India became 3rd largest economy in the world with respect to PPP (Purchasing Power Parity). The following are the Insights from a Conference held at ISB, Hyderabad on Deccan Dialogue related to Economics, Industry 4.0 and Society 5.0.

Industry 4.0: Transition from Industry 1.0 to Industry 2.0 involved development of assembly lines. Industry 3.0 involved mechanical and digital integration. With Industry 4.0 handwork is reduced and smart factories are being developed. Industry 4.0 comprises disruptive technologies such as Artificial Intelligence (AI), machine learning, data, analytics, robotics, and high performance computer technologies. FinTech (Financial Technologies) are leading disruption in both technology forte; banking and financial domain. For example, Amazon also developed technologies for payments, deposits and lending catering to emerging markets including India, and Brazil. The need of the hour is re-skilling and up-skilling for Industry 4.0. That is, there is need to create workforce for the jobs which do not exist now, but make them ready for future jobs. India is getting AI readiness. Manufacturing and agriculture can benefit from Artificial Intelligence.

Industry 4.0 objective should be to transform lives of people and put them in Society 5.0. AI, Internet of Things (IoT), digital devices, science and technology should improve lives of people. Industry, trade, technology, AI, 3-D printing, data flows, analytics, robotics for manufacturing, investments, competition, and adopting to change help Industry 4.0. For example, Sneider Electric in Hyderabad could implement Industry 4.0 related technologies. Microsoft could develop an eye diagnosis/treatment prediction system for LV Prasad Eye Institute. India is one among top 50 computer manufacturers in world. Employment in India moved from:

Agriculture => Industry => Digitization

Opportunities for India: As on 2019, India’s target is to achieve $5 trillion economy. It is possible only with community involvement. India is ranked at 77 in ease of doing business. India is the largest opportunity for outside world. Retailers like Walmart also entered into India by acquiring 77% stake (worth $16 billion) in Flipkart. 70% of the organizational wealth is in human resources who come and go every day from workplace. As the world is shifting from Asia-Pacific to Indo-Pacific; new opportunities may evolve to India from nearby countries. North-East policy of India is for economic development of north-east region. Recent thought of merging of weak PSBs (Public Sector Banks) in to fewer stronger banks gives us more opportunities or creates more wealth; we need to wait and watch! India’s position is at 15 in banking in the world. Policy making is now towards consultative and outcome oriented.

Developmental Economics: “Startup India” movement could create 15,000 startups in 5 years in 500 districts of India. Hope some contribution will come from these towards our target of $5 trillion economy. For example, 11% of Indian software exports are coming out of Hyderabad alone. Regional projects in areas such as life sciences, pharma, manufacturing, power supply, irrigation, micro irrigation, and organic farming are leading to growing economic activities in the region. Andhra Pradesh (AP) government could create 537,000 jobs in 2019H2. Disruptive job creation requires intelligent startups. KIA Motors in AP is using 700 robots in their facilities in AP. KIA could create 8,000 jobs in AP.

Ease of doing business, skill set development centers, policy making, creation of jobs and industrialization-but not at the cost of environment are helping Indian progress. Creation of wealth should create jobs.

Globalization and Opportunity Sharing: Geopolitical engagements, exchange ideas, cooperation, explore opportunities and technological changes are helping interactions with outside world. It is the era of globalization. Indian investment policies lead to further liberalization, privatization and globalization. 100% FDI (Foreign Direct Investment) is allowed in coal-mining; and single brand retailing sectors in India. With more ease of travel, India is now issuing e-visa to 54 countries people. The initiative of BRICS (Brazil, Russia, India, China and South Africa) was to benefit developing world. Restructuring of international financial institutions is impacting Indian economy. Global governance identified the importance of participation from emerging markets. For example, tiny countries like Estonia became completely digitized.

India has 1/6th of world population. Enhanced regional connectivity definitely boosts global economy. Intra-regional trade is for growth. Development partnerships should lead to sustainable growth. Innovation, indigenization, sustainable solutions and co-operation contribute to developmental economics. For example, In Telangana state of India, FDI is attracted in areas such as ICT and electronics sectors. It is the first state in India to have IoT (Internet of Things) policy. Internal and external disruptions may give quantum jump.

India is in 19th position in global exports. It is contributing 1.6% to global exports. On the other end Brazil with Vision-2030 is planning for free trade agreements and sustainable development by being part of G4 (Brazil, Germany, India and Japan) nations and BRICS countries. In 2017, Brazil was the 4th preferred destination for FDI in the world. Domestic economic reforms are balancing trade. Brazil even has 2030-2050 vision for forests and agriculture. The Brazil journey started with science further it was as follows:

Science => Politics => Business => Civil Societies => Economics

On the Other side Australia is making calculated steps towards development. Their specific developmental moves makes clear that short term reactions will have long term consequences. One beauty of Australia is that Australia has not experienced recession during global melt down also. Economic liberalization and reforms, manufacturing with automation, and artificial intelligence became part of Australia now.

When we discuss about globalization and partnerships, we should not forget the more than 30 year partnership between South Korea and Japan. Research indicates that geopolitics induce economic actions for the world.

Economic image of a nation comprises its economic issues, environmental issues, employment and immigration issues. For example, India has partnerships with France and Japan as well. Trade, tourism and agriculture can help lives of people. Public transport, housing, and basic living require societal involvement. There is link between trade and investments. If there is more trade, investments start flowing. In 2001, India-US joint trade was around $20 billion. By 2018, it could scale up to $142 billion. Technology players such as Google, Amazon and Microsoft have long presence in India. Shared economic vision helps nations.

Entrepreneurial Comparison: Let’s do the following entrepreneurial comparison:

(Elon Musk Vs. Jack Ma)

(American Entrepreneur Vs. China Entrepreneur)

(Developed World Vs. Developing World)

The opportunities, challenges, and risks vary for both the entrepreneurs.

Global Education: Ancient educational institutions in India such as Takshasila and Vikramsila attracted foreign tourists centuries ago. Knowledge sharing is the philosophy. As on 2019, 12% of overseas education seekers go to UK. Around 22,000 Indian students go to UK every year. Indian students annually spend $15 billion for overseas education. In that $5 billion educational spending goes to US every year.

Economic and Financial Research: Lack of financial data research is hampering economic policy making. Lack of understanding of basic macro-economic concepts is impacting policy making in some of the countries. Research model development, data analysis, financial estimations should be used for economic projections. Value based research is effective in long term. We should encourage different research methodologies.

The US spends 18% of its GDP on healthcare. India spends 3.89% of its GDP on healthcare. According to some of the experts, one of the solutions to NPAs (Non-Performing Assets) is to privatize PSBs (Public Sector Banks). In India, major bank NPAs are reported from mining, minerals and construction industries.

In China, 140% of GDP (as domestic credit) goes to private sector. In India, 40% of GDP (as domestic credit) goes to private sector. It is best practice to have value based economic indicators rather than to have volume based indicators.

Challenges for India: Earlier across the world, competition was there for capital, land and other resources. Now the competition is about data. Indian higher education system is slowly thinking about becoming a prominent higher education destination by attracting outside talent. Consumptions may reduce during economic slowdown (in case of global phenomena). One major challenge India has is integration of ease of doing business with HDI (Human Development Index). With respect to India, more governance helps FDI administration, guiding and skilling. 65% of Indians depend on agriculture income (which is hardly 20% of GDP). One more thing is rural population India comprises 69%.

Happy learning………..

Dr.Goparaju Purna Sudhakar

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