India Needs Inclusive and Sustainable Growth

"People’s incomes are going down, which is what we have to think about when we talk about innovation,” said Om Prakash Bhatt, Chairman of the State Bank of India at India Economic Summit. “We have to look at the numbers and quality of life. [Millions] are living on less than one-half a dollar per day. We do not have inclusive growth in India, which means we do not have sustainable growth.”

Public-private partnerships have the potential to drive growth, particularly in the agricultural sector, but government’s role should be limited. “Government needs to create a healthy environment for entrepreneurship, but should not be restrictive. I believe in the power of entrepreneurship and in giving people economic freedom,” said Sriram Raghavan, Chief Executive Officer, Comat Technologies, India, and a Young Global Leader.

A series of innovative public-private partnerships in rural development are being rolled out across the country and 250,000 villages will be connected to broadband by 2012. “If we keep moving forward, we can create stable livelihoods in rural areas,” said Arvind Mayaram, Additional Secretary and Financial Adviser, Ministry of Rural Development of India. “We expect these partnerships to be business relationships so that the model is sustainable and scalable.” At the same time, many villages are thriving by providing services. “When you combine village entrepreneurship with connectivity, you have a robust model,” he added.

India’s potential is “huge” according to Ben J. Verwaayen, Chief Executive Officer, Alcatel-Lucent, France, and a Member of the Foundation Board of the World Economic Forum. Consider that 15 years ago, voice telephony penetration was just 1% compared to 70% today. “India started to grow when it combined talent and connectivity with the world. We need the same Internet penetration as we have seen with voice.”

The government needs to reconsider its policy on GMOs (genetically modified organisms) if India’s agricultural potential is to be unleashed. “Subsistence farmers need to get to a profitable level. India has great soil; it’s a very fertile country. The issues are technology and business models. We need to understand the science and create a framework for genetic modification,” commented Ellen Kullman, Chair of the Board and Chief Executive Officer, DuPont, USA and a Summit co-chair. “It will take technology and partnership with government.”

Key is creating opportunities in rural areas, which means creating mechanisms to fund entrepreneurship. At the same time, simplicity is all-important, according to Elisabeth Comstock, Senior Vice-President and Chief Marketing Officer, General Electric Company, USA, and a member of the Global Agenda Council on Innovation. “Simplicity in a product is a virtue that creates business models and new opportunities for people [in rural areas] to create services,” she said.

Watch the video of the session below: