India's GDP numbers, and its constituents, such as the more than doubling in the openness ratio (exports and imports of goods and services as a ratio of GDP) in the last decade to around 55% today or the rise in investment levels from 24.3% in 2000-01 to 34.9% in 2008-09, make it clear India has done phenomenally well, but only the naïve will believe Jonathan Favreau's, oops President Obama's, eloquent "India is not emerging, India has emerged". Much of India is work in progress, as the stunning failures and successes, in infrastructure and social sectors like health and education make clear. And that's why the theme of this year's World Economic Forum meet in the capital, starting on Sunday, is Implementing India (FE is the WEF's media partner).
Some part of Implementing India, of course, is getting done in the routine course thanks to the employment that GDP growth results and the demand that this results in, whether for soft infrastructure like education (25% of schooling in rural India is now provided by private schools) or for hard infrastructure (infrastructure spend is projected to double, from $500 bn in the current plan period of $1 trillion in the next).
So we have a situation in which Bihar's growth is higher than that of Maharashtra, as is Chhattisgarh's; which is why NCAER finds the number of households earning under Rs 90,000 per year (at 2001-02 prices) is down from 80% of the total in 1995-96 to around 50% today while the middle class (earning Rs 2-10 lakh a year at 2001-02 prices) is up from 2.7% to 12.8% in the same period; which is why a household headed by graduate Scheduled Tribe earned Rs 85,023 in 2004-05 versus Rs 22,456 for one headed by an illiterate ST; which is why the average ST household in Karnataka earned Rs 62,238 as compared to Rs 51,187 for an upper caste household in Bihar.
Implementing India is not something just the government will do. In infrastructure, it will be largely government-driven with a small share of privately-funded projects, but what's interesting is the work civil society is doing, and how this is getting mainstreamed today. The Right to Information Act, which has already started to make an impact on governance in India, has been borne from the work of civil rights activist Aruna Roy, now part of Sonia Gandhi's National Advisory Council. Parth Shah's Centre for Civil Society began campaigning for school vouchers a decade ago, and that is reflected in the Right to Education Act; Gautam Bhardwaj tied up with Vijay Mahajan of Basix, Renana Jhabvala of Sewa and UTI's UK Sinha to set up Invest India Micro Pension Services (IIMPS) in 2006 — it has 2 lakh people contributing towards a monthly pension scheme as compared to just 11,000 in the government's New Pension Scheme, and a new NPS-light similar to IIMPS's is being pushed by the government now.
Anurag Gupta's A Little World began working with biometric-based smart cards years ago (this is what the government hopes to do with its UIDAI-linked smart cards!) and later moved to using mobile phone solutions instead - mChek, the mobile payments solution that top telecoms players are planning to use and which will revolutionise the access to banks and money transfers in rural India was originally developed by ALW. ALW has 3 million customers across 20,000 villages in 18 states. ICICI Bank's Nachiket Mor worked on a similar solution at Fino and today, with 18 million customers, it hands out government pensions and even offers cashless hospitalisation in five states under the government-run Rashtriya Swastha Bima Yojana. The work that Aravind Netralaya is doing to revolutionise eye care or Dr Devi Shetty is doing to lower costs of medicare are well known; in the industrial sector, while the state-run ITI training initiative is a mess, CII is doing a great job in its industrial clusters programme and in helping firms ready for various ISO standards; if the state-run education system can't deliver the quality required, software firms like Wipro and Infosys run university-size campuses of their own.
That India's biggest challenge lies in rural India is obvious, but an equally big one lies in urban India — as 260-280 million people are likely to move to cities in the next 20 years. This means $1.2 trillion of capex over the next 20 years and an equal amount of opex according to McKinsey Global Institute (that's 700-900 million square metres of residential and commercial space or two Mumbai every year!). More important, if urban India isn't to become one large slum, India needs to figure out how to govern cities, how to get 24x7 water, deal with municipal waste, deal with sanitation, use IT to deliver public services, figure out workable transportation models. While there is no one city that has implemented all of these, Isher Ahluwalia and Ranesh Nair's monthly Postcards of Change series in The Financial Express has successful instances of each in different cities across India.
Over the next two days at the India Economic Summit, this is what we hope to discuss and find solutions to a host of such issues, from non-communicable diseases to averting water crises, catalysing rural entrepreneurship, sustainable transportation, and even credit lines for the unbanked.
The state will, more often than not, act as the big barrier in all of this and a large part of Implementing India has to be about co-opting the state. India's solar mission, for instance, plans to set up 20,000 mw of solar power by 2022 and while there are both critics as well as believers, the fact that losses in state-run electricity boards is likely to rise from Rs 27,317 crore in 2008-09 to a likely Rs 116,089 crore in 2014-15 (according to the Finance Commission) puts a huge question mark over the project - solutions lie in reforming the boards, in allowing open access, in ensuring banks lend to solar projects, in perhaps even rethinking the model (do come to the session on solar that I'm moderating on Tuesday at 1:45 pm!)
In the education system, while the Right to Education Act has many positives, legislating that all 'unrecognized' private schools which account for 25% of students taught in rural India, and a lot more in urban India, now have to be 'recognized' will surely hurt badly - today, these schools pay their teachers a fraction of what the government does but deliver results that are as good by and large. In order to be recognised, the government will specify the kind of infrastructure they need, even salaries for teachers which will, if implemented seriously, drive them out of business.
