'Partnerships between civil society and government can help ensure that policies are not just being planned but effectively executed too.'  

As of 2023, India is the largest populated country in the world. Its economy is rapidly growing, with a GDP over $3 trillion, but nearly seventeen percent of its population lives in poverty, and it ranks 131 of 188 countries in the Human Development Index. India’s century – Achieving sustainable, inclusive growth, a joint report by McKinsey and the Federation of Indian Chambers of Commerce and Industry (FICCI) from December 2022, estimates that with sustained effort, the private sector can offer employment to over 600 million Indians by 2047. 

On September 21, 2023, Asia Society India Centre hosted a panel discussion on the role of the private sector in building inclusive economic growth for India, taking its cue from key points in the report. The panel included Hemant Sikka, president, farm equipment sector at Mahindra and Mahindra; Sajjid Chinoy, chief India economist, JP Morgan; Shinjini Kumar, co-founder, SALT - MySalt App; and Priya Agrawal, founder-director, Antarang Foundation. The conversation was chaired and moderated by Alok Kshirsagar, senior partner, McKinsey & Co. As an addendum to the discussion, this note presents some important questions about India’s future towards an inclusive and sustainable nation.  

What are the benefits of a public-private partnership in ensuring India’s inclusive growth? 

Amrita Sinha, partner at AZB and Partners and a member of Asia Society India’s Generation A initiative, began the evening with a set of provocations: while we can all agree that inclusive growth is important, and that the private sector along with the state play a part in this role, what are the limitations and challenges the private sector faces in aiding inclusive growth – including its profit objective that might run counter to social inclusion? What is the role of the state – is it to enable and incentivize corporate action, rather than impose it? She left the audience with fundamental questions: can profit and social inclusion be win-win; and what happens when that is not the case? 

Partnership is, no doubt, key in a country like India, where the private-public partnership model has proven to benefit the nation greatly. Examples of such partnerships include the National Monetization Platform that aids inclusive and sustainable growth in a dual way – opportunities for potential investors and transparency of public assets. The Parvatmala project, too, is an example that not only improved mass transit but also generated jobs.  

Further Reading: Invest India: Public Private Partnerships Driving Economic Growth  

Is it India’s Century?  

“It is India’s century; we either use it or lose it” -- this opening line by moderator Alok Kshirsagar laid the ground for the discussion with the panel. He talked about the specific combination of factors that could aid India’s economic progress: the country’s large workforce, its naturally endowed supply chains, like agriculture and food processing, and its robust digital economy. However, to ensure that this growth is steady and sustainable, the existing inequalities have to be acknowledged (for example, the per capita income of Karnataka is more than 5 times that of Bihar.) Navigating through these huge disparities and increasing per capita levels will help to create a consumer base for every product manufactured in the country. Another glaring problem is climate change, which will significantly impact the living conditions of almost half of India’s population by 2050. It becomes paramount, therefore, how India utilises the considerable skills at its disposal, whether its digital growth or its workforce. 
 

Further reading: FICCI and McKinsey & Company: India’s Century: Achieving Sustainable Inclusive Growth 

How can we make water utilization in agriculture sustainable? 

In the context of climate change, sustainability is not just a legal mandate but an imperative for the current condition of India’s economy to remain viable, and needs to become core to the operations of sectors like agriculture. Farming for instance, argued Hemant Sikka, needs to be sustainable to make agriculture a lever for growth. Two-thirds of India’s working population is engaged in agriculture, and related practices and this industry uses 90% of the country’s water. Flood irrigation or water collecting in soil is one of the most common practices used by farmers to irrigate their fields, but it is also one of the most unsustainable – it causes water-logging and affects crops. Are there measures that the public and private sectors can adopt to combat challenges of sustainability without compromising growth? To reduce consumption of ground water, the Punjab Government introduced an incentives scheme after which up to 25% of water was saved without impacting yield. This is an example of a positive reinforcer which worked in preserving the water table. Another sustainable solution is making micro-irrigation facilities more accessible. Mahindra, Sikka shared, is contributing to the solution by making technology like micro irrigation affordable and accessible – this is not only contributing in saving water but also electricity required to draw the water.  

