Atmanirbhar Bharat needs to harness the right strengths through a New Governance Architecture
Achieving the goal of an Atmanirbhar Bharat depends on two other factors in addition to the need for changes to various laws and a mindset change in our people (which I have written about in my two previous blogs). The first is harnessing India’s diversity in terms of natural and human resources and our rich civilizational traditions that, in many ways, are becoming relevant again. The second is to strengthen India’s federal governance structures in order to enable the first.
India as a nation has abundant mineral wealth, that, if tapped sensibly, will secure critical supplies to vital industries. Developing our own local sources reduces the dependence on imports, thereby partially insulating our economy from a range of geopolitical and other risks. India’s wide variety of soil types and climatic conditions are capable of supporting a range of food crops as well as cash crops. Our country’s rich biodiversity endows us with a number of indigenous plant and animal species. Many plants that are native to India have proven medicinal value. Plant extracts like saffron are in great demand worldwide, and through proper scientific cultivation, can be grown in more areas.
Almost every state is home to some traditional art or craft, whether textiles, dyes, toys etc. As the world becomes more conscious of the need to act against climate change and protect the planet, there will be a demand for green, sustainable products. Bamboo toothbrushes and bottles are a good example. Several north-eastern states can grow enough bamboo to make such products- not just for India but also for exports. A similar opportunity exists with Indian fabrics made of say tussar silk or fine cotton or pashmina yarn.
The concept of Atmanirbhar Bharat is not about becoming an insulated island in a global economy; it is about optimizing self-reliance. Even in the future, we as a nation will continue to import a wide range of products and services simply because we do not have the comparative advantage to make them: it is cheaper to import them. But in the years ahead, we must minimize this list of imports so that there is minimum strategic dependence on key materials, whether natural resources or other components and intermediates.
India has a strong base of human resources skilled in STEM disciplines. But many of our graduates who are keen on the research end up doing cutting-edge work in overseas labs. Why can we not create a domestic ecosystem that enables our scientists, engineers, and technologists to conduct similar levels of advanced research in India and allow domestic companies to commercialize the research to create products and services for the world? The new education policy is a step in the right direction, but more needs to be done to unshackle higher education and encourage private R&D and innovation in key fields. In fact, public-private partnerships in R&D can be quite fruitful.
In my view, it is possible to do all this, but to do so with impact and in a sustainable manner, we need to rejuvenate our governance structures. The founding fathers of India envisioned a strong federal structure where central and state governments will work symbiotically and in complementary ways towards the overall purpose of India’s progress. For a number of reasons, this intent of our federal government system has weakened over time. The tendency of central and state governments to often lock horns (unless the same political dispensation is in power) needlessly wastes valuable time and other scarce resources. In most states, continuity of policies does not depend on their merit or impact; very often, policies introduced by one party’s government are decried and rolled back or tweaked when another party comes to power. This is not right, because every government implements some good policies for sure. Irrespective of which political party is in power, the central government and state governments should work in harmony.
While the central government policies must aim to create a national-level competitive advantage for various sectors (through the right policies), state governments should work towards giving a thrust to industries that are important to India and can thrive locally within their jurisdictions. individual states must learn to utilize the legislative flexibility given to them under our constitution to make themselves most attractive to investors. This will necessarily mean that states will need to compete with one another, but that’s the only way they can accelerate social and economic development. Pegatron, one of Apple’s key OEM manufacturers, recently announced its intent to set up a production facility in India. I read a recent news report that both Karnataka and Tamil Nadu are offering incentives to get Pegatron to choose a location in their state. Similarly, UP has announced a policy to attract new data centres that come up.
It is not that states are not doing this. But I do not think they are doing it well enough. Often, states compete on the basis of tax breaks or land at lower prices or single-window clearances, etc. But the business case of investing companies typically considers many more factors beyond just the ease of setting up a factory. While this criterion is undoubtedly important, depending on the nature of business, natural resource availability, availability of skilled human resources and infrastructure (power, water, multimodal transport options etc.) are also important considerations. The quality of housing, school/college education facilities, entertainment avenues, lung space, pollution levels, overall law and order situation etc. are also critical elements of the business case because these factors collectively go a long way in determining whether companies can attract top-quality talent, the levels of compensation needed and how easy it will be to retain staff.
Also, some of these incentives can easily become a slippery slope because smart investors will start playing one state against another. For states to develop a stronger and more comprehensive “pull” factor, the quality of their policies and the degree of innovativeness they show will be key. This means that officers who understand the big picture will inherently be more flexible and responsive to the needs of investors, provided they are not impeded by political pressures of various kinds. States whose leadership consciously works towards quickly creating such a development-oriented culture within government will undoubtedly benefit much more than those states that continue to operate in the old way.
In the context of the preceding analysis, I see three distinct clusters of sectors where we as a nation should focus in the next five years to create a global scale:
- those in which we have become strong global players in the past 20 years (pharmaceuticals, chemicals, steel, IT, automotive, textiles etc.)- we can build on our advantages.
- those that are part of our ancient tradition, but are finding new takers worldwide (Ayurveda and other ancient systems of medicine, yoga, environmentally-friendly dyes, weaving etc.)- we can leverage our rich tradition and present them in a modern context using better manufacturing, packaging and branding.
- those that are emerging as the new arenas of global competition (space and satellite technologies, remote sensing, AI-ML, robotics, 5G, IoT, cognitive computing, genomics, biotechnology etc.)- this is where we can harness the diversity in our human resources to emerge as leaders in what will essentially be the key fields of the future.
Higher Education, in my view, is another large opportunity that India can benefit from. The pandemic has proved that with the right technology, virtual teaching and learning are possible. Naturally, the right teacher, training and content, along with further advances in technology, will help raise effectiveness further. With this in mind, allowing virtual universities to be established in various disciplines will help students from India and outside get access to a top-notch education. Of course, this will need a radical change in the laws that govern education.
A sustainable Atmanirbhar Bharat depends not just on a large and growing vibrant domestic market, but also on our ability to become an export hub that caters to global demand by producing top quality products and delivering cutting-edge services (including education). This is the only way we can build a robust economy that not only delivers the levels of employment and GDP growth but is also better prepared to cope with shocks and slowdowns that may occur in the future. After all, there’s a good reason why twin-engine aircraft is preferred, why world-class batsmen can play both on the front- and back foot, why archers have a second string to their bows or indeed, why it is recommended that we should not put all our eggs in one basket.
Image Credits: Photo by Balaji Malliswamy on Unsplash
A sustainable Atmanirbhar Bharat depends not just on a large and growing vibrant domestic market, but also on our ability to become an export hub that caters to global demand by producing top quality products and delivering cutting-edge services (including education). This is the only way we can build a robust economy that not only delivers the levels of employment and GDP growth but is also better prepared to cope with shocks and slowdowns that may occur in the future.