Notes: These are remarks I made at the SKOCH Conference on  5 Trillion Dollar Economy held in  New Delhi on August 29 2019. The focus was on technology. I am tired of people touting a piece of technology to solve the world’s problems – like saying using Blockchain will make us all happier human beings, or whatever. Technologists are guilty of the “If all I have is a hammer, all I see is a nail” approach to problem solving. Please read with this as the context. Thank you.

Five trillion dollars is a big goal – especially seeing as how we are now facing an economic slowdown. Why talk of it? I take inspiration from two great quotations – one from the old world and one from the new.

The first is the great Tamil saint and poet Thiruvalluvar. He wrote these lines sometime in the 4th century BCE.

தெய்வத்தான் ஆகா தெனினும் முயற்சிதன்
மெய்வருத்தக் கூலி தரும்.

deyvaththaan aahaa theninum muyaRchidhan
meyvaruththak kooli tharum

When faced with a huge task, which seems impossible even for the Gods, your selfless effort will produce rewards equal to what you put in.

The second is President John F Kennedy. Speaking about the US Space Program, on September 12 1962, he said:

“We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”

Inspiring words.

I am glad we are talking of how to get to the 5 trillion magic mark in the next 5-8 years. India is a blessed civilization. Our people are hard-working, they are big savers, they invest in their social networks – and they are big, big risk takers. We constituted ourselves as a democratic republic out of the chaos of colonial rule and partition. For 70 years we have taken this system and made it our own. Except for 1975, there has been no threat to our form of government.

After liberalizing the economy in 1991, we have lifted millions out of poverty and changed the lives of people without doing anything destabilizing. And there has been a sense of gradualism – for example the share of PSU banking in terms of assets has come down from nearly 100% in 1991 to about 65% today without resorting to any Boris Yeltsin style privatizations.  This is a solid foundation on which to build.

If only we could now unleash the animal spirits that lurks in each of us, we will be well on our way towards this goal. To do so, government needs to withdraw from participating in the economy except as a consumer, a lawmaker and regulator, and instead focus on building the social and political equity that leads to the creation of economic equity.

The single most important imperative is to create and strengthen equity. Equity can be seen in three dimensions – Political equity, Social equity and Economic equity. In each area, the role of technology as enabler can be profound.

Bullding Political Equity

We need to build a political consensus that crosses party boundaries around the agenda for reaching this target. It requires bridge building across the country to make sure that politics are aligned towards development. It involves creating systems of government that generate greater trust and greater accountability to the public. The huge majority won by the BJP in 2019 makes me confident that a platform exists to create this Political Equity.

It is so important to harness technology to build the political equity needed to grow the country.  To cite a few examples:

Using  Twitter/Whatsapp/SMS to talk directly to people. The Aadhaar ecosystem can be put to benign use by using it to engage people directly on matters of policy.  They could be local issues or national issues. As India becomes more and more an integrated republic, we can strengthen our democracy this way. A small example – the white elephant that is the Mumbai monorail could have been avoided if they had bothered to engage people directly on their travel patterns. Ten years and billions of dollars later, it is now a visible waste of public resources. China is great for using its ID and phone system for surveillance. Why don’t we use it to bring people into policy making in a direct manner?

Use Twitter/Whatsapp/SMS to engage with civic services: Mumbai Police today encourages people to communicate with it on Twitter. They respond immediately. Why don’t we make this a formal system? It will be impossible to change the Indian Police Act, but we can make police more accountable this way?

Rather than push the BHIM App, I wish the government had made it mandatory for every municipal ward and taluk to build an app in the local vernacular to enable citizens to request for services, register complaints or keep people informed. Sure – everyone does not have a smart phone but that is changing. Civic engagement has to start somewhere.

India talks digital but does not do anything digital. We need to change that so that we can effect lasting change in our political system. So that development and civic virtues do not become a political football.

Bullding Social Equity

This is the most important aspect of equity, and in my opinion, most government expenditure and effort should go into this. Without social equity, unlocking economic equity is restricted to the wealthy, the tax payer and the upper middle class. Health care, primary and secondary education, availability of clean drinking water, good roads, decent civic infrastructure, public transport, law and order, and justice ideally should be available to all.  And at a price level that makes it affordable for the common man, and at a quality level that removes the incentives to make private arrangements. Indians invest in their family networks today not just as a cultural preference but also to make sure they have a social safety net. We need to minimize the economic imperative of protecting the downside to making this the friends and family network that promotes risk taking.

There are so many ways technology can be harnessed to promote social equity. A few examples from healthcare come to mind.

Disease Surveillance: Collection of field data on specific parameters is essential to form a picture of hotspots. This takes place informally today. Formalising this helps concentrate disease control action where needed quickly and expeditiously. It also helps allocate Primary Health Care resources for triaging. As a tropical country India is fecund for vector borne diseases. Creating the mechanism for collecting vector data, consolidating them and creating district and state level alerts would greatly help. Additionally this data could also drive civic action. An example – a malaria outbreak should initiate civic action to unclog drains, remove stagnant water pools and educate the public. If citizens can be reached directly it enables them to take action quickly based on authoritative government inputs than based on rumours.

Specialised medical networks: Industry bodies like, say the Indian Association of Paediatrics, hold events regularly for exchange of information.  Portals and Information Exchanges that doctors can update and consult for tricky cases, linking doctors via Whatsapp and social media to an expert formally rather than informally.

Formalising Primary Health Care for Infant Children:  A uniform Child Book – like the Red Book in the UK – supported by an App or SMS based system – to provide milestone alerts, vaccination alerts and warnings. Such apps can be built by third parties but based upon a set of APIs or Data Sets available from the hospital to national standards. A fully commercial model, where the app is paid for and run by private parties under government supervision.

