India has become a leading country in the world, but it still has some way to go before it can consider itself a truly great nation. India needs to reimagine itself as a nation without poverty and shortages and as a nation of capability and prosperity. NITI Aayog has to play a pivotal role in shaping the transformative policies and improving policy outcomes.
Let me start off by complimenting ourselves, as Indians, for being in the midst of what I’ve always called India’s historically unique attempt at undertaking a triple transition simultaneously. I don’t see anywhere else in history or geography that there are other countries that have taken the social, political, and economic transitions simultaneously, these have always been sequential, and that’s something we’ve had to do because of what we were and what our independent leaders of our national movement decided. They simply decided that India could not afford to first take the economic transition where all the liberties would be closed and there would be no democracies and so on, and Mr Ambedkar ensured that you couldn’t undertake an economic transition without the social transition. And if you look at this huge achievement that we have had over the last 70 years, we very often tend to underestimate that. The inversion of the social pyramid in our country, where you’ve had a Dalit woman being the chief minister of the largest province in our country thrice, has been achieved practically and democratically without any bloodshed or violence. And states after states from Tamil Nadu to Bihar to UP we’ve seen that social transition happens over the last 70 years which for example cost millions of lives in the Soviet Union and China, and is doing so in Africa at the moment.
The same thing about our political transition, the most difficult form of the political transition we’ve chosen, the liberal parliamentary democracy and on top of that a federal structure whereby these 29 very different states have melded together, is something which we must be really proud of. And I say again, it is unique, look at the USA, which has achieved its own capitalist growth on the backs of the native Indians by enslaving them. None of that for us, we franchised our people from the very beginning and this triple transition, is ongoing, we are in the midst of it. But what I want to say really is that if we do complete it successfully, which we must, then we will be the model for most of the other countries to follow and look up to. I remember a time when two Japanese professors were in India and I asked them why are you visiting us in India, and they said because you represent the global world of tomorrow, you are the microcosm of a huge diversity which the world outside. And you can see that we are much better at handling our own divisions and distinctions than Europe today is appearing to be because we’ve handled all of that. I wanted to say that because I notice very often people in my generation, and not so much in the modern generation because they’ve taken it for granted. My generation, the transitional generation gets very impatient with what we’re not able to do, without realising the enormity of the task which the leadership faces. It is simply mind-boggling to create a nation state which is on its way towards an economic transition from a backward poor economy to a middle-income status economy where we still have to get 200 million people out of poverty is simply mind-boggling. There are so many variables that are in play all the time that I think this is something that we should be cognizant about.
And so here, in this ongoing triple transitions, the key now is, economic transition, earlier it was the social transition. We have to complete this, younger people are more impatient than even us. The last book I wrote was called ‘Modi and His Challenges’, the one before that was ‘Exploding Aspirations’ and that’s really what it has become today. And because of the media explosion and increased literacy or our 100% enrolment in our primary school level, etc, our young people’s aspirations are sky high. In a very perceptive article recently, Vijay Mahajan, pointed out the fact that out of the three contradictions facing our society today, the biggest one is an achievement on the ground with aspirations of the people, and we need to solve that, the other word for that is employment and good quality employment. In that context, what are the necessary conditions that we have to fulfill to achieve this triple transition, and what would be the role of the industry and the govt, and what can NITI Aayog do to contribute to that.