Further reading: World Bank: How is India Addressing its  Water Needs?  

Mechanization and Technology– A friend or a foe? 

Sajjid Chinoy pointed out that historically, industrial revolutions have played a pivotal role in increasing industrial output; however, this output tends to be capital-intensive, leading to lower rates of labour utilization. To make growth sustainable, it is essential that technology complements human labour, rather than replace it. In India today, equipping labour with adequate skilling and education is as important as mechanization. The ability to turn ‘insights into actions’ - turning knowledge from tools like ChatGPT into actions, or using machinery to increase output from small patches are examples of establishing of how mechanization can aid human labour. Increasingly, services like remote healthcare; Indian customers’ tendency to save, leading to a high investment rate; and a deep entrepreneurial base, ensuring job creation, have helped India tremendously. This led to the growth of the IT-enabled service sector from 200 billion to 320 billion USD in the pandemic years.  

Further reading: The Economic Times: Govt making sustained efforts for capital expenditure, job creation, productivity enhancement: P K Mishra 

How do we make the country’s growth more inclusive for women? 

Shinjini Kumar explained the impact of the changing nature of work on women in India. Even though the female workforce participation continues to be lower than male workforce participation, changes in inheritance laws and policies have enabled more women to earn a living. To scale this up in business, for instance, more women are needed on the supply side of production. Crucial to this is understanding a simple fact: women’s safety in workplaces and access to safe mobility is directly correlated to their participation in the workforce. Secondly, we need to understand and address how women use their money: they should be – but often are not – in charge of their spending decisions. Lastly, to make growth inclusive and support female entrepreneurs, improved access to government support of entrepreneurship, at the central and state level, is essential. Traditionally, men migrate for work, and owing to their talent; women in India migrate as part of the arranged marriage system. This continues to hold true: a recent government survey found that across rural and urban areas, employment continues to be the main reason for migration among men; for women, over 90% said they moved because of marriage. This proves that in addition to law and policy, there needs to be a fundamental shift in the narrative around women’s financial independence and their place in the workforce before growth can be truly inclusive for women. 

Further reading: MicroSave Consulting and Women’s Entrepreneurship Platform: Decoding government support to women entrepreneurs in India  

How will the young Indian population adapt to the changing nature of work?  

To make growth sustainable and inclusive, educational institutes need to deliver core transferrable skills to students, emphasized Priya Agrawal. Our understanding of what constitutes skilling needs to be revaluated in the context of our rapidly-changing work environment. In the absence of such skill-provision and access to the right opportunities, as many as 120 million Indians lost their jobs during the pandemic. To enhance cognitive dimension, children need to be equipped with universally employable skills like critical thinking, creativity and problem solving. When making policy decisions, it is imperative that all the stakeholders these decisions will impact are represented in the decision-making process. This includes the government; private industry experts; educational institutes and the young population which will benefit from policy change. Antarang Foundation, led by Agrawal, was able to successfully do this by launching a career-readiness program for classes 9-12 in association with the Maharashtra government. Such partnerships between civil society and government can help ensure that policies are not just being planned but effectively executed too.  

Further reading: UNICEF: The 12 Transferable Skills 

Conclusion 

The goal of this conversation was to critically reflect on the limitations and opportunities of the private sector to drive inclusive growth, through sectors that have been crucial levers of growth for India’s economy: manufacturing, agriculture, and education. In this context, a holistic discussion including reflection on gender representation, urban-rural disparity, and skill building and employability was essential. The panelists were able to dimension both the opportunities and the accelerators required to help India achieve its high growth targets. What are the gaps in skill-building, access to jobs, and professional opportunity? How does participation in the economy change as one moves across the country; and how is it determined by one’s gender? Is the flow of capital amenable for entrepreneurship and innovation to thrive? An important takeaway was to foreground some of these issues in policy formulation to enable the private sector to engage its resources meaningfully and navigate a more accessible growth framework, one that touches every Indian, rather than simply a few.    

These are some questions that will help the private sector engage its resources to meaningfully address the demographic changes in the world’s largest country, by population – and make growth include every India, rather than simply a few. 
 

To watch the video of the programme, please click HERE