CONTRA VIEW: Financial inclusion is the key

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For the last two decades India has not only accepted but actually revelled in being labelled an “emerging market”. India felt pleased and privileged by this tag, which seemed to signify that it had somehow ‘arrived’.

Strangely enough, the country’s sense of pride came not from being an industrial powerhouse, financial centre, or innovation capital. It was perversely derived from being seen as a ‘market’.

The problem is that markets fluctuate and can be a haven for merely temporary investments. As just a ‘market’, India was consigned to remain the chosen destination for everything the rest of the world produced in excess. Therein lay a deep disconnect — consumption can only go hand in hand with production. Surely India could not have hoped to emerge as a global power on the back of being a mere market, one that ran a trade deficit with over 100 countries!

PM’s ‘Make in India’ initiative will transform the nation

Aspirations 

Clearly, India’s self-image needed a re-boot. This rebooting of India’s 1.3 billion aspirations was conducted by the Prime Minister on the 15th of August last year. He did it with characteristic simplicity, by a simple call for “Make in India”. A call he hoped, would catalyse a seismic shift in India’s image of itself.

The world has changed since the Financial Crisis. Economic growth cannot be taken for granted. According to the IMF, global growth will continue to be under four per cent for some years. Even this nominal growth will not come without innovation to increase productivity, enhance quality and cut costs. And importantly, the race to be at the forefront of global innovation has intensified. India’s economy and enterprises must be prepared to face increasing global competition. “Make in India” must therefore attempt pushing Indian industry through global competition into a tsunami of innovation. It must not be misappropriated for primitive protectionism or misunderstood to imply insular industrialisation.

The “Make in India” initiative is at its core a ‘call to arms’ so that we as a country invest in our most precious resource- our demography. In a few years India will have the world’s largest workforce. It perhaps already is the world’s youngest workforce. Why must our youth be productive and innovative in Silicon Valley alone or help create financial instruments in only London and New York? To rectify this, we must build the eco-systems and conditions that can create the most productive, the most innovative army assembled in human memory; a peaceful army of wealth creators for the society and country.

Skill 

“Make in India” is therefore a rallying cry for “Made by India”. Its purpose is to arm close to quarter of a billion youth, between 15-24 years of age, with the tools to be productive. The rallying cry is also immediate. It is to skill around 500 million workers to innovate, create and add value to the global economy. We have in a limited way shown this can indeed be done. We have shown it in the automotive sector, which has rapidly become the seventh largest in the world. We have shown it in refining and petro chemicals where we use the worst quality raw materials and transform them into top-end products intended for the most discerning markets. We have shown it in telecom, where we are constantly innovating to empower millions through technology — a transformation which will soon touch the lives of a billion telephone subscribers in ways not imagined elsewhere.

But in all these areas we have shown it as an exception—an exception that only proves the rule. What has been the rule for India? The rule for India so far has been Jugaad. “Make in India” is not Jugaad. Moving beyond frugal innovation, it means delivering value to the consumer at the bottom of the pyramid, the 800 million or so who live at less than two dollars a day. The bottom of the pyramid also needs value, and it increasingly demands value—not just in manufactured products but in services, in transportation and in financial services. They demand the same value that high net worth consumers of the Atlantic countries demand of their manufacturers and service providers. “Make in India” is a proposition to “Make for this India.” And what is made for this India is relevant to many communities in Africa, Asia and elsewhere too.

Simultaneously, the “Digital India” initiative offers unforeseen opportunities to small producers, farmers, artisans and solution providers. It has the potential to ensure that we find an Indian fingerprint in every mosaic, a little bit of India in everything produced and consumed globally. It offers India the opportunity to leapfrog generations of industrial evolution and become part of global value chains. It offers the chance to make the informal sector—employing more than 90 per cent of the workforce—as productive as the formal sector. There is an unprecedented opportunity to integrate with the global market place, virtually. The “Digital India” initiative can transform “Make in India” to “Make with India.”

Initiative 

The “Digital India” initiative is complemented by the Prime Minister’s Jan Dhan Yojana, which has far greater power than any similar initiative to transform the lives of the excluded. Fifteen million bank accounts were opened in one day, and potential remains immense. Jan Dhan Yojana can be a basis for providing access to rural credit, crop insurance, loans to scale MSMEs, and for families and individuals to respond to special events and calamities. Financial inclusion is the building block for unleashing the creative capabilities of this country.

When these three initiatives can be synchronised and skilling the workforce made central to each of them, the prospect for India becomes truly transformational. It becomes a promise that it is now “Time to Make India.”

The writer is vice presdent, Observer Research Foundation. His Twitter handle is @samirsaran

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