In economics, we differentiate between the necessary and sufficient conditions. The industry community has to perform the necessary conditions to make this transition successful. The first one is that I think it is high time that Indian industry must emerge as clearly wedded force completely and unambiguously to the achievement of national interest in the country. Very often this is not very clear and referring to Marx and what he called the national bourgeoisie, i.e. the national elite, or national business or national industry is the one that leads every transition in every society and has done so historically. This is what happened during our national movement. Without the alliance between doyens like GD Birla and Kamalnayan Bajaj and Mahatma Gandhi, the national movement would have never succeeded. And the fight between Mumbai and Manchester and the fight between Ahmedabad and Liverpool would never have been successfully won. We miss that today. The Indian industry is not seen by either the people or the political leadership of this country as having firmly fixed its own colours to the national interest. It is often seen that the industry is trying to serve some segmented and sectional interest. That must change and the industry must come out squarely and strongly as a supporter of the national interest, and that is now very clearly defined by our Prime Minister. Recently he has talked about this in ‘Sankalp Se Samriddhi’ and ‘Mann ki Baat’, and in the parliament, he said that the national interest can be defined as achieving 5 freedoms by 2022, because that is the anniversary of Quit India Movement. The 5 freedoms that he defined were freedom from poverty, corruption, terrorisms, casteism, and communalism. I Implore the Indian industry to support these 5 transitions and these freedoms in every way possible. They are not doable if all of us don’t pull in the same direction. Can we see AIMA, FICCI, and CII making a special effort to achieve these 5 freedoms that the PM has talked about and has given us a challenge, can we do that by 2022 not so far away. That’s the first task we have before us. On that basis, and this is the second necessary condition where everybody will have to pull together. On that basis of getting on to the same platform, we must create trust between the govt and the industry on one hand, and the industry and the civil society on the other. That trust which I find in countries like Japan, South Korea, England and others, that trust is missing, as a result, we spend a lot of time checking and countering each other and approaching each everything with a huge degree of suspicion and mistrust. How do we create this level of trust, because unless we do that we will not have everybody on the same page, and if we don’t have the same page then I’m afraid India won’t be able to succeed and compete in this globalised world. Because out there, it’s a vicious world, we’re competing with the countries which have all the stakeholders working together to get a greater market share. You talked about 18 percent, we are at the moment less than 3 percent and sixfold increase in the global GDP will require a tremendous effort. And if we don’t work together as India Inc., I don’t see it happening. This is the second necessary condition I want to plead before you.
And the third one is actually equally important, that is, the Indian industry should wholeheartedly embrace the global scale and cutting-edge technology, which is referred as Industry 4.0, but also accept that the days of working within our own domestic economy are over. Unless you aim globally and get the ambition to get that scale, we will not be able to succeed. What I find very often is that even our younger people do not have that global ambition and this is the time to get it. The firms that we start now must be competing at the global level and must be pushing back the others. If you want to get market share in the global world that is the ambition and scale you have to have, and you will have to adopt cutting-edge technology because nobody is going to give you any ground if you’re not there. Those are the three things that I think the industry would have to do to be able to get what you want. Whether it’s inclusion, employment, or market share, those are the three things.
Now, what the government has to do is to create the sufficient conditions. The first thing that is clear to me is that the govt has to convert itself from a soft state to a development state. What does that mean? A soft state, as Gunnar Myrdal said, has kind of chastised and lampooned us. The best example is when I entered the government in 1989 in the Beaurue of Industrial Cost and Prices, a wizened old person who was the head of general administration said, “Mr. Kumar, let’s not talk about rules, you show me a face and I’ll show you a rule”. Now that has to end, that’s the crux of a soft state. It is personality and interest-driven; it is driven by short-term needs and not driven by merit or objective criteria or transparency, and it is not doing what it is meant to do. I believe personally, and an Australian minister asked me recently, why do you think we should pay attention to India, I said because it is the first time that you have a Prime Minister who is committed to putting in place a development state which will deal with every issue in an objective and transparent manner. So you will get far better results. A development state also means that you got to ensure a more efficient delivery of public services. This whole assumption that ‘oh it’s the government, they will not work or achieve anything, even law and order’. That’s why the fastest growing industry in the country is private security services. Why should that be? Would you get investment in a country without proper law and order? Starting from there and moving to basic education, can we be a civilized society where we have a basic education which is completely broken? Where the private tuition industry is 40,00 Cr.? We can’t be. Can we be a society where malnutrition under 2 years of age still affects 42% of our children? They are stunted and their growth is not possible, and we call ourselves a knowledge society. And who will take care of that? Not the private sector. This is the role of the govt. and the development state. And therefore when the PM talks about maximum governance and minimum government, people have misconstrued it as saying the govt should move out of all of this lock stock and barrel. No, there are some basic conditions of industry and development which only the government can provide if you want inclusion. Private tuition, of course, is exclusionary, so is private health.
