is growing faster than the two developed countries ahead at the moment – Germany and Japan, both trudging along at around 2 per cent. But then, this was again a reminder of the long distance that India had yet to cover in ensuring that the income per person in India was in line with the rich nations considering that in per capita terms India was still ranked (2022) 149 out of 194 countries.

https://www.financialexpress.com/policy/economy-g20-beyond-from-showcasing-india-externally-to-readying-it-internally-for-a-new-world-order-3227052/