India’s Resource Crunch & it’s impediment towards Nation Building

Ethos :-

The Windfall of Great Riches can, if mismanaged, make things worse, not better , for the recipients.

Background :-

Above saying can’t be more congruent for our great nation. A nation blessed with enough of all riches (Natural, Climatic as well as Human Capital). The oldest human civilization embodied with principles of oneness among many & it’s underlying tenets of spiritualism, which tries to look beyond just the physical existence of human life.

Then why is it so that we are still a developing nation, a third world country (used derogatorily by our western counterparts). Why in spite of a population of 1.35 billion, with an abundance of natural resources and mildness of climate, we are failing to produce an all sustainable future for this great land? Why are we not able to contribute to the world in the true sense of research and growth? Why are our industries (except a handful few) not able to make a mark in the world consistently? Why no sustainable growth in Industrialization led by R&D culminating with the best of manufacturing?

The questions are varied and deep. Interestingly the underlying reasons are the same and starkly pervasive in all areas we lack to make a mark. The profundity of the discourse may at times sound acrid but if overcome in the true sense will go a long way towards building a shining India.

In the next few paragraphs or so , I would like to take you through from where we started as a civilization and how we faltered in deliberating our actions as per plans. These will be endorsed with datas wherever called for.

Logical denouement of the initiated write up will include minutia related to future looking plans which would need strict execution.

The Indian growth story  :-

Having skewed our views towards “WHY” in the prelude, let us now probe for the answers for the same. Ancient India (Bharat varsha) Started it’s growth story since they started settling down at the banks of Saraswat river (some 5000 yrs back). There are evidences which point out existence of puranic civilization much beyond 5000 yrs ago (under sea remanents of Dwarka-the temple city which dated back to the end of last ice age I;e 13000 yrs back).

As human settlement grew in the pre-vedic and vedic era, they certainly developed drainage, sewerage and reservoirs. Cultivated cotton and sugar and made widespread use of devices such as ploughs, kilns and furnaces. Mathematics was also pioneered at that time though more pertinent to celestial positions which were akin to the likes of seers, who could foretell the oncoming rains and draughts. The Rishis calculated planetary diameters from the nebular hypothesis and conservation of angular momentum of planets which condensed from the dusty gases of the solar nebula. These hard numbers are listed in Rig Veda. The order of planets and the name GURU for the gas giant are from these sizes!

 The days of the week are in the same order as distances from the sun. Vedas had the solar centered system right from the beginning.

However the earliest wisdom (puranic to pre-vedic era) was lost mainly due to the following major factors :

(a)    Most of these knowledge were in the form of smriti (mental assimilation) and not shruti(written forms).  Non written teachings are bound to lose tune and hence prone to modern adulteration.

(b)   The language in which they were taught were in verses with old language and phonetics. The same was hard for people to communicate and understand (creating conceptual ambiguity).

(c)    These accumulated wisdom were mainly centered around the idea of universal consciousness, rather than materialistic evidences. Hence their power waned as people lost their virtues.

(d)   Caste based system put a glass ceiling towards the all pervasive spread of knowledge and thus a significant few stifled the developmental richness.

Post vedic period saw the spread of science and knowledge around the world following the paths of trade & wealth, so it was true for the Indians. During late Mauryan period and Gupta period India was one of the richest places on earth. For example,  monopoly in Zinc processing. And the proportion of temple bells (that is bronze), conservation of water (Step wells), steel making etc. 

Royal support helped in the development of Mathematically  modern height & distances, geometry of plane figures, Decimal system, Quadratic equation and linear equations (books and scriptures such as Ganitpada).

Medicinally some of the ways for local anesthesia was developed as-well as advances were made in surgery, (explained in shushruta  samhita).

In warfare the Idea of prisoner of war was developed, though most them were used as slaves. But, before that all the prisoner of war were killed.

 A good comparison of particular countries/regions application of science and technology,  is it’s GDP per capita, as this metric is largely determined by individual productivity, which is in turn dependent on the technology, and skill set (education) of the population.

Recent research on ancient world economies by Angus Maddisson, have showcased that both India & china held a GDP sway of over 58%(india contributing to a sizeable 25% on the basis of nominal estimates) until 1750’s…At that time when India & China were prospering, America was busy fighting independence war and Europe was going through a new reckoning due to French revolution. Fast-forward to 21^st.century.

The entire story is turned upside down and now an average American and European is 23 times richer than an average Indian.

