Celebrating India’s Entrepreneurship & The New Paradigm of 2014
As India completes 75 years of Independence, we have seen much change. The Indian economy now stands as among the largest and fastest growing in the world, truly breaking free from the shackles of colonialism. Recently, India overtook the UK to become the world’s fifth-biggest economy. India’s rise to the heights of the global economy is merely a return to where it was on the eve of colonization. However, it was not the policies instituted post-Independence that were responsible for India’s standing in the global economy today. One of the biggest differences between now and 1947 is the role of private enterprise. Kept on the peripheries of the economy by design, private enterprise is now driving India’s growth story.
Once a leader in the global economy, centuries of colonization saw India being deindustrialized and falling behind. Indian entrepreneurs reignited India’s industrialization efforts in the late colonial era, but India moved ‘From British Raj to Licence Raj’ after Independence in 1947. In today’s environment where allusions to the ‘Licence Raj’ are made in response to policy initiatives, it is important to understand what the Licence Raj truly meant and represented. It was not merely a web of rules and regulations that shackled private enterprise.
As the years progressed, it became increasingly clear that the model India was following was not working. Inefficiency and rent-seeking became the hallmarks of the economy as we teetered from one foreign exchange crisis to another. Cracks were papered over, and rather than looking outwards, we continued to look inwards. By the time the crisis of the 1990s hit, the cracks had become gaping wide. Systemic change was needed.
In the early 1990s, a complete reorientation of policies placed India on the path to becoming a global player again. The effect of economic liberalization was clear. After a period of deindustrialization, it was the Indian entrepreneur that led India’s reindustrialization. New industries boomed and new career paths came to the fore. A new kind of entrepreneur built the behemoths of today. Soon, Indian companies not just entered but also thrived on the global stage.
After years of ‘golden growth’, the global financial crisis derailed India’s growth story. The reform agenda had run out of steam as well. India, despite opening its economy, remained one of the hardest places to do business in. Global confidence in India’s economy was faltering. Foreign investment started to dry up. A new paradigm had to be ushered in to restore domestic and global faith in the economy.
The new paradigm of 2014 saw a focus on ease of living and ease of doing business. Economic reforms, no doubt, played a key role but understated has been the role of the new paradigm in governance. Citizens were now being delivered government benefits through digital means. Offline forms gave way to online single-window clearances. States were competing on who provided the easiest business environment.
The scale of reform has been truly exceptional. Having driven some flagship initiatives personally, such as ease of doing business and competition among states, Make in India, Startup India and production linked incentive (PLI) schemes, among others, I have seen how India’s policy priorities have evolved during this time.
The importance of and trust in private enterprise now is worlds apart from the environment prevailing during the post-Independence period. There is an increasing acceptance among policymakers that engaging with private enterprise will usher in India’s socio-economic transformation. This has perhaps been one of the biggest shifts in the attitudes of policymakers.
India’s start-up ecosystem is now among the most vibrant in the world. Entrepreneurship is no longer looked down upon. The youth of today are now shunning the safety of jobs and instead following their dreams of entrepreneurship. New business models and novel solutions are being developed by these start-ups for some of India’s legacy problems. Not just in e-commerce, entrepreneurs are innovating in health, agriculture and digital lending, among others. In addition to the evolution of India’s private enterprise and the associated economic policies, this is also the story of the ingenuity, adaptability and risk-taking ability of our entrepreneurs. Budding entrepreneurs are certain to find inspiration in these stories.
It is this entrepreneurial zeal that we must rely on to tackle climate change, which is the world’s biggest challenge to global prosperity and development. Policies to catalyse private action will hold the key in this battle. Over the past few years, India has emerged as a leader in the fight against climate change. Again, it has been a combination of public and private action. Enabling policies have seen private investments thrive in the renewable energy space. India’s corporates are leading our green hydrogen charge. Start-ups are innovating in eMobility and the circular economy. Many leading corporates have taken the pledge to go net-zero by 2050. India’s model of digital and green growth will make a telling contribution in ensuring the world’s future.
The lessons we learn from the past will serve us well as we enter the next phase of our industrial journey. It is important to understand the context in which these policies evolved. Readers can expect to find an analysis of key policy decisions taken since the post-Independence era. The rationale and impact of these policies are evaluated against global best practices of the time. As our Asian peers galloped away, over time, it became clear that the model India was following was not working.
While India launched several socio-economic development programmes, it was only when growth was unleashed did India make a serious dent in poverty. To thrive on a global stage, India must be competitive enough to become an integral part of global value chains (GVCs). This is the essence behind Aatmanirbhar Bharat (Self-reliant India), which many have confused to mean looking inwards.
The environment in which India is seeking to integrate itself in GVCs is vastly different to when Japan, South Korea or China saw their transformations. While other advanced countries grew and prospered with carbon emissions, India has promised to cut its emissions to net zero by 2070. This is not only a challenge but also an opportunity. Digital technologies are permeating economies like never before. Global trade has been slowing. The economies that can turn these challenges into opportunities will be the most competitive in the future.
Having spent six-and-a-half years at NITI Aayog and now as India’s G20 Sherpa, I have always encouraged my colleagues to be futuristic in their thinking. It is technology and sunrise sectors of growth that will enable a new era of prosperity in India’s growth story.
Author: Shri Amitabh Kant, G20 Sherpa