Explaining the factors that would be key to India’s efforts to stay resilient amid global headwinds, the NITI Aayog CEO – whose career spans four decades, across the government and the World Bank – sketched the roadmap to Amrit Kaal, or India@100, and outlined the action agenda for fueling India’s growth story and catapulting it into a developed nation by 2047.
A member of the Indian Administrative Service (IAS), Uttar Pradesh Cadre, 1981 batch, Iyer was speaking to Miloni Bhatt, Editor – Digital Broadcast, economictimes.com at ET India Rising, a multimedia interview series where some of India’s most influential decisionmakers and leaders share their outlook and insights on the challenges, opportunities, and trends that will define India’s rise as a global economic powerhouse, backed by three key economic pillars: digital financial services, MSMEs, and transit infrastructure.
On the road to resilience
Iyer highlighted three crucial factors that would be critical for realising the Amrit Kaal of an empowered and inclusive economy—in sync with the larger vision of India@100.
First, he stressed upon the importance of fiscal consolidation. He cited the Union Budget 2023-24, presented by the Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman, on February 1, 2023, which spelt out how the fiscal deficit is estimated to be 5.9% of Gross Domestic Product (GDP) in 2023-24. The targeted fiscal deficit is to be below 4.5% by 2025-26.
The second critical factor would be continued investment. As per Budget 2023-24, the capital investment outlay has been predicted to increase by 33% to Rs. 10 lakh crores, while the ‘Effective Capital Expenditure’ of the Centre is to be Rs. 13.7 lakh crore. In addition, Iyer lauded the government’s decision to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and continuation of the Welfare scheme. Towards this end, as per Budget 2023-24, the government has proposed an outlay of 1.3 lakh crore rupees.
Third, Iyer highlighted the importance of the financial sector, which has been witnessing steady growth. Gross non-performing assets (NPAs) have come down from about 11% four or five years ago, to 5%-6% today, he noted.
On the whole, the future belongs to skilling as emphasised in the Pradhan Mantri Kaushal Vikas Yojana (PMKVY)—the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE) implemented by National Skill Development Corporation (NSDC), said Iyer. Whether it’s artificial intelligence (AI) or blockchain, PMKVY 4.0 is set to invest in skill development to empower the youth force, to harness the untapped potential of the vast human capital or resource pool of the nation.
The big Indian dream of a $5-trillion economy
When asked how the global headwinds are likely to impact India’s aim of a becoming a $5-trillion economy by 2025, Iyer referenced Prime Minister Narendra Modi’s grand vision, and how this Budget, touted to be the Amrit Kaal’s first, provides the roadmap to India’s rise to be a global superpower by 2047. He outlined the building blocks towards realising that vision.
In terms of India’s growth path, Iyer stressed that some of the policy reforms undertaken by the Indian government to power inclusive growth, like the Goods and Services Tax (GST), the Production Linked Incentive Scheme (PLI), Insolvency and Bankruptcy Code, 2016, and thrust on Digital 2.0 aimed to transform the country through an acceleration of e-Governance, have already rolled out India’s fast-track journey.
According to Iyer, the blueprint for India’s rise to global economic leadership will be driven by:
● Mission LiFE: The Mission LiFE movement (Lifestyle for the Environment), launched by PM Modi at the Statue of Unity in Gujarat in October 2022, is envisaged to be an India-led global mass movement or Jan Andolan that will nudge individual and collective action to protect and preserve the environment.
From water conservation to household segregation, this entails the practice of conscious living and mindfulness, fundamentals which run in the traditional culture of India and its indigenous communities.
However, this is the first time a global movement is being built around it and is led by the Global South. Apart from the obvious global agenda-shaping thrust, broadly speaking, nudging individual behaviour will lead to a supply response, which will lead to an increased demand for more environmental-friendly products, further nudging industries and companies to produce them, culminating in a policy response from the Government as well. Iyer explained. “At NITI Aayog, we have a small unit called a Behavioural Insights Unit of India (BIU). NITI Aayog has been incubating the concept of LiFE, working together with the Ministry of Environment, Forest and Climate Change, supporting them and helping them to roll it out nationally; we provide the ideas and the innovations.” .
● Energy transition: The overall thrust on “greening the economy” has a special emphasis on green mobility. A major part of the green mobility belongs to Electrical or Electric Vehicle (EVs); India’s EV market is expected to grow at a compound annual growth rate (CAGR) of 90% in this decade to touch $150 billion by 2030, according to a report by consulting firm RBSA Advisors. This also presents a great opportunity for the Indian Micro, Small & Medium Enterprises (MSME) sector, as many of them are supplying components to the manufacturing sector of automobiles in the Internal Combustion Engine (ICE or IC engine) sector. They could also emerge as the next-gen manufacturers themselves.
● Green fuel: Another step towards “greening the economy” is to tap the huge opportunity of the fuel of the future, green hydrogen. The announcement of the National Green Hydrogen Mission earlier in January 2023, with an allocation of ₹19,744 crore, aimed at producing 5 million tons of green hydrogen annually by 2030, is a powerful leap towards that end.
● Women-led development: Committed to powering a She economy, Iyer recalled PM Modi’s clarion call for Nari Shakti and Nari Ka Samman on August 15, 2022. From the Swachh Bharat Mission aimed at transforming the safety, security, and dignity of women to the Jal Jeevan Mission, wherein over 11 crore rural households already have access to tap water connection, to the clean cooking fuel-centric Pradhan Mantri Ujjwala Yojana (PMUY), Iyer cited how the government has already been undertaking rooted and robust policy measures to empower women.
As a positive step to boost women’s return to the workforce, Iyer lauded the increase of maternity leave from 12 weeks to 26 weeks. Crèches at the workplace are going to be a game-changer. There are several policies in place for women in entrepreneurship. Case in point, NITI Aayog itself has the Women Entrepreneurship Platform, which focuses on helping, facilitating, and building the capacity of women who are in the startup ecosystem.
● The logistics juggernaut: When it comes to logistics expenses, Iyer agreed that the objective is to bring the cost down to less than 10% of India’s Gross Domestic Product (GDP), from the current 14%. The National Logistics Policy, which was launched in September 2022, is pulling together all the different aspects of the policy and implementation to revive the sector, he said. Additionally, NITI Aayog has worked together with the Department for Promotion of Industry and Internal Trade (DPIIT) to create the Unified Logistics Interface Platform (ULIP), a platform which pulls together government departments, manufacturers, associations, and enterprises.
To sum it up, Iyer pointed out that the Indian government works as a “facilitator” rather than a “provider” with its dual focus on reducing government and improving governance, as well as encouraging both ease of business and ease of living. This is a step forward to transform lives and the economy, he said.
Over the next 12 months, ET India Rising, powered by Visa, will bring you in-depth conversations with key decision-makers who will share their insights on how India can accelerate growth in the three foundational pillars that are essential to realising the vision of India becoming a global economic powerhouse by 2050. You can follow the multimedia video and textual coverage of ET India Rising on the Economic Times’ digital platforms that include ET Digital, ET India Rising dedicated digital content hub, ET YouTube channel, and ET social platforms; on TV at ET NOW; and on print via the Economic Times daily newspaper.