What went wrong?

We missed the bus of first industrial revolution.

Export has been the key component in prosperity of any country in the world; you name any developed country today and by default all will be export oriented countries. Ex. Germany, UK, China, Japan, UAE, South Korea etc. Before first industrial revolution, India & China dominated the world in terms of exports.

In the mid of 18th century, the source of power was human labor and almost all industries were dependent on adept hands. Britain learned the art of harnessing flowing water, wind as well as steam for power generation. This gave big boost to their Industrial production which gave them massive advantage over other countries. Power looms out did handlooms and thus India and China’s textile industry suffered heavily.

This was the first Industrial revolution. Europeans must get credit for this technological breakthrough which helped them become exporters of the world. Thus, this marked the beginning of European supremacy.

2nd Industrial revolution was in 2nd half of 19th century when again Europeans and Americans focused on large scale production with the help of electric motors, IC engines and even moving assembly lines. India missed this bus again and paid heavily for being a laggard in adopting Science & technology. In a nutshell, R&D then, was the major differentiating factor between us and western countries.

3rd Industrial revolution started with advent of computers in 1959. This changed the way we used to manufacture, communicate and analyze.

Post this China and India’s per capita income became so low that manufacturing in these countries or outsourcing to these countries became really attractive for developed countries. China seized the opportunity by opening its economy in 1978 which helped her to become “Workshop of the World” (manufacturing hub).

Finally in India, after one of the worst economic crisis situation, government was forced to open its economy in 1991. This opening of economy helped us to grow in leaps & bounds as it infused the much needed money & technology in the market but by then China had advanced too much in production hence despite of low manpower cost, very little scope was left for India to produce and export.

Luckily the language English, though cursed by many so called nationalists, came to our rescue. English gave us an edge in Information Technology and soon India became the “back office” of the world and the hub of IT and ITES services. This contributed from nowhere to one third of India’s total exports by late 90s.

Currently we are growing @ 7% per annum as compared to the rest of the World (@2.5%) because of our USP of low manpower cost. But this growth story is likely to come to a grinding end, because of new machines.

Let’s hold our thoughts here and revisit this when we delve into the 4^th industrial revolution (the most intriguing part of the entire write up)

Let’s for a moment now try and introspect the failure of the times gone by, which should be able to shed light on the rudimentary gaps culminating into epic failures recently (prominently since third industrial revolution).

This land had been a cauldron of ideas, which were learnt the hard way through physical involvement rather than bookish knowledge. By the time our European counterparts were looking for greener pastures east wards, post being driven out of their homes due to less of arable land and hence poor farm output leading to famine and establishment of a pirate system of economy (fugitive in nature). This mass exodus led to a series of invasions and land grabbing, which was in no way a tenable model of knowledge seeking.

At micro level as we appreciated and adopted, institutions of pirate system of economy. Most important of them was; our admiration and aspiration for migration to urban settlement. The moment this happened the value of residential homes took as base currency (credit) in place of previous institute of wealth generation “the agricultural land”.

Whoever arrives seven generation ago (in urban area) harbored; vast patch of land and converted it into residence; to be rented out (or sold out) to newcomers. In this situation the gap in, have one’s and have not’s widened disproportionately in favor of have ones. That is why today only 57 Indian hold wealth equal to poor 70% Indian’s.

Interestingly this basic form of bartering led to the concept of commercialization & a business based decapitation of education (rather than free knowledge seeking)...Just before seven generation from today; there was no value of this fictitious thing called “university degree “in Indian subcontinent. In place of it we valued the real institution of wealth creation the agricultural land, production and trade.

The entire young Indian teenagers were involved in some sort of productive (hand’s on learning) activities in place of disproportionately wasteful demands of studentship like uniform, shoes, books etc.

Due to this phenomenon (Aspiration and admiration of degree and servant hood by general public) the value of productive skills and tools of production (the trade secrets and arable land) fell in downhill rolling manner. 1856 AD onward India accepted heartily the pirate system of economy; by building universities; the deterioration rate of “Sone Ki Chidiya” Era increased tremendously.

Once this system of University based education was drilled into the masses through generations, there is no coming out of the rat race of numbers and objective thinking (relating only to materialistic gains and individual favour).  We lost rationale of knowledge and hence lost the art of introspecting on the various unbiased queries to the issues around us. Thus mind stopped asking  universal questions, hence stopped innovating and got busy with just mugging up what has been given to us (more so the same was established as harbinger of all materialistic gains).

