A simple perspective on India
On the anniversary of India’s 75th year of independence, I’m stepping out of my typical swim lane to provide a personalised status update for India, from my outside-in view given that I've been here in Mumbai for a little over a year myself. I’m not an economist or a policy, trade or social justice expert nor is this by any means an exhaustive analysis of India so please take it for what it’s worth. I hope you enjoy reading it from my lens. If you have any feedback - please do share!? Also, if I’ve missed any key area that is close to your heart, do comment or contribute your perspective in the comments! I am going to break this up into 3 sections: Digital , Sustainability and Geo-Political. Here goes...
Digital
Entrepreneurship is a career option
There is no digital divide in India. Access is ubiquitous with 80% of the country on a mobile phone and whether you’re a billionaire or a taxi driver - you’re paying only Rs. 150 ($2) for access- so as a result India is #1 in data consumption on mobile. In addition, companies like Reliance Jio have sponsored over 100,000 colleges with free Hotspot access. Yes there are issues around some data access inequalities but long term satellite internet connectivity will solve that problem. All said and done, this has catalysed a confidence in the young generation who are seeing optionality - the numbers of students starting companies early in college and achieving product-market fit by the time they graduate is truly astounding. Currently, India is the world’s 3rd largest start-up hub in the world but I believe it will become #1 by 2030. Today, 90% of VC capital in India comes from outside, but with generational life changing wealth multiplying over the last few years, I wouldn’t be surprised if we see this getting turned on it’s head - where vast majority of VC financing / LPs will come from inside the country.
Public Sector getting it right
The Government sponsored architecture, ‘India Stack’, has made India into a platform country. Yes, you read it right -? India is virtually building itself a National level API and think tanks like iSPIRT are leading the way to herald in a new set of innovation and inspire entrepreneurs to capitalize on the various implementations of IndiaStack, be it around health, finance, agriculture and so forth. This is truly an amazing outcome of public and private coming together to unleash tremendous value and opportunity.?If you were to ask any entrepreneur today in Bangalore, how the government can best support them, the answer is : “build the framework, and then please let us innovate” or in other words, “stay away”, and you know what - the government is doing exactly that. Less is more!
Latent People Power
99.9% of adults in India have a digital biometric identity - which is the seed of India Stack. What this does is it seeds the ability for an amazing amount of innovation starting from the atomic unit of a single person. With consent, and proper ownership and privacy controls, applying AI to the population of India will fundamentally transform how we approach personal and professional growth - the very notion of making small adjustments via atomic habits and subsequently impacting behavioural changes at the margin will enable Indians to transform culture, from hyper local levels all the way to national levels, at scale. And to take it even further, outside of India, there are ~2B humans without any form of identity within the G20 - this is a perfect opportunity for India to export India Stack and given that the next lead country of the G20 is, …drum roll…INDIA, opportunity is right there to seed cultural transformation in the world.
Exploding Gig Economy
You know conventional ‘middle class’ jobs in India are typically from two sources: large corporations, or the government -? and for the most part it required people to move to larger Tier 1 cities…until now! Digital platforms such as ONDC ( Open Network for Digital Commerce ) which has been rolled out across 36 cities, and counting, will enable people to be self reliant and stay in their native Tier 2/3/4 locations ( basically anywhere except for Delhi, Mumbai, Chennai, Bangalore etc.). Why am I so excited about this? Because India has a major poverty issue exacerbated by the pandemic - resulting in 200M+ people below the poverty line. On top of that, there is an emerging opportunity gap because from the 100M+ youth in the country, 10M+ are graduating every year and India’s GDP needs to maintain a 9-10% YoY growth rate for about 3 decades to lift this young generation above the poverty line. With this gig economy, India will be positioned to distribute economic activity in a more equitable way ( including female employment) and I won’t be surprised if more than 50% of growth will come from these Tier 2/3/4 markets. Oh and by the way - guess which is the largest growth market for Meta, Google Pay, Amazon et al? India! So, it’s all being tee’d up as we speak.
Middle India Rising
There are two types of startups in India: Indian startups - the VC funded traditional startups we know from the Tier 1 cities ( think west and east coast in US)?where there are almost 100 unicorns in this category;? and then there are the ‘Bharat’ (i.e., non Tier 1 cities - think US MidWest , rust belt etc. ) startups where I personally think we will see 200 unicorns in the next 5yrs. One prime example of momentum underway for Bharat startups will be the disruption to the Agriculture industry which employs nearly 50% of India’s workforce. Innovations on the Agri-Stack ( India Stack ), will truly digitize the Agricultural value stream and eventually shift the over-reliance on physical manpower as big-data and technology solutions take affect. As a result, people typically employed in the agriculture sector will up-skill naturally and come out of their comfort zones. This is a tried and tested pattern, after WWII about 50% of the US workforce was in agriculture, and today that is <10% today. I won’t be surprised that we will see a new set of entrants to the middle class emerging from the traditionally lower income agriculture sector as they become higher paid and capitalise on other adjacent opportunities over time.
