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A ready reckoner for the growing prominence of a nation should be how many times it gets talked about — at hallowed policy meets in governance circles to savvy investment decisions made in marquee fund houses to sharp and conspicuously flummoxed media choir through pointed cover stories as also the ‘looking up’ mindset her frontline leadership receives from the peer group. Juxtaposed against these macro threads, India should emerge as the single-most serious contender for the primus inter pares spot in the bygone year 2022, a year best remembered for its intrepid fights – against runaway prices to newer variants of the virus to territorial aggression in Europe.
As the new year begins with recognising and capitalising on new possibilities, the upcoming Union budget should be a great start to discuss building bridges that seamlessly and sustainably create and transmit wealth across the socio-cultural-economic fabric of our resurgent nation. Looking at the tepid growth predicted for advanced economies and the willingness of the central banks to walk the extra mile in cooling the inflationary pressure in foreseeable period, the pivots dictating terms of trade will definitely be challenging, to put it mildly.
Committed to Wealth Creation
The underlying theme of the budgets in past few years has been laying overarching architectures that promote laying channels towards creating substantial wealth while the framework is continually chiselled to ensure the flow of wealth is all-encompassing, reaching the last of diverse strata with least fraction.
Towards this end, giving further fillip to India’s digital stack should be a key area in the budget as the enabling digital infrastructure has a force multiplier effect on proliferation of various economic activities in a synchronised, data-driven manner, ultimately faster generation and transmission of wealth. We have seen structural changes taking place in formalisation of economy of late and bringing in suitable reforms and statures that promote businesses/enterprises to migrate to formal status at the earliest should be a win-win situation as they get better access to diverse geographical markets and credit facilities while consumers have the power to choose from a wide pool, quality and experience being the two utmost critical denominators.
Building on the JAM code and anchored by India Stack, OCEN, ONDC, UPI, RuPay and CBDC, connected at strategic nodes, could herald a better tomorrow at population scale, in synchronisation with an eager world where they are being dubbed as architectural marvels. Internationalisation of the rupee, in a CBDC dominated future, requires some groundwork now and framework to incrementally use the same between friendly neighbours can be promoted among India Inc. Enabling changes in trade policies, Companies Act, payment & settlement Acts through budgetary announcements should catalyse innovations sans boundaries, creating a level playing field as the transition from physical assets to financial assets gains speed.
Expanding Global Outsourcing Pie
Better digitisation should also give a fillip to expanding basket in global outsourcing pie, which should gain significant scale as IoT and Blockchain emerge as frontier technologies of tomorrow, upending the landscape in existing domains of software development, business processes/customer service outsourcing. With a young population having high skill sets, investments in best-fit reskilling and upskilling tools through creating right education and training hyper-web will be highly remunerative in attracting global players, drawn by cost and efficiency competitiveness on offer. The GIFT city, envisioned as a citadel by way of tie-ups with foreign varsities of repute, can work on a hub and spoke model to dispense right skills, educational training and incremental competency mapping.
Export as a Key Growth Enabler
Exports have, of late, been rightly recognised as a key enabler to nudge India’s journey towards attaining an advanced economy status much within the Amrit Kaal and GoI’s various strategies viz. FTAs, dedicated trade corridors, I2U2, ODOP, recalibrating export mix, engaging consulates and embassies in harnessing the existing as also potential opportunities in select jurisdictions. While our services exports have been in better shape on comparative scale, we need to promote exciting areas in open banking, fintechs, select DeFi and startups through enabling legislation to capture much larger slice, dethroning select European nations first.
Also, making MSMEs a part of the pragmatic export story through better information dissemination, financial accessibility and affordability, credit guarantee mechanism (preferably through revamping the CGTMSE) could have a sea effect on wealth as also job creation. The Production Linked Incentive (PLI) scheme under Make in India has been a game changer and more sectors need to be added judiciously for making the country a new destination for meeting the world demand without hiccups, filling the ‘trust deficit’ and strategic realpolitik at play in South China sea. There is much talk on China+1, but enough opportunities should arise from keeping lateral focus on Europe+1 and some announcements to align the two should work wonders.
Housing as Consumption Driver
Housing, having an emotional connect within the Indian context, has the potential to change the aspirational landscape further, becoming a lynchpin for fuelling unbridled consumption growth under the security of a roof for each family. Transition to clean/green energy and mobility demands aggressive pitching, at a bigger canvas, lest we lose the first-mover advantage.
Capital markets, often lauded as a gauge of long-term wealth creation globally have seen quantum addition of crores of retail investors, mostly millennials, through the pandemic period. They should align more with investments in their quintessential search of better yields and risk-taking ability Regulators needs to impart better safety nets to this stratum. NRIs/FPOs need to be offered simplified investment avenues in diverse areas. FPIs would repose greater faith if our decisions woven around tax impacts could be clarified.
The changing algorithms in uncertain times mean time is of much essence. We cannot certainly watch the paint dry.
(Ghosh is Group Chief Economic Advisor, State Bank of India and Kumar is AGM, SBI. Views are personal)
Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
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