India has never been able to shrug herself out of this muck since then. The colonial legacies are still very strong and ridicules our age old belief systems. Indians are more busy with coined words of SOCIALISM, MARXISM, FREE ECONOMY. No wonder we still remain a source of cheap, hard working & sustainable labor to the developed economies. Whatever innovations happen there, we silently copy and follow till another innovation breaks the silence.

The economic development strategy that India chose after the Second World War was marked by :

(a)    Dominance of the state in the economy. Development was considered synonymous with industrialization and industry was concentrating mainly on basic goods like steel and machinery.

(b)   R&D labs were few and capital influx was low due to poor economic conditions.

(c)    The above gap was reflected in channelization of natural resources for productivity at a mass scale.

(d)   Private capital was not seen as an efficient motor for development, and it was considered to have a tendency towards monopolization.

(e)   The chosen development strategy was one of import substitution.

(f)     Development policies included licensing of industrial activity, the reservation of key areas for state activity.

(g)    Controls over foreign direct investment, and interventions in the labor market. An anecdote to the laziness of an average Indian would not sound like pulling the strings here. We are slow adapters and love to look up to “GOD” rather than being a “KARMA YOGI”.

(h)   Low human potential to fuel the needed industrialization. We lacked even proper institutions to provide trade based training to catch up with the third wave of Industrial revolution.

As the chosen strategy turned out to be ineffective, bureaucratic and conducive to rent-seeking behavior, policy reforms were started in the 1980s, however were less consistent and they only became systematic and broader at the beginning of 1990s, following a severe macroeconomic crisis.

Fourth Industrial Revolution :-

Developed countries are at the cusp of embracing 4^th. Industrial revolution (as we graduate from productivity led growth to economic led growth) which is an imminent threat. Artificial Intelligence, machine learning and mechanized workforce can easily defeat cheaper Indian manpower, thus India’s biggest USP will be in danger. Already we are witnessing stagnation in IT sector because of algorithm based technology being used by importers of IT services. Thus, for us 4th Industrial revolution is very important and this time India must not miss this bus.

But the moot question is, what is 4th Industrial revolution, when will it start and from where will it begin?

Answer is simple, it has already started, it is everywhere and right now in your hand as well.

As per Prof Schwab, It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. It is marked by emerging technology breakthroughs in a number of fields, including robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, IoT, 3D printing and autonomous vehicles.

Siri by Apple and Alexa by Amazon are classic examples of machine learning. Now these devices talk to you and based on historic data, they even give suggestions. Autonomous driving is almost a reality now.

Last year in China more robots have been added than human.

So the  4^th. Industrial revolution might aggravate the problem of unemployment in India.

Is there any choice for India to not to jump on the bandwagon?

In this globalized world, India can’t stay unaffected by these technological disruptions. Only option for India is to embrace this and become the competitor, if not leader.

1st & 2nd Industrial revolutions were mechanical while 3rd & 4th are digital in nature. India has an added advantage in digital technology hence it is a golden opportunity for us to finally embrace the change. If we can channelize our energies towards the 4th Industrial revolution, we can again become “The golden bird”.

Another question comes here, what is the single most important component in capturing the 4th Industrial revolution?

Answer is Innovation and to innovate one need focus on research and development. As per Economic survey of India 2017-18, India’s spending on R&D is just 0.6% of GDP v/s that of Israel - 4.3%, South Korea - 4.2%, US - 2.8% and China - 2.1%. China’s absolute R&D spending is 20 times more than India.

Universities play a very important role in R&D but shockingly not even 1 Indian university is in top 300 universities of the world. At the same time, private sector plays a very important role in innovation but as per Forbes reports, there are only 26 Indian companies in the list of the top 2,500 global R&D spenders compared to 301 Chinese companies. This means the infrastructure for innovation is lacking in India at the grass-root level.

Currently, a bulk of R&D expenditure goes from Central Government followed by some private companies. State Government are least bothered about spending money on R&D.

With this kind efforts can we be the leader in technological space?

