Koustubh Soudarthi, Young Leader - IndiaGlocal
Koustubh Soudarthi is a full time engineering student at Chaitanya Bharathi Institute of Technology, Hyderabad . This article was submitted as part of his selection process as an IndiaGlocal - Young Leader. The views and opinion in the article are solely of the author.
The Indian economy, which was in poor state of health at the time of independence, was strengthened during the next five decades by means of FYPs (Five-year plans), private sector participation, foreign direct investments amongst other measures. This initial period consolidated the economy and laid good foundation to facilitate emergence of a robust business ecosystem in the country. It was during 1991, the Indian economy chartered a new trajectory by opening to the outside world. Liberalization, privatization and globalization ensured a vibrant and progressive business culture in the country. The growth, which was till then majorly contributed by in-house resource, got a spur through foreign investment with greater access to enhanced technology and capital. The industrial and services sector witnessed a multifold growth while the agricultural sector started reinventing itself through better processes. A strong edifice was thus created, which led to the flourishing of businesses in India.
Seamless integration, wholistic approach and being organic are implicit to any ecosystem. The business ecosystem in India is chiefly consists of the government, manufacturers, end users in the form of burgeoning population, and service providers, which make the foundation for a strong interdependent supply chain. In addition to the above, other factors like abundantly available natural resources, inexpensive skilled/unskilled manpower, political stability and most significantly the sense of national pride, catalyze the functions of the ecosystem. It is imperative that all entities must fulfil their roles to ensure a successful business in a sustained manner. The government on its part through simplified tax regimes by implementation of GST, Jan Dhan programs, social welfare schemes has contributed towards making a sturdy ecosystem.
The business success story of India is inevitably linked to the strength of the economy. They are mutually dependent for thriving. Currently, India has been amongst the fastest growing economies in the world. This is indicated by the metric of Ease-of-doing-business (EoDB), established by the World Bank group wherein higher ranking (lower numerical value) is suggestive of a better business climate. It aggregates information from 10 areas of business regulation such as getting credit efficiently, trading across borders, resolving insolvency amongst others. This parameter has dramatically improved for India from being ranked 142 in 2014 to 63 in 2020.
It was on 30th January 2020, that an unwelcome visitor in the form of Corona Virus started wreaking havoc with the economy of the nation. A national lockdown of nearly 10 weeks virtually crippled the economy with huge dip in revenues. The expenditures shot up to an extent of nearly 10% of our GDP, to mitigate hardships in the lives of citizens, in the form of free rations, cash transfers to sustain lives of people. The negative impact is expected to result in a significant contraction in the Gross Domestic Product (GDP) resulting in a recession.
India is presently going through unlocking mechanisms and opening of economy in a calibrated manner. The Indian Economy is likely to rebound as the impact of the COVID-19 pandemic recedes and is projected to grow by 7.4 percent in the next financial year. Despite the negative short-term shocks and tremors from the pandemic, total Foreign Direct Investment (FDI) into India has remained buoyant. Global technology firms like Facebook, Amazon, and Foxconn have committed large new investments up to USD 17 billion into India this year. Google too has committed an investment of 10 billion dollars over the next 5-7 years.
An important positive factor for India is its large and fast-growing middle class. In my understanding, this section of population could become a force to reckon with, if the right training and opportunities are presented to the middle-class youth. This could be through cheaper lending rates, vocational training for employability, awareness sessions on entrepreneurship, and a concerted effort from local bodies to assist in the above agendas.
Periods of mayhem have always created opportunity. In this context, I think greater digital economy is the need of the hour, since physical distancing is poised to remain the norm for the better part of next year as well. The use of e-commerce, digital payments, smart supply chains will assist in remote operations, thereby ensuring seamless business continuity as well. At this stage, India has to look at the crisis as an opportunity and take necessary measures to grow, both supply capability and consumer demand, thereby setting the foundation to emerge as an economic superpower in the years to come.