In some cases, the state will be the facilitator. The ration shop system works well in Chhattisgarh, there is GPS tracking of trucks that take rations to shops and even SMS alerts for ration shop users who are registered; the centre's new land acquisition law is based on one adopted in Haryana for many years ...
Given all this, at the end of the day, as the Summit asks, how attractive is the RoI (Return on India)?, in the 1715 to 1830 session today (THAT'S MONDAY).
FinancialExpress
Some part of Implementing India, of course, is getting done in the routine course thanks to the employment that GDP growth results and the demand that this results in, whether for soft infrastructure like education (25% of schooling in rural India is now provided by private schools) or for hard infrastructure (infrastructure spend is projected to double, from $500 bn in the current plan period of $1 trillion in the next).
So we have a situation in which Bihar's growth is higher than that of Maharashtra, as is Chhattisgarh's; which is why NCAER finds the number of households earning under Rs 90,000 per year (at 2001-02 prices) is down from 80% of the total in 1995-96 to around 50% today while the middle class (earning Rs 2-10 lakh a year at 2001-02 prices) is up from 2.7% to 12.8% in the same period; which is why a household headed by graduate Scheduled Tribe earned Rs 85,023 in 2004-05 versus Rs 22,456 for one headed by an illiterate ST; which is why the average ST household in Karnataka earned Rs 62,238 as compared to Rs 51,187 for an upper caste household in Bihar.
Implementing India is not something just the government will do. In infrastructure, it will be largely government-driven with a small share of privately-funded projects, but what's interesting is the work civil society is doing, and how this is getting mainstreamed today. The Right to Information Act, which has already started to make an impact on governance in India, has been borne from the work of civil rights activist Aruna Roy, now part of Sonia Gandhi's National Advisory Council. Parth Shah's Centre for Civil Society began campaigning for school vouchers a decade ago, and that is reflected in the Right to Education Act; Gautam Bhardwaj tied up with Vijay Mahajan of Basix, Renana Jhabvala of Sewa and UTI's UK Sinha to set up Invest India Micro Pension Services (IIMPS) in 2006 — it has 2 lakh people contributing towards a monthly pension scheme as compared to just 11,000 in the government's New Pension Scheme, and a new NPS-light similar to IIMPS's is being pushed by the government now.
Anurag Gupta's A Little World began working with biometric-based smart cards years ago (this is what the government hopes to do with its UIDAI-linked smart cards!) and later moved to using mobile phone solutions instead - mChek, the mobile payments solution that top telecoms players are planning to use and which will revolutionise the access to banks and money transfers in rural India was originally developed by ALW. ALW has 3 million customers across 20,000 villages in 18 states. ICICI Bank's Nachiket Mor worked on a similar solution at Fino and today, with 18 million customers, it hands out government pensions and even offers cashless hospitalisation in five states under the government-run Rashtriya Swastha Bima Yojana. The work that Aravind Netralaya is doing to revolutionise eye care or Dr Devi Shetty is doing to lower costs of medicare are well known; in the industrial sector, while the state-run ITI training initiative is a mess, CII is doing a great job in its industrial clusters programme and in helping firms ready for various ISO standards; if the state-run education system can't deliver the quality required, software firms like Wipro and Infosys run university-size campuses of their own.
That India's biggest challenge lies in rural India is obvious, but an equally big one lies in urban India — as 260-280 million people are likely to move to cities in the next 20 years. This means $1.2 trillion of capex over the next 20 years and an equal amount of opex according to McKinsey Global Institute (that's 700-900 million square metres of residential and commercial space or two Mumbai every year!). More important, if urban India isn't to become one large slum, India needs to figure out how to govern cities, how to get 24x7 water, deal with municipal waste, deal with sanitation, use IT to deliver public services, figure out workable transportation models. While there is no one city that has implemented all of these, Isher Ahluwalia and Ranesh Nair's monthly Postcards of Change series in The Financial Express has successful instances of each in different cities across India.
Over the next two days at the India Economic Summit, this is what we hope to discuss and find solutions to a host of such issues, from non-communicable diseases to averting water crises, catalysing rural entrepreneurship, sustainable transportation, and even credit lines for the unbanked.
The state will, more often than not, act as the big barrier in all of this and a large part of Implementing India has to be about co-opting the state. India's solar mission, for instance, plans to set up 20,000 mw of solar power by 2022 and while there are both critics as well as believers, the fact that losses in state-run electricity boards is likely to rise from Rs 27,317 crore in 2008-09 to a likely Rs 116,089 crore in 2014-15 (according to the Finance Commission) puts a huge question mark over the project - solutions lie in reforming the boards, in allowing open access, in ensuring banks lend to solar projects, in perhaps even rethinking the model (do come to the session on solar that I'm moderating on Tuesday at 1:45 pm!)
In the education system, while the Right to Education Act has many positives, legislating that all 'unrecognized' private schools which account for 25% of students taught in rural India, and a lot more in urban India, now have to be 'recognized' will surely hurt badly - today, these schools pay their teachers a fraction of what the government does but deliver results that are as good by and large. In order to be recognised, the government will specify the kind of infrastructure they need, even salaries for teachers which will, if implemented seriously, drive them out of business.
In some cases, the state will be the facilitator. The ration shop system works well in Chhattisgarh, there is GPS tracking of trucks that take rations to shops and even SMS alerts for ration shop users who are registered; the centre's new land acquisition law is based on one adopted in Haryana for many years ...
Given all this, at the end of the day, as the Summit asks, how attractive is the RoI (Return on India)?, in the 1715 to 1830 session today (THAT'S MONDAY).
FinancialExpress
