 "India needs to learn from the mistakes of advanced economies: Jennifer Blanke")
Jennifer Blanke, chief economist, World Economic Forum, has written and lectured extensively on issues related to national competitiveness. A PhD in international economics, Blanke has served as lead editor on a number of regional and topical reports related to economic growth and development. In an interview with N Sundaresha Subramanian, she spoke on India’s competitiveness and the challenges it faces. Edited excerpts:
When the World Economic Forum (WEF) index of competitiveness was released, there was surprise in some quarters as it did not quite match with the perceptions in India and what the businesses have been saying. The jobs data released here the same day painted a bleak picture…
We are looking at drivers for medium to longer term and there is definitely an improvement. But, remember that India is many places behind China and China still has a lot of things to work at. China is not in the top 10 either. We are taking a holistic picture. We are looking at health, infrastructure not just the day to day business environment. There has been great improvement in maternity health and infant mortality. The macroeconomic environment is a lot more stable, there is a lot more confidence. However, it doesn’t mean that you have got there already. This is the government which is taking these things seriously and putting in place things that are making a change in the mindset. It is dangerous for India to get complacent. Even in competitiveness, a lot more needs to be done. Infrastructure has been built but lot more needs to be built.
Which are the areas in infrastructure you are looking at?
Transport — roads, railroads, ports — IT and energy... there has been some improvement but still a lot needs to be achieved. Health indicators are a lot better but still very low.
One of things people don’t realise is how important the size of the market is. It is a massive economy. Economies of scale make for a huge benefit. There are internal barriers, but in general it is a massive opportunity for India. Going forward, everything needs to be pushed further. India should continue to dismantle red tape. The labour market is a big issue… it should be made more flexible in order for businesses to hire more people and give them better jobs and these people holding those jobs.
But, businesses seem to want flexibility to fire more people…
The truth of the matter is, if it is so hard to fire people in bad times, how likely are you to hire in the first place? A lot less. That churn is good.
In a scenario where joblessness is at a five-year high, will such a move gain broader acceptance?
This is the issue: The inclusiveness side of the story. A lot of other things need to be built in terms of having a safety net, training, retraining and a decent-enough education. India has the second-mover advantage. A lot of advanced economies are struggling with the same issues. What can India learn from the mistakes that the US, France and Japan have made? So that as India comes up the value chain, it educates its people to make much more value-added efforts so you don’t make the same mistakes at a time things are moving super-fast.
What are these mistakes which can be avoided?
I think a part of it could be the way the labour market is structured. It could also be the education system. This idea of school, work and retirement, doesn’t work anymore. People have to be continuously learning. And, what they are learning is not appropriate. If computers and robots can do so many of our jobs, what is that we need to be learning? We haven’t figured that out. What are those skills that robots won’t figure out? Critical thinking, creativity — these are things we need to work on.
The government has started several initiatives under its Skill India programme. Do you think these would work?
This is the time to integrate it in. At a time when the US and Canada are working on how to improve their educational systems, India can get on the bandwagon and figure out what is it that we could do differently so we don’t make the same mistakes, at the stage of programming itself.
What you think about the buzz around start-ups? On one hand, these companies are valued at billions of dollars, while on the other the smaller manufacturing businesses that can create jobs are continuing to struggle for capital…
It is a tough question. The other thing is a lot of companies that are being built on the digital economy don’t have very many employees. That is a big question. I think a lot of questions are raised about so-called unicorns because you are not sure what they are until they actually get coded. But, there is something good in the dynamism they bring about. There are so many start-ups in the US started by brilliant Indians. You want those to be started up here. Not that everything will always be perfect. But, if you have that “can do” attitude, which Indians really have, you need to make sure you have the right structure in place to ensure that they can do it here and they don’t leave.
Many of them bet on the 1.2 billion number, but are now realising that the purchasing power of a majority of this population is much lower…
That story is going to die down now. It is very hard. It is very hard to even comment on that. Who knows some will work, some won’t. If you know which one, you are gonna be rich.
Unlike China, where protectionism helped local start-ups grow big, the Amazons and Ubers are here directly. Can Indian start-ups survive them?
In the long run, that competition is good. Whatever is built should be able to compete abroad. If you are a billion-dollar business you have to be built to go elsewhere, not just in India.