Edutech: Strengthening delivery in classrooms, supplementing the teacher. Rather than selling iPads or lessons to kids I would prefer to see the government make use of their capabilities in service delivery in addition to the Edutechs evolving business models of their own right.

Assisting in Creating Economic Equity

This is equity in the financial sense. Encouraging domestic capital formation by mobilizing domestic savings is the one of the most important factors in achieving the magic 5 trillion number. Recall that Indians are great savers. But since for most Indians, there is no safety net available to catch them on the downside, we tend to protect our own downside by putting money in liability products of FIs, or in gold, or in land. Money loaned to FIs then goes into equity. The FI gets all the benefits (and the downsides) of equity investment. The saver gets his 6%. Even taking portfolio choices into account, the percentage going into equity investment is quite low. Indians are risk takers. But the willingness to take risks is constrained by the lack of a safety net.\

Government must focus on political and social equity and cut back its role in the economy. The most essential economic role government can play is in ensuring a level playing field, a clear regulatory and legislative environment that is predictable and fair, and act to facilitate private investment than replace it or crowd it out.  Indians can be found building and running businesses in all parts of the world. Why not at home here?

We are subject to two major external economic forces for the time being. One, Global macro conditions like interest rates in the US, which decides how much of private capital flows to India. Two, the price of oil.  We cannot do much about the latter in the short term, since we are net oil consumer. But in the interest of economic and social equity, long term technology planning to reduce and replace oil in the economy is a national priority.

As for the first, US interest rates – it matters because we are net importers of capital. As long as domestic private capital formation lags, we have to rely on either government investment or external capital. The goal of building up economic equity is to promote domestic private investment. A healthy domestic investment thesis makes foreign investments easier. Our goal is to expand the investor base and  increase the propensity of Indian businesses to make investments. Social equity and Technology can play a big role in the former. In the latter, government has a big role in playing the role of a facilitator rather than a market participant.

If we accept that government should focus on Social and Political Equity and restrict its role in the economy to supervision and legislation, then some of their recent policy moves are questionable. Cutting the MDR on debit card payments to zero, for example. Simply hurts certain businesses and does not do anything for the economy. Digital is not a goal, it’s a means to an end. By the same token, the “shock” of demonetization would also not have happened. It failed in all its stated objectives and instead caused a GDP and investment decline that has hurt the economy.

Manufacturing is technology. Revitalising manufacturing and making India a manufacturing powerhouse was part of Make In India. It has not worked because we have not managed the environment in which manufacturing operates. The failure of “Make In India” has received a lot of attention. Much of it has to with economic policy. But let us not forget agriculture.  The fall in agricultural prices combined with reduction in land monetization opportunities has caused severe economic pressure which has resulted in a fall in demand. We should not apply shocks to change this. But we need sustained investment in the sector and in rural areas to create employment.

What can we do in terms of technology for agriculture?

Reducing climate and weather uncertainty – Using satellite and drone technology to map micro-climate patterns, soil characteristics, plant growth, pest and disease monitoring.  This is at incipient stages today – very interesting satellite and drone technology being used to help agriculturists. Tying in satellite weather reports to local climate conditions to help predict local climate conditions. A lot of interesting work was show-cased at the IOT Seminar on Agriculture in Bangalore a few months back. The business model was to get the technologies paid for Financial Institutions providing products as a mechanism to assess and monitor exposure.

Hydroponics and Crop Planning – India has 16% of the world’s population and 4% of the world’s water. We have to change the way we manage water use. Political will is required in ending rice cultivation in dry areas where ground water is used – a non-replenishable resource when used in such quantities as Punjab has found out. We need to move to crops that do not need so much of water. Businesses and governments can help – government in reeducation and businesses in packaging traditional dryland crops to the general public.  Hydroponics requires intelligent measurement, monitoring and dispensing systems. This is not easy. Facing a distressed rural economy we need to be careful with how we go about it.

Fintech in agricultural finance: Easy loan origination, tied in to crop progress, with cash repayment and electronic repayment options. The Fintech ecosystem has not expanded into rural areas. Rural finance requires an assisted approach that marries savings with loans.

I have limited my remarks to the overall objectives that technology should achieve in the context of the overall macro-economic and socio-political framework. We have to work back from the overall goal and make opportunities available for technologists to create applications in these areas. It has to be on a sound commercial model. If we pull together the goal is certainly achievable.

2 thoughts on “Toward a Five Trillion Dollar Economy – Technology Imperatives

  1. Almost a research paper. Intrigues by how you have highlighted use of technology in various spheres to bring about the objectives of political, social and economic development (prefer the word development to equity).

    Every Ramamritham would do well to read your post. You should also add another dimension to use of technology – use it to fire half the Ramamrithams.

    The only area I disagree with you is that India is a land of savers. It used to be. Not anymore. Indians have got hooked to debt as much as other cultures. The level of debt amongst the poor is enormous. And hat too debt taken at outrageous rates of interest , from sharks, for non productive expenditure. Ever domestic help I have had for the last 20 years has taken loans at upwards of 100% p.a. interest for some enormous spend at a social event to “preserve status” in the community. The middle class has got hooked to the word EMI, which has now become ubiquitous. So much so that the current slowdown in the auto industry is not because of supply and demand of cars ; its because of the NDFC meltdown.

    I didn’t know you could quote Thirukkural 🙂


    1. Thanks Ramesh – the opportunity to speak gave me the push to think about this a little more. There were a bunch of IAS officers in the discussion and I was able to tell them that Government needs to get out of business.

      I am a bit shocked at the indebtedness you describe because it is not borne out by empirical evidence. Savings have fallen but is still quite high, relatively speaking.

      For Thirukural – that is all Ramya! She knows quite a bit.


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