Day 4, Thursday, 21 January 2016
“Bet big on India for 2016.”
With a growth rate of 7.5%, India has weathered global headwinds and has achieved a growth rate which is the envy of the world. Sitting today at Davos at the India session, I had the opportunity to hear our Finance Minister, Arun Jaitley, describe a scenario of 9% growth being the norm for the country if it can overcome a few minor regulatory hurdles and cross-party differences. He sounded especially confident sitting in his orange tie and Indian tricolour cufflinks.
With China about to come down with a hard landing, and falling commodity and energy prices providing the much-needed fiscal legroom required by the FM, he was optimistic about India being the shining star for the second year running. This is not to say that we don’t face significant global challenges on a politico-economical spectrum: from the US Fed’s deviation away from 0% interest rates, a continuing hangover in Europe over a possible Grexit, the ever-increasing probability of a Brexit, to the complex regional opera playing out between Sunni-Shia relations in the Middle East, India is lucky to be buffered from some of the challenges.
What stood out most from this year’s conversation, aside from the cheeky blows amongst the Congress’ Kamal Nath, CM Naidu, and FM Jaitley over the roll-out of GST (with NDTV’s Vikram Chandra aptly brokering peace before a more colourful set of outcomes could have arisen), was the focus on entrepreneurship from all the stakeholders in the room. ‘I think the world is ready to bet on India!’, John Chambers of Cisco exclaimed. ‘The last start-up culture in 2008 was driven by necessity’, Sunil Mittal commented. ‘This one is being driven by design.’
We are all aware of the spirit of India. In many ways, while sitting here debating the fourth industrial revolution, as my last blog described, it appears that this era naturally belongs to India. With 28 million smart phones shipped last quarter alone, India’s consumers are poised to maximize the benefits of the planned broadband highway rollout. We must be cognizant that this does not automatically negate the gaps that we need to address domestically. From adding one million new employees per month to the creation of adequate IT infrastructure, India must invest further, both in its human capital as well as in its infrastructure capital, to achieve the 9% goal that the FM talks about.
We were all in agreement that the traditional business models will not match the demands of India’s new young middle class. We need to explore newer models that don’t rely too much upon public spending, and the general hope at Davos was that entrepreneurial activity would fuel domestic growth and drive the momentum needed to counteract the global winds I mentioned.
As an advisor to many start-ups in India, and with my VC hat on, I was especially excited by the panel’s commitment to the start-up culture and its willingness to help. Asked whether 2016 was India’s year, the overwhelming consensus across the entire group was a resounding ‘Yes’! Good news for us back home, but we all know how quickly the tide can turn. Now I’m off to try and ask the FM where he got those cool cufflinks!
Dr. Marcus Ranney is Vice-President at RoundGlass Partners and a Global Shaper at the World Economic Forum. He completed his Bachelors of Science and Medical degrees from University College Medical School in London. He has served as a medical officer in the Royal Air Force and at NASA’s Kennedy Space Center for a shuttle mission to the International Space Station. Find him on Twitter at @docmranney.