India's population - an enormous opportunity awaits us

#Marco2Micro ?by AA: Chapter-1

?According to the UN, India is set to become the world’s most populous country by the end of this month, overtaking China :)?While this can be partly embarrassing on one hand, I feel this could be perhaps the beginning of the most exciting time for India’s economy.

[Disclaimer: Am sure most of us already know all these. The attempt is?view them all together, but via a different lens/perspective]

How can population affect GDP ? The GDP of any economy is a multiplication of GDP per capita and its Population.?Now that we have the largest population in the world, that too a young one, the only hurdle we need to cross to become an economic super power is to focus on Improving the GDP Per capita, which is nothing but income or productivity per person.?But, the big question - How can we make people more productive?

Here is how:

There are different sections/segments of society who/which need to be made productive by using different set of tools/missions. Like In Maslow’s hierarchy, we need to take care of basics first – Health comes very first. Then comes Education/skilling. Then comes Mobility & Communication. Then comes Entertainment/Leisure/investments and finally comes Environment & Infra needed for more Employability & Entrepreneurship. This is a cycle where each are strongly interlined to one-another. But one thing is sure - if we can disrupt these factors, we can leapfrog for sure.

·????????There is one section of India who needs basic healthcare & nutrition so that they can grow into healthier citizens and focus on better things once they cross this hurdle- this is a big aspect that mostly government has to disrupt and this is where the subsidies and freebies should mostly go. Once people live healthy and longer, then the game starts. Affordable healthcare and meds and insurance is a huge opportunity - But not very easy for everyone to disrupt.

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·????????There is another section of India which needs better skilling and education –?so that they become employable – Right skilling and education?can make young folks more employable and go beyond blue collar. This is not just about basic schooling – but more about making people skilled & employable. There are lakhs of fresher graduates/engineers in India, who are still not ‘usable’ by the industry. But at the same time kudos to one Industry called the IT-ITes that changed india’s stature and brought us huge forex reserves. Which are the next big Industries that can unlock potential of millions like the IT did, with simple re-skilling or the 3-6 months training that TCS and infy cracked? MFG - silicon to electronics to EVs/Cars is my bet. This is what made China big - but next big player in this can be india.

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·????????Mobility & Communication – Luna/ Tractor/ Splendor/ Telecom-internet/ Whatsapp/ UPI have all done disrupted this in their respective generations/times. The more people can travel quickly and communicate quicker, several new opportunities will emerge out of now where. Smart People will find several arbitrage-income generating- opportunities that we never thought ever existed. Perhaps It’s because of Luna-Moped that we started getting many Poor-Village women entrepreneurs - by buying and selling small products from a town to near by villages - and by selling milk and products to near by towns and so on. And its perhaps Hero-Honda splendor that made a large population of men better self-employed - by helping them travel longer distances in the absense of decent road connectivity. It is a free tool called Whatsapp that made billions in the world more productive in a totally different way by crunching the timelines of communication and decision making in a big way. Imagine how much less profits all the start-ups of today would have made if there were no whatsapp. And imagine how many new music or movies would have been made because of easier collaboration possibilities. Not to mention thousands of Uber & e-commerce seller entrepreneurs on this generation due to mobility and communication. So we have to just watch out for what can disrupt Mobility and communication next? what is your guess?

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?·????????Entertainment/Leisure – As people earn more, they want to spend more on their leisure needs – Tourism to Food to Music to cinemas to TVs to malls to clothes to Toys to Cars – a large chunk of consumer economy sits here – which in turn creates huge employment opportunities. OTT, airbnb and malls disrupted this space over last few years. advent of first iphone and power of touch screen Phones unleased the power of entertainment within our palms. This is an area that offers huge potential to disrupt.

But one big road block is lack of infra (covered in subsequent points)

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·????????Infra + Environment for Industry & employability:?In other-words better Policies & Better Infra - physical and digital. This is perhaps the Govt’s most important job. How to facilitate large investments that can leapfrog productivity – The PLI scheme and make-in-India schemes have got amazing responses indeed. The recent textile PM-MITRA and GATI-Shakti are all great initiatives in this direction. Digital Infra like UPI has been a roaring success too, unleasing productivity of millions in a big way and helping millions of small business get cash-flow and re-investment so easily.

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·????????Infra + Environment for spending & Investments:?Not just investments in production & mfg, the Govt has to facilitate big on infra that enables easy spending too – Like toursim, entertainment, shopping etc. E.g. The Char-dhams got 40 lakh visitors last year – But the tourism infra in these dhams have been extremely sad.?What is govt made this easier - the 40L can become 300L without an effort. Given the length of India’s coast and the length of our share of Himalayas, India has the potential to attract largest number of tourists from the rest of world – But this needs vision, policies and investments. Not to mention movies, music, and several other industries that thrive on spending economy. our Investment economy is still nascent too – our large monies are still in form of bank deposits and gold and Real estate. The MF and insurance industries can grow big time, with people becoming more aware. Kuods to companies like Zerodha which made one generation of techies into stock investors which no one else could. They made it nifty easily accesible to all of us.

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But are the above factors enough to improve productivity? From an economics point of view, mostly yes. But there are many other support factors, those, if not addressed well, can easily derail us in our mission to be the largest economy:

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·????????Having brilliant productivity but without superior defense to protect ourselves is like Taiwan or Ukraine at the mercy of Russia or China. Anyone can attack us and no one may come to save us – so we need that strong force out there to safeguard us. This is a must like an insurance policy.

·????????Having amazing industries, but being unsafe for young girls to travel out in the night like Delhi? Need to invest in security/police infra, without which no one can take up more.

·????????Having amazing economy with no stable govt to rule? Look at the state of Israel, UK, Pakistan, Lebanon in the recent times. Israel has had 5 elections in 2+ years. Economy can never progress without a stable govt.

·????????Does having 200/300+ languages in a small country like ours help? Imagine the potential if everyone spoke one language. This is where the US and china scored big. Cultural Diversity-Unity balance is much important. We have to work like 20 different countries and make best use of unity yet diversity – like how EU works. Independent yet together. This will unleash lot more efficiency if we adopt a federal system.

·????????Having good savings but not a stable banking system??It is important to have a banking system that people can trust – Our RBI’s moderate-conservative stance, imho, has definitely proved to be the better strategy in the long term. Also keeping our Inflation & currency relatively stable compared with our peers who see 100%+ inflation and huge erosion of their currencies - e.g. argentina

·????????Dependency ratio: 15-64 yrs bracket now constitutes 68% of our population, which means only 1 of us on an average is dependent on 2 working people – which is a very good ratio. Compare this with Japan or UK. This means we spend relatively less on dependents and we can take better care of them on an average

·????????Adequate Investment in R&D in every industry so important that new trends pick up and can be scaled quickly –otherwise we will be obsolete in few decades. This is the main value add of all those eccentric Profs we hated.

·????????Better child and elder care/infra is another factor – The more we take care of them, their guardians can be more productive – especially a large chunk of new age and old age house-wives.

·????????Doing all the good things for exports and imports – but fighting/meddling with everyone like the Trump or Kim-Jong-Un helps? Absolutely not. Having healthy relationship with most countries is?so important especially in Times like these..

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…...And the list goes on and on.

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In short, its going to be an exciting Phase indeed, but its going to be a long long long journey to move to a sustainable, stable and a balanced, large economy – And the odds are that we have better chances than most others at this point!

Good day. Please do shoot in your comments and/or views and/or difference in opinions :)

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-AA