Government needs to handhold & slow down pace of labour displacement by incentivizing labor-intensive industries: Bindu Dalmia

Bindu Dalmia, Chairperson for NITI Aayog’s National Committee on Financial Commission, is of the view that the Government needs to handhold and slow down the pace of labour displacement by incentivising labour-intensive industries. ‘’We need to adapt to new disruptive business models such as Airbnb, Uber, Amazon and Alibaba who have introduced the formats of sharing economy or on-demand economy’’. Speaking on Roadmap to a $5 Trillion Economy’ hosted by MCCI (Merchants ’Chamber of Commerce & Industry) at Kolkata recently, she said India is facing the third slowdown since 1991, and each time India has displayed the resilience to emerge stronger. ‘’However, we do not have the luxury to maintain the statuesque, she pointed out. The sooner we can capitalise on our demographic dividend and other comparative advantages, the faster we will achieve an upper middle-class economy status. Currently, our per capita monthly income stands at just Rs. 11,254 in 2019/20 as per the Ministry of Statistics. The window of opportunity to scale up from these lows will run out if we fail to improve on our Human Development Index. 
Speeding up on economic growth is the only antidote to civil unrest and combating social ills. Mitigating poverty requires reducing our over-dependence on agriculture as a source of livelihood, as 58% of our labour force is dependent on agricultural income, which accounts for only 14% of GDP. The Government needs to handhold and slow down the pace of labour displacement by incentivising labour-intensive industries. We need to adapt to new disruptive business models such as Airbnb, Uber, Amazon and Alibaba who have introduced the formats of sharing economy or on-demand economy. ’She said the dominant propeller of growth during the slowdown has been the government spending on infrastructure and welfarism, even if the government was compelled to exceed the fiscal deficit target by 0.5%. So long as governments deploy additional borrowings towards capital expenditure that creates long term asset building, IMF or rating agencies do not view this negatively. The opportunity despite the crisis is that Digital India can emerge as the next engine of growth. Leveraging the potential of Digital India can take the Indian economy towards the $5 trillion mark much faster, she added. What India needs is learning from the likes of Alibaba’s Tabao platform, the world’s largest e-commerce marketplace, which reduced SMEs’ cost for innovation, widened the ambit for entrepreneurship and offered cross-company linkages for cooperation; all of which reduced the early stage fixed costs for start-ups. Every innovative entrepreneur now has easy access to funding, technology, talent and strategic partnerships through these platform enterprises of Alibaba, namely Taobao and Tmall. (Note: Taobao Villages are rural e-commerce hubs that service and train farmers to engage in online sales of farm produce.) India also needs to understand how China implemented its ‘E-commerce Poverty Alleviation Projects’ and solicit domain expertise on lines of what Jack Ma provided to the International Trade Centre and UNCTAD so as to internationalize the e-commerce experience. Improving the healthcare industry through faster Internet penetration can drive the adoption of tele-medicine, improve resource efficiency and rapidly expand access to preventive and primary health services. In the education sector, a quantum leap is possible only through remote online learning. Reviving investment inflows requires a series of confidence building measures so that investors opt for India as a preferred investment destination. The global community has for long viewed Brand India through the twin lens of admiration and scepticism, knowing that a population of 130 crores is a marketeers’ dream, yet expressing scepticism about pervasive corruption, fickle business policies, and bureaucratic impediments. The first step in actionable measures is improving on parameters of Ease of Doing Business. The Government must become taxpayer and investor friendly. The Government needs to reverse the capital and calibre exodus from the country by engaging in confidence building measures. With real-time intervention, future budget making will be an annual event, but course-correction and timely intervention will be a round the year phenomenon, so as to expeditiously redress sectoral concerns. Politicians know better than us that it is only good economics that makes for good politics, which ultimately yields electoral dividends, Bindu Dalmia added. Earlier Shri Vivek Gupta, President, MCCI, said that everyone is aware of the current economic slowdown in India. He added that the population of the country is rapidly growing and enquired how the Government will deal with this. Also, the flow of bank credit to entrepreneurs needs to pick up, he mentioned.
 

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