Sustainability
There are 17 global ( sustainable development goals ) SDGs defined as a worldwide standard, with over 150 parameters to be measured, across 160+ countries in the world.? Originally instituted in 2015, the SDG goals’ progress have seen significant YoY progress until the pandemic hit. For the 2nd year in a row, within India, there has been virtually no progress with SDGs due to the exogenous COVID induced shock, and the spillover from it. Since data is often lagging on what the impact of COVID really is to India, the jury is out on how India’s SDG levels have truly been impacted, (e.g., poverty, and to what extent there have been job losses in the informal economy etc)..? It is a widely agreed upon fact by academics that the more well off a country is, their ability to rebound from setbacks is stronger. So as a result, high to middle income countries have seen a lesser impact of conflicts and pandemics on aggregate, whereas the brunt of it is strongly felt by lower income countries. So, in a nutshell - there is a lot of work to do in all these sustainability areas. Collectively, these SDG goals represent investments into natural, human, social and financial capital. If you’re truly interested, then do read the 500+ page report which will go in great detail on the key metrics to track regarding SDGs: Levels ( how far we’ve come) and Trends ( are we moving towards or away from targets).
Shift from Manufacturing to R&D for Pharma
In lower income countries in the world, there continues to be a systemic issue where from the 12.4B vaccine doses administered worldwide, 67% of high income countries have had at least 1 full dose whereas for the lower income segment?the vaccine rate is only 20%.?Interestingly, India has not fallen prey to this pattern as it has about a 75% vaccine rate. Thanks in large part to stellar local drug manufacturing abilities, for example the Serum Institute in Pune has developed capabilities they call 'Global Pandemic level' manufacturing. The Indian pharmaceuticals industry has established itself as an important contributor for the ever-growing demand for pharmaceutical products and solutions globally due to the mass export of essential medicines (e.g., more than 65 million doses of COVID-19 vaccines). With that said though, here is an absolutely mind boggling fact, did you know that 80% of the vaccines administered in India were reliant on foreign IP, specifically Astra Zeneca from the UK ( manufacturing was done at the Serum Institute ), while 15% - Covaxin - was developed and manufactured locally. India is now realizing the need to develop capabilities to become self-sufficient domestically by eliminating reliance on import of patented drugs as well as important raw materials such as Key Starting Materials (KSMs), Drug Intermediates (DIs), Active Pharmaceutical Ingredients (APIs). This reliance is due to a (comparative) lack of pharmaceutical R&D facilities and the associated policies and private industry leyways to bring it all together - fixing this much easier said than done because it is new territory so lots of work to be done there.
Data driven governance
Another issue that COVID rudely brought to light was the importance of having timely high quality data and building up datasets that reflect the state of health at localized levels. True story: After the first wave was over, during Q4 of 2020, the central and state governments were enjoying a relatively relaxed time thinking that the worst was behind them. Unfortunately, this complacency resulted in a disastrous response to the next COVID waves during the 2nd and 3rd Q of 2021. This could have been avoided had the public sector gained access to real time data sets of health and city data in order to proactively enable rapid responses to initial surges. The good news is that the lesson has been learnt and we are now starting to see a powerful initiative around cities and towns alike, exposing datasets (in close to) real time.
Need for Primary Care
Another important topic, resulting from the spillover of the Pandemic,? is the need to focus towards Primary Care. According to the WISH Institute around 800M out of 1.3B Indians do not have access to primary healthcare, and from the 200M+ I earlier mentioned in poverty, 60M of them are in it due to a lack of affordable (secondary care) health bills that could’ve been avoided had they originally accessed basic primary care. In a country like India, 90% of human health needs can be addressed by primary healthcare and so the opportunity here is to truly enable for a strong primary healthcare sector, driven by a fundamental dis-intermediation of the medical value steam powered by digital doctor platforms thereby bypassing the requirement for hospital visits, traditional clinic visits and so forth. Building on top of the health-stack ( India Stack), and allowing electronic medical records at scale will be key. Fortunately, there is significant momentum on this as evidenced by states such as Tamil Nadu which is building a cloud based EMR system for all residents.?
