As Modi 1.0 prioritised delivery of social sector schemes, Modi 2.0 must prioritise end-to-end solutions that will enable last-mile connectivity to help India leapfrog to the digital revolution
The ability to sustain the momentum of reforms amid an economic crisis is the mark of a decisive and robust leadership. Historically, wars, financial downturns, revolutions and pandemics have tested the economic stewardship of national leaders, triggering tectonic shifts in policies that were previously inconceivable. That Modi 2.0 has the political will and retains enough political capital to pursue the path of reforms is evident from the spate of recent policy interventions. While Modi 1.0 accomplished the most ambitious social sector reforms post-Independence, Modi 2.0 in its second avatar has persisted with the pace and scale of path-breaking changes.
The series of watershed reforms under way have ranged from commercial mining of coal, making India a global hub for aircraft maintenance and repair, building more world-class airports in Public Private Partnership (PPP) and moving towards indigenisation in defence production.
What remains to be undertaken on a war footing in the second year of Modi 2.0 is what I call “rurbanisation” of the economy which needs to gather pace as it will act as the much-needed social equaliser to bridge the growing inequality gaps. The World Bank estimates that the Coronavirus-induced recession could push 60 million people into extreme poverty in developing countries.
As India is among the most impacted nations, policymakers need to resolve the housing, education and healthcare deficits of rural India that have persisted since 70 years. Given the limitations of revenue collections in 2020, these goals can be achieved by the Government of India (GOI) in PPP mode, lowering the cost and availability of land, power and capital.
To accomplish the objectives of education and healthcare for all, the advanced onset of digitisation post-Coronavirus will act as the vital “equality enhancer” in expediting social and financial inclusion, extending to even rural India. This is because the pandemic has brought forward digital adaptation across strata by at least three to five years, virtualising almost overnight offices, education, healthcare, the marketplaces and governance.
Towards this goal, Doordarshan has planned 32 channels to deliver its Swayam Prabha content, which will act as a force multiplier.
Further, in order to complete the set of social reforms undertaken during Modi 1.0, there is need for few more additions to Jan Dhan, Ayushman Bharat, village electrification, toilets and so on, by bringing migrant labour beneficiaries, too, under the ambit of Direct Income Transfers (DIT). With 380 million PMJDY accounts till date, the Jan Dhan-Aadhaar-Mobile trinity has created an efficient database for social benefits to be transferred to beneficiaries through Direct Benefit Transfer (DBT.)
The way forward is by providing income support through digital delivery for displaced migrants by way of Universal Basic Income and Universal Basic Health and Education. The Centre already spends five per cent of the Gross Domestic Product (GDP) on subsidies that include multiple programmes. If an additional one per cent of the GDP is apportioned for a specified time, confined and limited to the duration of the Corona-induced crisis, this will provide the much-needed mitigative relief to rehabilitate the displaced migrants. India has roughly 80 million migrant workers across the country, which is due to the disproportionate economic development across States that has persisted post-Independence.
As industrial activity resumes gradually, it faces a crippling shortage of up to 52 per cent in the construction and real estate sector; 44 per cent in the manufacturing sector; 42 per cent in the healthcare and pharmaceuticals sector and 30 per cent in Fast-Moving Consumer Goods (FMCGs). With companies now willing to offer extra wages, incentives, bonus and transportation in an effort to woo labour back, the shortage in demand-supply makes it a plus, having the potential in the long-term to turn the job market into an “employee-market” as against an “employers’ market.”
The migrant crisis has bought to the fore the need for rural-urban rebalancing, making it even more important for States to grow their own Gross State Domestic Product (GSDP) and turning aatma nirbhar (self-reliant) by incentivising the domestic industry to invest in their States by creating specialised industrial parks where possible, and providing tax-exemptions for the first six to seven years.
Urban India has woken up belatedly to realise just how crucial low-skilled labour is to the host states. To provide labour an option to choose between working in their state of origin, policy makers and domain experts need to re-design a modern, rural India: a ‘Rurban India’. The PM has already urged industry to invest in the rural economy, think on lines of Smart Villages and participate in the rental housing scheme for migrant workers.
The fact is that in the interim, there is no alternative to Government spending on infrastructure or welfarist schemes and, therefore, we will just have to “spend and borrow our way out of the crisis”, till the job market stabilises. The Mahatma Gandhi Employment Guarantee Act, 2005 (MNREGA) is already looking at an ambitious target of 10 million man-days of work per day to absorb the influx of semi-literate/semi-skilled returnees.
Government-spend to handhold labour through cash transfers and skilling until the economy recovers is not a wasted expenditure, but on the contrary will yield remunerative outcomes in the near future as multi-lateral institutions like the International Monetary Fund (IMF) count India as one of the few economies that will rebound faster. This is because “India’s wide range of structural trends, including healthy demographics and competitive unit labour costs, work in its favour.”
Blue-collared and low-skilled/semi-skilled labourers have made the largest contribution to free market economies in producing goods and services at affordable rates, especially in developing countries like India, which has still not fully adapted to automation. The abundant skilled and semi-skilled labour pool is our single-largest human asset if wage-costs remain well-priced, which is different from being under-priced. India’s labour assets alone hold the largest weightage factor in luring relocating global value chains.
Re-accommodating reverse migrations has thrown up a forced opportunity to rebuild the rural economy from scratch, not repeat the blunders of unplanned urbanisation and instead move towards well-planned “rurbanisation.”
Labour-exporting States must capitalise on their resident human assets now back with them in order to build their own economies through those very hands that built a prosperous urban India. Out of 40 million migrants that returned home, 7.5 million are now seeking employment closer to home in semi-urban and rural areas.
Further, post-pandemic, the industries that are set to rise and which will help uplift rural India are in the sectors of remote education through Ed-tech platforms, tele-health, agripreunership, and the Khadi Gramodyog, which has helped in financing and setting up two lakh industry units since the last five years, while directly employing 5,26,000 artisans. Additionally, the Khadi and Village Industries Commission (KVIC) is set to become a nodal agency that supports jobs through the Prime Minister Employment Generation Programme (PMEGP) and also provide micro-credit. Micro finance lenders, too, can play an important role by building products suitable for semi-skilled professionals who are returnees from big cities, “So that in future they are not left as appendages of urban economy capitalists who had a ‘use and throw’ attitude to the vulnerable.”
Finally, my one actionable recommendation to complete the virtuous set of reforms for social and financial inclusion is that the biggest enabler aatma nirbharta is through owning gadgets like smartphones, televisions and tablets to bridge the digital divide.
Therefore, there is a need to lower the cost of these enabling gadgets by achieving economies of scale, increasing teledensity and improving digital literacy which will enable the transition to remote education, e-commerce, Fintech and telemedicine.
As Modi 1.0 prioritised delivery of social sector schemes, Modi 2.0 must prioritise end-to-end solutions that will enable last-mile connectivity to help India leapfrog to the digital revolution.
(The writer is author, columnist and chairperson for the Committee on Financial Inclusion at the Niti Aayog.)