Few of the baby steps taken by Central Government will help us to make inroads into 4th Industrial Revolution like Atal Innovation Mission (AIM) in which Government is committed to establish Tinkering labs with Robots, 3D printing, sensor technology, IoT etc in 2500 plus schools by end of 2018.Digital India, Startup India, Make in India, Stand up India and Ease of doing business are also welcome initiatives by Government. Niti Aayog is expected to release National Policy on Artificial Intelligence which will probably hold the key to the future. Some of bureaucrats like Niti Aayog CEO, Amitabh Kant are doing their best to develop ecosystem of innovation. Few of state Governments are also taking steps in establishing incubation centers like Telangana Govt’s T-hub and Andhra Pradesh Govt’s Vizag Fintech hub. We must realize that we are miles behind developed countries in R&D hence these baby steps won’t be suffice in our endeavour.

We need to relook our education policy because currently it’s based on traditional way of gaining knowledge rather than experiential learning.

Currently, the Government is taking these steps by considering the 4th Industrial revolution as one of the many planned projects while they must make this as “the most important project” of the country.

Luckily India’s young generation is not ready to compromise and is ready to take on the mightiest of the world. There are several India startups like Arya.ai, Artifacia, Nebulaa and Aindra system are working in the field of Machine learning.

Finally, how as a common man, can we contribute to India’s journey towards 4th Industrial revolution?

Biggest weapon we have is the power of awareness about Government’s initiatives. Choice is with us as to whether we should debate on Mandir-Masjid issue, BCCI working, Salman Khan’s marriage (such issues are best left to the Legal system to formalize taking into consideration the broader inputs from the society at large) or check the status of AIM implementation, Startup funding by banks and State Government’s R&D budget. Until and unless we as citizens won’t push the Government why will our politicians look into the making of a conducive eco-system for 4th Industrial revolution?

The solution to most of the socio economic problems like poverty, casteism, reservation demands, corruption, unemployment, poor infrastructure, and poor healthcare can be addressed only if our country strengthens its economy and to do so, it needs to catch up with 4th Industrial revolution.

Almost 400 years back Francis Bacon had said “Knowledge is power” and now it is evident that countries with latest technological know-how are the most powerful and prosperous countries.

Let’s give big thumbs up to all Indian startup companies because they are our torchbearers for a prosperous India.

The Dichotomy (paucity amidst plenty)-

The fourth wave of Industrialization is the last chance we have a nation to join the league of developed countries. It is now or never and It’s time for governmental institutions to perform or perish.

Are we as a nation ready for the on slaught ? are the rules in place for transparent investment, discoveries, allocation and manpower training?

Let’s probe into some of the major areas, which ail and where persistent work has to be done. Further detailing would also call for defining the current structure of the three major areas of Education, Industrialization, Budgeting & planning (Resource allocation).

Challenges faced sector wise :-

1.       Natural Resources –

India produces 95 minerals– 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other minerals).

Among the minerals, reserves of coal, iron ore and bauxite are vast and will last decades. India's coal reserves of 293 billion tonnes are the fourth largest in the world and account for nearly 10 per cent of global deposits. Bauxite reserves of 3.5 billion tonnes and iron ore deposits of 28.5 billion tonnes are the fifth and seventh largest, respectively, in the world. 

But is India taking advantage of this geological windfall? The answer is a resounding “NO”.

Case A -- Take coal. Sixty years ago, India and China had comparable coal reserves and output. China's annual output now exceeds three billion tonnes, while India extracted 568 million tonnes of the dry fuel. As a result, India needs to import 180.63 million tonnes in FY 2017. This is very large considering that the global trade is only 900 million tonnes..Only consumers in coastal areas found it feasible to import as high inland transportation costs made it unaffordable for others.

Inevitably, coal shortage is hurting power generation. More than half the country's electricity generation is coal based. The country lost 25.1 billion units of electricity due to non-availability of coal in 2017/18, contributing to a peak power deficit of 11 per cent and hurting economic activity.

Case B -- Iron ore mining is buried in even bigger problems. Until a couple of years ago, India was the world's third-largest exporter of the mineral, earning $7 billion from it annually. Exports surged from 62.57 million tonnes in 2003/04 to 201 million tonnes in 2009/10. The sector expanded rapidly to meet insatiable demand from China in the run-up to the 2008 Beijing Olympics.

A politician-industry-bureaucracy nexus led to mining leases being allotted in violation of norms. Also, in the absence of an oversight body, illegal mining became rampant and environmental considerations were disregarded. This, in turn, led the Supreme Court to intervene.
The ban led to a fall in iron ore output and imports exceeding 6 mn tonnes. Supreme Court ordered the cancellation of 51 mining leases in Karnataka. It also allowed 57 mines to resume production but with an annual cap of 30 million tonnes. All 90 mines in Goa remain shut and are unlikely to reopen.

