Renuka Ramnath: India’s deep pool of domestic surpluses can be directed towards startups

As India marches closer to the status of a $4 trillion economy and the world’s fourth largest, a crucial question emerges: how do we equip ourselves for the road ahead? For India to wear the crown of a developed nation, we require 10x growth targeting the $40 trillion mark.

It is not just growth, but other goals that need to be addressed. I believe there are five pillars common to every developed nation: economic strength, evidenced by per capita income, and backed by a stable fiscal/monetary environment; superior quality of life for all citizens, coupled with universal access to education and healthcare; social stability, backed by trustworthy legal systems; a fast pace of innovation and technological advancement; and strategic relevance to the global economy. Meeting these goals would also see us lifting millions out of poverty and building an India that withstands the test of time.

As we aspire to become a developed nation, the task on hand is to have broad-based growth which will be anchored on creating more than 100 million new jobs. According to projections by the Confederation of Indian Industry (CII), startups are expected to create 50 million jobs by 2030, which is certainly encouraging. In the last two decades, particularly, we have witnessed the emergence of innovative, tech-driven business models that have made a significant contribution to inclusive growth, having cultivated an ecosystem of new jobs and allowed for low-cost access to products and services.

Achieving developed nation status will require concerted effort and collaboration bringing together policymakers and business builders.

First, the government needs to bring accelerated policy development within 10-20 priority sectors that are directly linked to large-scale employment potential and can contribute to our target of more than 100 million new jobs. These sectors can be chosen basis a mix of factors including demand potential, supply-side factors including available skillsets, and keeping in mind sectors where human skills are indispensable. These could include diverse areas from labour-intensive manufacturing to core services such as healthcare and hospitality.

Second, policymakers and businesses will benefit from focusing on enabling more women to participate in this development journey. Currently, the female labour force participation rate stands at only 32.8%, as per the ministry of labour and employment’s 2023 statistics, or less than half of males. There is an urgent need to bridge this gap. To achieve this, we must prioritize initiatives that increase women’s employment opportunities. One key gap that needs attention is developing a robust care economy, boosted by investments in caregiving infrastructure, fair compensation for caregivers, and comprehensive training that includes technical skills and essential qualities such as empathy.

While implementing effective policies and initiatives is essential, it is also necessary to maximize entrepreneurs’ access to capital and fuel unfettered, disruptive innovation. India has a deep pool of domestic surpluses that can be directed towards startups.

In India, the Pension Fund Regulatory and Development Authority Act was enacted about a decade ago, allowing for a 5% allocation to alternative investment funds. Despite this regulatory framework, the actual involvement of these funds remains limited. In this context, there is an urgent need for the government to recognize that just enabling regulations is not enough.

Government-led allocators of capital can play a role in building strong guard rails around portfolio construction and prioritize fund managers who can deliver good risk-adjusted returns while driving agile, disruptive innovation in India and helping meet our country’s development goals.

Also, technology can play a significant role in strengthening our business environment and helping us leapfrog into development faster than the past experience of other economies. The transformative impact of innovations like Aadhaar, the Unified Payments Interface (UPI) and direct benefits transfers under the India Stack exemplifies this trend. By harnessing India’s technology talent, the government can further deploy artificial intelligence to streamline its operations, enhance interdepartmental coordination, build governance and deliver efficient services to businesses.

While technology certainly will take the driver’s seat in Mission Possible, we also need to be aware of its environmental impact, especially with sustainability becoming as important as economic progress. Climate change is staring humankind in the face, and particularly for economies like India, there are significant threats ahead like unpredictable weather, water scarcity and food security challenges. To mitigate these risks, prioritizing business consciousness around sustainability will be key.

I believe it is the tandem of policymakers, investors, and industry—along with a commitment to not just the introduction of policies but also meticulous execution—that will shape the future of our nation. The foundation of this synergy, however, must be built on the pillar of mutual trust. If we play our cards right, a brighter, self-sufficient tomorrow awaits India.

Renuka Ramnath is founder, managing director and chief executive officer of Multiples Alternate Asset Management.

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