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What Can Stimulate India's Post-Pandemic Economic Recovery?

Hrishikesh Panditrao (TYBIM)

Nobody ever is an entrepreneur all the time, and nobody can ever be only an entrepreneur. Leadership is more
important than ownership.” (Dr. Joseph Schumpeter)

Rather than the concept of an equilibrium that an economy returns to, business innovation involves continuous
disequilibriums, largely led by entrepreneurs. In a financial crisis, it's not the big organizations that change the
business landscape of the world. It's the small ones. The SARS virus in 2003 elevated the standing of Alibaba.
Reflecting upon the 2008 Financial Crisis, temporary restrictions gave rise to companies like WhatsApp, Facebook,
Airbnb, and Uber cab services. With even more intense restrictions during the COVID-19 pandemic, if India needs
to grow beyond just being called an 'emerging market', it will have to believe that the next class of entrepreneurs will
come from its soil. For implementing this successfully, it needs to ensure a brisk rate of rural to urban migration.
According to the Arthur Lewis Model, people move from rural areas to urban ones in search of an efficient
alternative to the agriculture sector. For the millions of people entering the workforce in the coming decade, we also
need to strengthen our MSMEs (Micro, Small and Medium Enterprises) as we think of this space to be India's
engine for creating more and better jobs.

Despite multiple fault lines in the economy, India has shown some positive signs as an investment destination,
something that can help its post-pandemic response. In
May 2020, the Indian government reached out to more
than 1,000 companies, to make India a manufacturing
hub. Of these, 300 of them are confident of executing
these plans and have agreed to comply with the Indian
government through their signatures. The rest of them are
yet to issue their conditions for a business-friendly
environment and are still planning the location and scale
of investments. Surprisingly, these companies do not
intend to manufacture in urban centers like Mumbai,
Bangalore and Delhi. Instead, the Indian Government
wants to create more urban centers for itself apart from the contemporarily most well-known ones. As is seen in
industrialized countries across the world, urban centers are not just one of the many instruments of economic
growth but rather the one that drives it. In China, 23 cities grew from a population of one hundred thousand to more
than a million since 1950. Shenzhen, currently one of Mainland China's first urban centers was considered a fishing
village in the 1980s, comparable to India's Dharavi. However, it grew from a population of 310,000 and a GDP of
$160 million in 1981 to a population of 12.5 million, a GDP of $388 billion, and a per capita income of more than
$30,000 by 2019. The quality of life in Shenzhen today can be compared to regions with similar populations like
Singapore, Taiwan, Israel, Finland, and Sweden. As of 2012, India had just 6 urban centers. A more aggressive effort
to encourage urbanization can boost India's long-term growth to double digits. At a time when India lacks enough
electricity supplies along with proper infrastructure facilities, connectivity and skilled labour, these initiatives seem
to be a daunting task, but require indomitable will.

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