Another point that I must mention here is R&D, it is traditionally an activity which is in short supply by the private sector because the returns are social and not entirely private, the government has to step in and make sure that in this society with huge technological change the R & D must get its due recognition. India spends less than 1% of its GDP on R&D, Korea does 3.7%, the USA does about 3.5%. Can we progress in this competitive technologically fast moving world with that sort of expenditure? And again the partnership between the private and public sector, for them to be able to conduct R&D together collaboratively, I think we are nowhere near that. One of our doyens Dr. Mashelkar attempted that in our National Chemical Labs to some very good results. Now the only other thing that I want to mention about the government and again this is something that this government has started first time ever is to say that it will take care of the 100 most backward district, and once we take care of that and achieve that the 100 most backward districts come up to the national average I think regional disparity will be automatically taken care of, in a manner which will be more focused and monitorable than in the past.
This is where I see the role of NITI Aayog, it can perform an absolutely amazing service to this development process. One of our mandates is to monitor objectively, strictly, and give feedback to the Prime Minister and other ministers, the outcomes of all the schemes. That is our job, to monitor the outcome and performance. We can do that for these 100 districts, this is something that we have already started in the North East. This is one of the roles that NITI Aayog can play. That’s the sort of very focused functional role. Another very big role for NITI Aayog, for which it is called the premium think tank, is to act like a funnel for ideas and to collect all those ideas from everybody here and throughout the country and then to filter them and put them into the government system. So that’s the second role, but given the two together, I think of NITI Aayog, more as an action tank and not as a think tank. I’m afraid today, one of my friends, Pronab Sen, an economist, talked about NITI Aayog as being a talk shop. I must submit to you and make it very clear that it is the least of what we do. We are trying not to just generate ideas, but also to put them into practice and then monitor their outcome. One of the most important things for NITI Aayog is to outreach to the thinking society and which is why as we talk there are about 24 working group meetings going on in NITI Aayog at the moment to try and develop an agenda for 2022. We are reaching out, getting ideas, ideating, also we are monitoring, and that is why I think of NITI Aayog as an action tank.
The second one is that we have to work with the states, the competitive and cooperative federalism, getting all the states together, making sure the states are not left behind, we do not want a situation in this country where like China every lunar year you have 400 million people moving from the fringe to the inlands. We can’t afford that. I’m sure you’ve seen that sort of thing before, if this is India, there is a line you can drop from Kanpur to Allahabad, this crescent of growth is actually probably developing twice as fast as the rest of the areas. We can’t afford a situation where everyone around is going to move into this belt, so therefore what we need to do in NITI Aayog is to make sure that this regional disparity is reduced and there’s a convergence across states, and that is probably going to be reflected in my own work. I have decided to start working with the Northeast states, to begin with, then with the Himalayan states, then the backward states and finally with those which are more advanced. A couple of other points, NITI Aayog is trying to create a hub and spoke model for think tanks in the country, we have a program called ‘Samavesh’, where we are trying to identify leading think tanks in different regions in different states and create a network of other think tanks around it which can then relate to NITI Aayog for developing blueprints for individual states, regions, and districts.
In India, there is no such thing as developing India strategy, India is a an agglomeration of 29 very different states, so we will have to develop blueprints for development of each of those states. There was a time when we thought about developing district industrial plans and so on why can’t we go back to those, that’s what Neeti would be trying to do through Samavesh. Lastly, we will do our bit to contribute to those 5 freedoms that the PM has mentioned, and I can assure you one thing, that we will work towards greater empowerment of our people, and take them away from the mindset of entitlement. And we will therefore work towards generating the employment that we need in this country, we talked about a million a month, maybe it’s 700,000. It is a huge task, especially in the days of technological change and progress that we have around us, where the industry is absorbing the latest technology which is not so employment friendly. So we have to discover what will be the next IT industry for India that’s the job NITI Aayog has designed itself and we will try to develop the ideas in the next 6 months and we’ll get back to you to report what we’ve achieved.
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