Case C -- Bauxite mining is also caught up in land acquisition and environmental issues. Production of this raw material, used in making aluminium, has fallen since 2007/08(though we have  the 7th largest bauxite reserves- around 2,908.85 million tonnes as in FY17). As a result, aluminium output is not enough to meet demand. The country produced 2 million tonnes aluminium, lower than demand of 2.35 million and the target of 3.35 million tonnes. No new bauxite mine has come up in the last 25 years.

2.       Fundamental Education & Vocational Training –

 The Indian education system, as we know today, is the same system which British had introduced with the sole purpose of producing clerks for the functioning of the British administration. Sadly, even after independence and multiple “reforms”, the plight continues.
 The education system needs to undergo some serious reforms. The first step should be to analyze the present system and see where exactly the problem lies.

-         Are we lacking in the quality of content?
-         Do we need to change the way teaching is being done?
-         Do we need to give better training to the teachers?

-         Is our education system interfering with our Learning (Knowledge seeking)?

Glaring void is both in the way fundamental schooling is delivered and Infrastructural deficiencies at the planning & execution level.  To make it brief let’s scan our views through the current status.

Our archaic education system (based on the Pirate based economy) is based on the following false pillars of :

(a)    Lectures are remotely engaging and they don't really teach anything. Throughout the lecture, the teacher reads aloud or writes on the board whatever is there in the textbook. The same examples, the same problems and the same methods that are there in the textbooks.  Nothing more, nothing less!

(b)   Homework is given just for the sake of being given. It would typically consist of copying the exact same lines from the textbook.

(c)    Exams are just an unnecessary ordeal. They don't really test anything. They would typically consist of the same questions that are there in the textbooks (in subjects like math, the types and the wordings would be the same while only the values will change). To ace these exams, all you need to do is learn by heart the answers to all the questions.

(d)   Promotion of Rat Race - Our education system rewards for scoring more rather than better understanding. A student who mugs up early in life may end scoring more than a child with better understanding encouraging the one who mugged to do more of it and discourages the one who actually understands better.

(e)   What is taught Vs What is needed - The education methodologies and curriculum still belong to an era when India needed to produce a large number of clerks and services professional. This age old curriculum is not keeping up with the age we live in creating a huge disparity between what is actually taught and what actually needs to be taught.

(f)     One-size-fits-all Education - A student might understand well in a classroom setup, another learns better by watching videos, another does activities and learns best. Yet, all these three might be forced to sit in the same classroom learning the same way using the same method. Education cannot be one size fits all because every child has a unique learning requirement.

The above way of educational discourse encourages Rote learning & Kills creativity. This is where the students thought provoking outlook is subdued and they inculcate the habit of accepting things at face value. Students are not able to enrich themselves with the idea of surviving continuously with the changing time.

3.       Educational Infrastructure -

India holds an important place in the global education industry. India has one of the largest networks of higher education institutions in the world with 850 universities (as of April 2018) and 42,026 colleges. A total of 35.7 million people were enrolled in higher education institutes in 2016-17. However, there is still a lot of potential for further development in the education system.

Moreover, the aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost the growth of the distance education in India.

Market Size

(a)    The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. The education sector in India is estimated at US$ 91.7 billion in FY18 and is expected to reach US$ 101.1 billion in FY19E.

(b)   Higher education system in India has undergone rapid expansion. Currently, India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. By 2025, the segment is expected to reach US$ 35.03 billion.

(c)    The country has become the second largest market for e-learning after the US. The sector is expected to reach US$ 1.96 billion by 2021 with around 9.5 million users.

Given there is huge gap between demand and supply in education, a vast array of businessmen, politicians, realtors have put in money to open sub-standard educational institutions with the focus to mint money. Such schools many a times lack basic infra, quality teachers, and maybe just a single building  complex, cramming students.

India ranks  124^th. in literacy rates as per several sources and given the education sector budget we might not see a rise in rankings this year.

There has been a decline in the Budget allocation from 4.4%  to 3.5% in FY 17/18, though focus has been given to create world class institutes. We need to have higher share in education rather than doling out large sums of money in charity and Loan waivers.

4.       Research & Development –

The research ecosystem in India presents a significant opportunity for multinational corporations across the world due to its intellectual capital available in the country. India’s Engineering R&D (ER&D) Globalization and Services market reached US$ 22.3 billion in 2016 and is set to rise to US$ 38 billion by 2020.