Education
We still don't know the impact of COVID on education. What we do know is that kids from families who could afford devices all went to remote education and what we must not forget are the hundreds of millions of children who didn’t have access to devices. Regardless, 100M kids across the world , many of whom are in India, went below the standards required for reading proficiency. You know, in ancient Indian mythology there are two necessary criteria for a child’s education, and in Sanskrit they are defined as: 1 - vidya: the info we receive and 2 - shiksha: the discipline of physically sitting with a (human) teacher to learn. I can see how this makes sense, and besides who am I to disagree to thousands of years of knowledge. Anyhow - the generational impact here is potentially catastrophic as some estimates say that there is up to a $17T opportunity cost because of this step back in education. On top of that, when schools shut down there was a loss of the mid day meal which in many cases was their only substantial meal - and that is a different topic all together, and the impact of that on ability to learn and be present is a big question!?
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So, this is very worrisome and I don’t know how to paint a rosy picture here, but this is where NGOs will need to step up and create the necessary interventions to empower this generation with real job worthy skills. Fortunately, there is an emerging field and private sector Ed-tech companies ( few of which are already decacorns ) are seizing this white space at light speed.?
This is a very big opportunity because India is like the EU on steroids in the sense that language, cultures , and even economies are highly varied depending on the region and so disseminating different styles ( that are appropriate to hyper local regions ) of vocational training, digital training, and management skillsets is a white space in my opinion.
The Call of Nature
Another topic near and dear to my heart is nature preservation and how critical it is for India as a people to redefine it’s relationship with nature. Did you know that about 90M people in India have some sort of mental health issue and in fact over 85% of India’s population has no access to mental health professionals whatsoever, and this doesn’t seem to be improving much because in the 21/22 budget, mental health improvement was only $5M per annum. On the bright side, according to a study by ATREE, (Ashoka Trust for Research in Ecology and the Environment), 90% of people said their stress was reduced by proximity to nature! Deep inside we know that, but I do wonder if things are coming to a head, and in addition to professional help ( which is key ), we will also ask Mother Nature to help us. Ultimately, I believe this will lead to a rise in Eco-Villages and retreat sites for individuals looking for holistic treatment therapies and we are seeing strong evidence of that already ( e.g., Govardhan Village ) which is just a 2h drive from Mumbai.?
Philanthropy
India is in a golden age of philanthropy. Wealth creation, both locally and from the diaspora internationally, in recent years is unprecedented and these communities are truly excited to build India, and not restrict themselves to just writing checks - but giving time and expertise. A case in point is?Amit Chandra, a Mumbai private equity executive, who now devotes 50% of his time to philanthropy in addition to putting his own money. This is a key point, because India is now seeing many individuals and companies getting closer to grassroots and bringing management and execs into social discourse ( before it was only the Tatas and Bajajs of the world who had a monopoly on connection to grassroots ). Whenever I interact with Amit’s team, there is always a conscious undercurrnent of public sector collaboration - be it with Niti Aayog, or even the PM office directly. This pattern will only continue where donors will be building institutions and movements in a collaborative manner with the government.
Also, what these professional donors bring is a level of responsibility where the focus is to ‘teach beneficiaries how to fish’ as opposed to seeing the NGOs and social workers on the (respectfully) perilous treadmill of social good. A paradigm of goal orientation in the form of the transfer of knowledge and skills and imparting values of innovation,(between NGOs and beneficiaries), is happening as we speak because there will be many more donors like Amit in India over the next few years.??
I will posit though, that there are some circles where there is skepticism towards the value creation in philanthropy, and my take is that this narrative continues to get reinforced by media coverage of NGOs - which is vastly based on sensationalism and negative coverage. What about the good impacts? Very seldom do we hear that. That needs to change.?
I’m also seeing another shift occurring and that is more rigorous analysis and governance towards measuring the effectiveness of outcomes, as I’ve heard many a times that the effectiveness of a donation decision is proportional to the quality of dissemination multiplied by the acceptance of the impact. In other words, it’s not just about the act of donation, but about how did the funds get transferred, to whom, in what manner, and what positive net impact occurred and how to continually track. This level of governance is only improving in quality with this new wave of younger, professional donors entering the philanthropic arena.?
