The New Startup Nation : India - Vision 2030

As another year comes to close, and the new year 2020 beckons, India is in the throws of challenges, quite different from problems of Brexit and US-China trade war etc. At under 5% GDP growth, while it is still respectable compared to the world economy, is not enough to meet the challenges of poverty reduction (a fourth still live under two dollar a day) and a young workforce (10 million people join workforce every year, equal to two Singapores!).

The nation is in throws of transition, whether it’s the society at large; thanks to the latest initiatives from a mission mode Government intent on correcting historical imbalances or the financial system distress that does not seem to be ending for a good half a decade. To be fair, the challenges India is facing; whether the migration which is the mega challenge for Europe or US or the challenges of twin deficits which US faced in last decade that caused the global financial crisis in 2008; this is a familiar movie.

The difference is technology, an industry that has matured in last decade to pretty much dominate everything else in the world. And India is uniquely positioned there as it is the tech engine of the world. One just has to look at top tech cos and Indian participation at top or across the rank to know how it comes naturally to Indians. Technology provides that once in a lifetime opportunity that India has to develop. One could argue that China with its massive scale was placed perfectly in 90s, and Japan with its quality revolution before; and the eastern tigers like Korea with their export focused regime with a great work culture.

Technology is not only the solution for India’s problems, but the problem too. Implementation challenges of major upgradations in India’s IT infrastructure bring out the central problem visible everywhere in India. Roads in most Indian cities are in disarray, thanks to a boom in metro construction. The challenge is the current road network is already fully loaded with new network being built on top disrupting the natural flow. The digital highways are similarly being put in while the regular business continues on the same rails. Initial projects that India undertook were relatively less complex. Thus Aadhar project that gave biometric identity to a billion plus Indians had an unprecedented scale, it was a completely new tool, sort of like greenfield project. But later initiatives have proved more complex. This happened with GST, which was a massive effort in bringing a new tech based tax system that is just about settling in after 3 years, as the companies had to switch from existing system to new, while conducting business too! I got a taste of how this live switchover of system is affecting on ground last week when I was travelling on expressway passing through toll. The FASTtag system that has become compulsory from yesterday glitched, with our car driver’s wallet as well as earlier toll paid not having synced correctly. A fight between the toll operator and the driver ensued, which ended with driver forced to pay again for the same journey; as there were a lot of vehicles behind with impatient drivers honking. This was the best example of digital and physical live systems being replaced on the go, a challenging task indeed. This just shows how India is acting more like a startup, continuously disrupting itself, with old infrastructure; both physical and digital being replaced by brand new next gen architecture, amidst the usual chaos.

So where is the problem?

With a comatose economy thanks largely to the financial sector distress building risk aversion in the system, a disruption caused by technology switching is the last thing that one needs. As economies are collection of people, who individually and collectively are hardly rational; the sentiment plays a big role. Mind you, the words rational as well as sentiment are not well defined, and do not meet the rigours of analysis. They are subjective by definition. So the task of policymakers is to ensure a loosely defined measure of confidence across the economy, called the sentiment; for a range of people, whose rationality can not be assumed. This is indeed challenging and that’s why the current downturn seems to be raising the old worries about growth rates going back to the so called “Hindu rate of growth”.

And what is the solution?

I believe, the solution is two fold: immediate task is to use creativity in nudging behaviours to create a positive sentiment and longer term is to create a nation of startups and take technology to the masses. Clearly, the leadership needs to understand that while the massive changes being brought in are well intentioned and will build the economy for next 20 years, the devil is in the details. As they say in startup world, an idea is 1% and the implementation is 99%; following the age old maxim as success is 1% inspiration and 99% perspiration; Government also needs to get smarter about implementation.

The immediate solution is to reflate the economy, and push through massive transformational changes without causing bottlenecks. Initiatives like FASTag are as instrumental in monetizing tolls by way of long term debt as well as reducing black money, tax evasion and crime; they need to be pushed through sensibly. The current policy is a stick by way of double toll for those paying without FASTags, with no counterbalancing carrot. The carrot could have been a creative discount for the early users over last 6 months, with discount reducing every month; incentivizing those who at least travelled regularly to get onboard far before. For GST compliance, there has been similarly talk of providing cheaper loans for MSMEs that are registered; but the same does seem to be poorly structured and communicated. There is again potential for creativity, such as providing say free insurance for those that are registered. Again, the businesses need to see more benefits of being compliant, maybe such as providing an automatic loans for their employees if they connect their true employee numbers on their rolls, which hardly happens. In a nutshell, this is similar to what Google or Facebook or Amazon do, keep looking for ways to increase their captive audience do more while using maps or posting pictures or buying things. The revealed preferences are routinely being utilized to help them sell more things or data. Obviously these are commercial entities, and the response function of a Government needs to be different. But the Government has to think about how it wants to reward the honest taxpayers or compliant companies or good citizens as much as it thinks about and spends trying to bring miscreants to books. This challenge also includes changing the mindset of bureaucracy which needs to becomes change agent and partner in growth rather than their earlier positions of power and priviledge with no accountability to people.

The long term solution for India is to create an army of new companies that are risk takers, as the old guard is unsuited to taking risks in the new environment where risk taking requires not just managing ecosystem or process perfection as before; but true product innovation. For this, a massive effort to enable a knowledge based startups to succeed is required, bringing them capital, bureaucratic green channel, connections to global markets such that they are designed to succeed. Initiatives like Start Up India etc have still to bear fruit, as the scale of ambitions are probably not big. What India needs is probably 10 companies in next 10 years with US$100 billion value, which will be built ground up from today for the future needs and new world. China after decades produced one hectacorn, Ant Financial, while the rest of the world has none so far.

The other piece that the country needs to work on fast is to take technology to masses. India is a massive country, with 90% population that is not primarily English and possibly non tech literate truly, but has a mobile. It is not enough for a rural youth to watch a regional language movie or share a local video on a mobile app, but she should be able to write a program in local language to track the expected rains and change the irrigation frequency or intensity. In the world of connected machines and IOT, this will be quite easy through modules, save for the language barriers. Taking technology to masses would mean bringing this vast number of people that are currently digital have-nots into the mainstream. The impact of this on the productivity and the sentiment would be humongous over next 10 years. One could say that China managed this well, one sees the Chinese heavy equipment like turbine comes with instructions in Chinese. Of course, they had one language, India has 22 official and hundreds of dialects. The task is quite herculean, but if the fruits of Industry 4.0 are to be uniformly distributed across population and inequality which is already dangerous is not to spill into bloody revolutions, then there is no option to this.

To summarise, as 2020 beckons, creative technology adoption is necessary immediately to realize the target US$ 5 Trillion economy by mid-decade; while simultaneously hacking a plan to create 10 hectacorns and billion tech savvy people.