As India’s economy takes a halt amid the coronavirus crisis, the country needs to leapfrog ahead to achieve the employment and productivity growth needed. India needs to put growth on a sustainably faster track and meet the aspirations of its growing workforce, said a report by McKinsey & Company. The report highlighted that over the decade to 2030, India needs to create at least 9 crore new non-farm jobs to absorb the 6 crore new workers and an additional 3 crore workers who could move from farm work to more productive non-farm sectors.
Three ‘growth boosters’ can spur $2.5 trillion of economic value
Global trends such as digitization and automation, shifting supply chains, urbanization, rising incomes; demographic shifts; and a greater focus on sustainability, health, and safety are accelerating in the wake of the pandemic. Within these three growth boosters, the McKinsey report found 43 potential business opportunities that could create about $2.5 trillion of economic value in 2030 and support 11.2 crore jobs, or about 30 per cent of the non-farm workforce in 2030.
It has been suggested that India should introduce sector-specific policies to raise productivity in manufacturing, real estate, agriculture and food processing, retail, and healthcare sectors. Besides, unlocking land supply to reduce the cost of residential and industrial land use and creating flexible labour markets with stronger social safety nets and more portable benefits have been emphasized.
Perks of privatisation
Large-scale privatization is expected to more than double the productivity and potentially contribute between 0.2 and 0.4 percentage points annually on average to GDP. India has about 1,900 state-owned enterprises, of which we estimate about 400 could be privatized and it is estimated that just 2 per cent of all PSUs could yield as much as 80 per cent of total value from privatisation.
Meanwhile, reducing commercial and industrial (C&I) power tariffs through new business models in power distribution; improving the ease and reduce the cost of doing business; and using more household savings to capital markets are other recommendations mentioned in the report. It has also been highlighted that the financial-sector reforms can help India meet its $2.4 trillion capital requirement.