Prime Minister Narendra Modi’s policies may have many flaws but he should be given credit for a signal achievement. He is steadily transforming India into a land of better opportunities for businesses of all sizes, small, medium, large and giant.
There can be much backsliding, because the country is a messy democracy, beset by myriad social, community, religious and political conflicts. But India has never been at the cusp of so many radical technological transformations to lift up the living standards of all its people. This is now acknowledged by a galaxy of world-renowned analysts, including the World Bank, McKinsey, Goldman Sachs, JP Mor-gan and others.
A major proviso is that Indian companies must put their shoulders to the grind of progress. At the same time, the government must constantly improve regulatory and financial frameworks to help them make contributions to the nation through their business success. Without putting that success on a constantly rising curve, it is impossible to generate the jobs needed for the country to benefit from its youthful population. McKinsey encouragingly calls India ‘a place of superlatives’. But the challenges its people and businesses face are gigantic in addition to the risks of excessively politicised and unpredictable governance at national and state levels.
Yes, India is the world’s fifth largest economy and its population has a median age of 27.6 years, which is more than 10 years younger than most major economies. Remarkably, 642 million people voted in mostly free and fair elections earlier this year. The daring but somewhat weakened Modi has set bold goals that would raise GDP to $19 trillion by 2047 at a robust clip of 8 per cent annual growth, to mark 100 years of independence. That would cre-ate 90 million jobs by 2030 and 600 million jobs by 2047. Per capita income would rise six times to over $12,000, still far behind the US and China, but a tri-umph for a genuine democracy of the global south.
None of this can be achieved without a deter-mined effort by businesses of all kinds, including very small, small and medium-sized entrepreneurs. Private sector enterprises will be critical for these efforts provided that the government gives them the necessary support while placing severe con-straints on fraudulent activities, wanton risk taking and speculating with investor funds. The private sector was fairly dynamic even before Modi arrived in Delhi but its performance has been noteworthy since then, according to a McKinsey analysis of more than 800 publicly traded companies. Between 2012 and 2022, one in five companies was able to double its revenue every five years and quadruple it in 10. This growth rate is more than two and a half times the GDP growth rate during the same period.
The biggest challenge for Indian business and the Modi administration is that more than 70 per cent of the people do not earn enough money to meet their essential needs
Indian companies should be prudent but cannot afford to be risk-averse because big data technologies and artificial intelligence are sweeping through the global economy simultaneously with rising eco-nomic uncertainty. The world business environment is being shaken by an onslaught of trade protection-ism and economic coercion by the US and West-ern nations to obtain concessions from weaker economies.
In this context, medium and larger-sized companies will have to quickly move upwards to higher technological levels. They will have to use the poten-tial of digital and data technologies combined with AI throughout their business processes, like mar-keting, pricing and corporate decision making. For-tunately, Indian engineers are often world-class in these technical areas at lower cost than their inter-national competitors.
Skill companies must develop with much more diligence is how to use their internal resources more productively by allocating them carefully across their operations while collaborating with outside partners to build resilient supply chains. This requires close attention to each detail within the framework of a clear business strategy that is understood by every-one in the company. Importantly, leadership skills should be instilled at each management level to train successors and avoid crossed wires and turf bat-tles among business units.
The biggest challenge for Indian business and the Modi administration is that more than 70 per cent of the people do not earn enough money to meet their essential needs or have enough left over to save for their economic security. That means most people are left out of economic opportunities and are unable to make useful contributions to the nation’s collective prosperity. Only business innova-tions and a regulatory environment that promotes growth can turn that exclusion into an inclusion capable of uplifting those people by 2030.