As one of the world’s fastest-growing large economies, India occupies a prominent position on the global stage – and its ambitions are high. The Modi government aims to turn the Indian subcontinent into a $5 trillion economy by 2024. To do this, it will have to expedite its current rate of expansion and achieve growth at a rate of more than 12% per year.
Unsurprisingly, the rise of advanced technologies and digitalization has been identified as a vital enabler of growth for India and its neighbours. The OECD’s Economic Outlook for Southeast Asia, China and India 2018 was devoted to the topic, noting that each region has enthusiastically embraced this new wave of change.
As a result, internet penetration – the basic prerequisite for participation in the digital economy – has rocketed. According to the market research agency Kantar IMRB, India’s internet users will register double-digit growth this year to reach 627 million as rural areas are increasingly switched on. Meanwhile, government and private businesses have led the charge on digital identity, artificial intelligence, fin tech, cryptocurrencies and the use of Unmanned Aerial Vehicles (UAVs) or drones.
There’s no doubt that hastening the adoption of these and other technologies that come under the umbrella of the Fourth Industrial Revolution could help India come close to or achieve its ambitions and leapfrog to an advanced state of development.
However, the OECD report also highlights that while digitalization undoubtedly presents many opportunities, there are considerable challenges in realising its potential to support inclusive and sustainable economic growth. It’s right to do so for two reasons:
The issue of effective governance is of crucial importance if new technologies are to be successfully adopted and deployed. That means encouraging citizen engagement, putting in place safeguards around data and security, designing responsible policies and monitoring social changes, particularly with vulnerable populations – both within and across national borders.
Sustainable growth is only possible when economic gain is pursued in a way that does not cause other significant problems, such as a lack of equal opportunity or reduced quality of life. While the words inclusive and sustainable are increasingly bandied about in popular discourse, it only takes a glance at progress on the UN’s Sustainable Development Goals to realize there is much still to be done.
Findings by the Business Roundtable – a lobbying organization that represents many of America’s large businesses – give an insight into the effects of prioritizing shareholder interests, including customer distrust and employee discontent. As such, 181 CEOs have signed up to rethink the purpose of corporations and committed to lead their own businesses for the benefit of all stakeholders. Though not directly involved, India’s Tata Steel has echoed the sentiment of the roundtable’s initiative: “We have amply demonstrated that our definition of stakeholders is much broader and goes beyond just shareholders.”
Multiple studies suggest that embedding sustainability in company agendas strongly correlates with creating shareholder value – the Dow Jones Global Sustainability Index (DJSI) has closely tracked and performed slightly better than the Dow Jones Industrial Average (DJIA) in recent years, for example. As an A.T. Kearney colleague wrote earlier this year, the notion that there has to be a trade-off between shareholder and stakeholder value is becoming an increasingly false dilemma.
With India on the threshold of advanced economic development, the leapfrogging opportunity is not only relevant to digitization, industrialization and economic growth; its governing administration and corporations also have the opportunity to overtake their international peers in terms of achieving growth with purpose.
In this respect, two vital aspects of India’s make-up will both contribute to and benefit from this:
1) A large and fast-growing youth population
By 2022, the average age in India will be just 28, in contrast to 37 in China and the US, 45 in Western Europe and 47 in Japan. This means its workforce will be dominated in the near future by millennials and Gen Z-ers – groups that place more emphasis on trust and shared values than their baby boomer and Generation X predecessors.
This applies both to the companies they want to buy from and the organizations by whom they want to be employed. A.T. Kearney’s Global Future Consumer Study finds that younger generations actively look and are willing to pay more for environmentally friendly and socially minded brands, while, according to Amanda Hammett, an expert on millennials, the number one thing that drives young people to quit their job is a lack of trust.
2) A heritage as one of the world’s least wasteful economies
Disproportionately affected by climate change, India has nevertheless built on its heritage as one of the world’s least wasteful economies. It took the top position in the World Economic Forum’s 2017 Greendex report, which ranks consumer response to environmental concerns.
India also played a leading role in shaping the Paris Agreement and has implemented forward-looking policy measures including efforts to reshape its energy mix in favour of green sources and phase out single-use plastic.
However, there are signs that results have yet to trickle through to the corporate world. In the 2019 Global 100, which highlights the world’s most sustainable corporations, no Indian companies were included. Clearly, more effort is needed by the private sector, and quickly, if true progress is to be achieved.
Saurine Doshi is Head of Asia Pacific at A.T. Kearney. This first appeared in World Economic Forum.