Geo-Politics
Let me confess that I am a macroeconomics nerd, yes - I’m the one who buys the Economist to just read the back three pages as I analyze GDP, inflation, unemployment, growth? of the G7,20. I am also a geo-politics geek: international trade and finance - love it, and what’s happening at places like Davos, G7 meets - I am in it before you know it. So yeah, maybe this isn’t THAT big a departure after all.?;-)
Geo-Political Center of Gravity Shifting to India
Since WWII, the pressure on developing countries has always been to demonstrate alignment with ‘the West’, primarily precipitated by the cold war and of course foreign aid and so forth. Looking at it from a western-centric geo-political lens, India has always been a bit of a mystery because it has been perceived to be ‘on the fence’. This has always complicated India-US relations, (which I do think is a bit over-exaggerated because President Eisenhower and Senator (future President) Kennedy have always enjoyed good relations with India pre-cold war). Now the opening of India’s economy over the last 30y, coupled with the digital revolution and rise of the Silicon Valley and powerful Indian diaspora has catalyzed India-US relations back into positive light. Further, India’s seemingly infinite ‘soft power’, shared principles centered around a common set of political and social values and above all - the shared apprehensiveness due to the rise of China - has brought both countries ever closer together. This is not a judgement against China from me personally, but a geo-political fact I’m simply stating.?
Will India stop becoming friends with Russia? No. I believe the history is too rich, and there is a genuine loyalty between both countries - which is in direct conflict with the rest of the G7 ( with some exception to France because France and Russia have always enjoyed friendship too ). Perhaps the biggest takeaway is the ‘west’ will finally make peace with India’s non-alignment stance because there won’t be a choice. In other words, the narrative of “India being on the fence” will begin to evaporate.
Global Hi-Tech and Manufacturing Hub
I will not be surprised if we see both consumer and high tech manufacturing finding bases in India as evidenced by companies like McLaren investing into semiconductor building, and the semiconductor alliance between India, Israel, US and the UAE. In addition, India has a large well-trained worker base for skill-intensive value chains such as pharmaceutical formulations, capital goods, and automotive components and the rapidly emerging, young and hungry, trainable labor market are a boon to makers of basic metals, textiles and apparel, renewable energy, and chemical products.?
Unfortunately, public logistics infrastructure has always been a huge barrier to India becoming a global manufacturing hub, sprinkled with some degree of isolationism resulting in unfavourable trade policies, which I believe has always been India’s achilles heel in relation to China ( leaving aside internal government policies which is a major factor of course). But I see the balance starting to shift as the geo-politically induced tailwinds from the private sector will catalyze the central and state governments to get their act together (e.g., Mumbai to Nagpur’s highway and so forth).?
As a result, I think infrastructure development will become contagious as states compete for opportunities to build manufacturing and logistics hubs. I also see an accountability - more so than ever before - being put on politicians to look into the future and ensure their constituencies stay competitive as education levels improve and pressure to reduce opportunity gaps increase. This advancement in infrastructure will catapult India to yet another?new level because she will become not only a tech hub, but a production hub and subsequently penetrate global economies. At a macro level, by creating an export oriented economy, India will be able to sustain her growth requirements and increase influence in the world.
Summary
Need of the Hour: Systems Thinking
Thanks to COVID, India has had a major setback to achieving it’s 2030 SDG goals but I think this is a blessing in disguise if India does not panic and get too much into a firefight. It is critical for India to embrace strategic thinking in order to solve the complex long term sustainability problems. I’d like to use the example of how Jeff Bezos mandated Amazon’s employees to work in small 2-pizza microservice teams through out the entire company, and for that to all come together, the architect person at Amazon is an essential requirement. I think this analogy of Amazon’s operating model is important for India as a country to mimic: highly decentralised, autonomous, but integrated within a common framework and set of standards. For this to be possible, India needs more architect personas. You see it’s no secret that India is an academic power, rote education in technical fields is unparalleled and ability to dive deep is what makes Indian academics the best. But the flip side of this is that the education system, and generally the cultural setup in workplaces is more oriented towards brilliance in slivers of topics. As a result, the systems thinking and overall holistic approaches get missed. Bottom line: Systems thinking is needed!? But, I’m an optimist because the powerful characteristic about India is that if one creates a destination,? people find the path. India just needs to incorporate Systems thinking into the private and public sector to make the path a bit more palatable - because you know that saying, ‘the road to hell is paved with good intentions’ and India doesn’t want to go there!
Manager at ICICI Bank collection expertise over 15 yrs in call center recovery and flows
2 年Any openings in Kolkata in regional collection manager
Co-Founder & CEO of Finarya, an Integrated Governance, Risk & Compliance Platform Company | Empowering organizations to Reimagine Governance | Tech solution driven & result-oriented Leader
2 年Brilliant, it was a great read Sumit!! One more area where we are creating our own niche is defence.
President & Head-Information Technology at Axis Bank
2 年Sumit Sharma Interesting perspective. BFSI, Consumer goods ,Capital Markets and sports are few other surrogates to a countries overall outlook aside from the once you captured. Very nice read. Thanks for posting.
Owner, Blue Frog + Highlight Films
2 年Great read. Put well.