By Clare Premo ’16
Our time in India was quite eye-opening in terms of business lessons learned.
Perhaps the most common refrain we heard, and one that gives me the greatest hope for the future of the country is the major opportunity for economic growth that lies ahead. This is due to a combination of intrinsic factors in India, as well as international developments that make India relatively more attractive. For instance, India’s youth cohort is extremely large and there is a massive number of millennials ready to work. This robust addition to the labor force stands in contrast to many developed nations that face an employment crisis as the population reaches retirement. Furthermore, the slowdown of China and other emerging market nations mean that India is an increasingly attractive place for foreign direct investment. Since India is not a commodity economy and has a massive consumer base, it should be able to capture investments that are leaving these other countries in search of a better combination of stability and returns.
Another common discussion point was the stark gap between rich and poor and rural and urban. Even as millions of Indians enter into the middle class, there is still a vast chasm between the rich and the poor in the country. This occurs both in major metropoles where 5 star hotels neighbor massive slums, as well as in more geographically dispersed dichotomies between urban and rural areas. Finding ways to lift the fortunes of the poor without triggering even more migration into the already overpopulated major cities will be a major challenge for India going forward.
Another issue that came up frequently in conversations was the importance of investing in reliable infrastructure. From our conversations with Airtel, we learned that telecom is perhaps the most developed form of infrastructure thus far, and one can observe this given the widespread penetration of mobile phones across the country. The train systems are also quite extensive, partly due to the British colonial heritage. However, critical systems like water and sanitation are still underdeveloped, and the lack of these feed the healthcare crisis. It will require significant investment from the public and private sectors to bring these basic pieces of infrastructure up to snuff to promote a healthy workforce. Roads, airports and ports will also require continued attention in order to enable movement of goods and people and to power commerce.
We also noticed the contrast between conglomerates and entrepreneurial ventures in India. Most of the major companies there are diversified corporations, often partly family-owned, that reach across many sectors. These include Tata, Reliance, and Airtel. However, it seems like the next stage of breakthrough growth will need to come from new companies with the ability to hire new workers. In order to employ the millions of people entering into the workforce, the Indian economy will need to nurture start up firms. But the paradox is, most young people aspire to work for one of these well-regarded companies, or to find reliable employment in the very large public sector, and are loathe to try their luck at starting a new company or working for an unproven one. The Indian culture is more risk averse than the American one, and working for a failed company is seen as a personal shortcoming rather than just the way the business world goes. So long as young people shy away from small, innovative companies, India will struggle to incubate the kind of enterprises that grow and create jobs. Fortunately, the national government is promoting a program called “Start Up India” that provides loans to poorer people in order to give them funding for new ventures. Perhaps this will be the beginning of a trend that helps supercharge the next stage of economic growth.
Finally, all of these business lessons are moot if the environmental situation continues to worsen in India. Climate change poses a serious threat to the future of the country, and is already wreaking havoc on commerce and productivity. India is in the unenviable position of figuring out how to industrialize and develop while limiting greenhouse gas emissions and other polluting actions. It will be a major challenge to find clever ways to both grow the economy and shrink the environmental footprint, but it’s absolutely critical to create sustainable development.