Nandan Nilekani On Technological Disruption And Indian Economy
- Conventional wisdom for growth was: Increase exports, boost manufacturing, and Large Employers/Business employing more people
Future levers for growth would be: Domestic consumption, Services led growth (not manufacturing) and Small business for employment creation
- The future levers to be driven by digitization which is happening rapidly led by increasing penetration of smartphones (generator of data), internet penetration, and penetration of Aadhar.
- Unified Payment Interface, Bharat Bill payment system, GST, new age platforms like Amazon, Practo, Uber, Stayzilla, amongst others.
- Footprint of digitization would garner a lot of rich data which inturn would help businesses. India is rapidly becoming data poor to data rich!
- Loads of data + good algorithm would change the way businesses work. Example, surge pricing
- Coming back to future levers for growth: Globalisation is challenged examples being US protectionist policies, Brexit, etc. This has resulted in global trade on a downward trend, same reflected in India's slowing exports. India benefits from domestic consumption supported by its young population
- It would be services led growth and not manufacturing led growth: India has one of the youngest workforce globally, it can continue to be the outsourcing partner, also talent can go abroad. Also, a lot of scope is in health, education, tourism, etc. In manufacturing, there are a lot of excess capacities already present in China (which was not the case for China when it decided to become a manufacturing hub).
- Also, manufacturing is getting automated at a rapid pace with robots replacing humans for some jobs. For example, Adidas has set up 2 factories in Germany to manufacture 0.5 million shoes each and would require only 160 workers as bulk of the work would be done by robots. By that rate, it can replace its 1 million workforce in Asia by 100,000 workers by setting up such factories in Germany itself.
- Small businesses would lead the growth: Platforms would aid in many small businesses flourishing; example being, platform of Uber providing access self-employment to many drivers, similarly platforms like Amazon and Flipkart encouraging a lot of small business. These platform also increase the skills of the people associated with it as they represent that brand, Example, Uber would train its drivers to read Google Maps, basic English, etc.
- All the above have led and will lead to acceleration of the economy to formalization which would result in ease of extending credit and growth.
CEO | Quema | Building scalable and secure IT infrastructures and allocating dedicated IT engineers from our team
1yRitesh, thanks for sharing!
CIO & Business Head
5yTo be able to gather, parse, analyse and make meaningful actionable conclusions from this data, one needs Quant, Data Science, and fintech skills. Top business houses like Tatas, etc. have just started. The vast majority (including investment firms) have not even started! in India. Over time, decisions taken without this backbone - ratings for instance, or bad investment decisions, taken without using this data is becoming apparent, in India's culture of disparaging numbers, and encouraging 'gut feel'.
Chartered Accountant
6yVery realistic analysis.