The Indian economy is experiencing a significant structural shift, driven by increased access to affordable capital and technological advancements for its entrepreneurial sector, according to Neelkanth Mishra, Executive Director at the World Bank. Mishra, who oversees operations for India, Sri Lanka, Bangladesh, and Bhutan, noted that disciplined fiscal policies over the last decade have been instrumental in controlling inflation and lowering the cost of capital for businesses.
Speaking ahead of the 24th Hindustan Times Leadership Summit in New Delhi, Mishra highlighted that the government’s current economic approach encourages the private sector to utilize capital more productively. This strategy has already yielded results, with the number of active companies in India rising to 2.2 million from 1.6 million over the last three years. Mishra remarked that this trend toward business expansion and job creation is notable.
Technology, particularly advancements in artificial intelligence and the Aadhaar-based digital public infrastructure, is expected to be a major catalyst for small and medium-sized enterprises. Mishra suggested that these tools could empower a significantly larger segment of the population. While there were previously about five to six million software engineers in the country, the integration of AI could potentially involve up to 100 million people in technological development.
Regarding manufacturing and trade, Mishra expressed some skepticism about the current design of Performance-Linked Incentive (PLI) schemes in sectors beyond electronics. He emphasized that for schemes to succeed, they must reward scale, citing the footwear industry as an example where businesses need to provide millions of units to attract major global contracts. Additionally, Mishra suggested that India should focus on aligning its demographic dividend with the needs of countries facing ageing populations, such as Japan, the UK, the US, and Australia, through controlled migration and skill-specific mobility agreements.
Key facts
- The number of active companies in India increased from 1.6 million to 2.2 million over the past three years.
- Neelkanth Mishra is the World Bank Executive Director in charge of India, Sri Lanka, Bangladesh, and Bhutan.
- India’s consumer inflation dropped to a decadal low of 2.06% during the last fiscal year, following a peak of 10.5% in FY13.
- The 24th Hindustan Times Leadership Summit is scheduled to open in New Delhi on November 14.
Why it matters
The emphasis on lower capital costs and digital infrastructure aims to stimulate domestic entrepreneurship and employment. By aligning human resource exports with the needs of ageing economies globally, India intends to manage its demographic dividend more effectively over the next decade.
Source: Livemint, Hindustan Times
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