India has a total of 25 innovation centres in the country and has been ranked as the top innovation destination in Asia and second in the world for new innovation centres.

 However there are few telling issues related to Governmental controls, Budget allocations, Regulatory and IPR related areas. The basic need of the hour is to earmark National Institutes of pride under CSIR, fund them and pitch them up as International Institutes of repute for R&D.

5.       Industrialization & Manufacturing -

The manufacturing sector was identified as the major constraint inhibiting the industrial growth. The manufacturing sector declined to 3.6%, 3.8%, 2.8% and 4.6% annual growth rate in FY14 to FY17 period.
The IIP also dropped to annual average rate of 3.8% during FY14 and FY17.

It has been a long wait for the revival of manufacturing sector, especially capital goods, infrastructure and construction and consumer durable segments which are steel intensive. The share of engineering goods and equipment in the total export basket had also witnessed a steady fall over the past few years.

The manufacturing sector has contributed little to income growth and its share in total merchandise exports has been declining.

Manufacturing has not brought much new employment, and most of the recent rise in manufacturing employment has been in the informal sector, where workers are not covered by social security arrangements. Productivity of the manufacturing sector is low, partly because:

(a)     Relatively small size of manufacturing firms makes it difficult to exploit economies of scale.

(b)   Despite abundant, low-skilled and relatively cheap labour, Indian manufacturing is surprisingly capital and skill intensive.

(c)    Furthermore, firms have little incentive to grow, since by staying small they can avoid taxes and complex labour regulations.

(d)    Land acquisition is slow, companies face frequent power outages and transport infrastructure is below par. This is especially harmful as manufacturing is highly reliant on well-functioning infrastructure.

Stronger manufacturing would increase productivity and make growth more inclusive, while contributing to improved current account balance. In particular, India should aim for more formal jobs, as these tend to be the most secure and of highest productivity.

6.       Supply Chain Infrastructure -

Other challenges related to manufacturing are the poor infrastructure related to Logistics and warehousing. Infrastructural woes had a crippling effect on the supply chain network in India. Suppliers, manufacturers, and retailers had to factor in delays in the movement of goods between state borders due to complicated taxes and transport lines running over capacity, increasing overall costs.

The owe to this are categorized under:

(a)    Ports –

According to the Ministry of Shipping, around 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport. India has 12 major and 200 notified minor and intermediate ports.

However till date we do not have proper allocations to develop, maintain and operate ports, inland waterways and inland ports. Operational efficiency of the ports is low (approx. 45%-50%) as there is minimal mechanization.

Deepening  of the ports to increase the draft and speedy evacuations of Bulk cargo is amiss. Considering that we need to handle 1,695 million metric tonnes by 2021-22(report of the National Transport Development Policy Committee), efficiency of cargo handling and M.V turn rounds will be the benchmark.

Another major area is the absence of Multi Modal Hubs adjacent to the major Hauling ports of India. These hubs needs to act as one point connectivity between train, Road and shipping lines (which should reduce the overall inland cost of transportation). These MMTH needs to have material handling equipments of highest efficiency so as to ensure above 90% Operating efficiency.

(b)   Rail & Roads –

The Indian Railways is among the world’s largest rail networks. The Indian Railways route length network is spread over 115,000 km, with 12,617 passenger trains and 7,421 freight trains each day from 7,349 stations plying 23 million travellers and 3 million tonnes (MT) of freight daily. India's railway network is recognised as one of the largest railway systems in the world under single management.

Challenges in India’s supply and distribution channels are further complicated by lacking roads and railway infrastructure.

Railway stations are often unable to cope with the large volume of goods transported. Merchandise at railway stations and factories are often left waiting for transport due to delayed turn-around time.

Currently country is in need of a “National Rail Plan’ which will enable the country to integrate its rail network with other modes of transport and develop a multi-modal transportation network.

There needs to have an order to have digital and transparent systems and procedures in daily operations. Indian Railways is targeting to increase its freight traffic to 3.3 billion tonnes by 2030 from 1.5 billion tonnes currently. This will require advanced heavy duty Loco engines and automated signaling systems for faster route synchronization.

Parallely  we need to enhance transparency in the processing and settlement of bills. New  bill tracking system for contractors/vendors of Indian Railways to track status of their bills for faster due clearance and hence speedy executions.

Going beyond our national boundaries, India can become stronger with rail based trade links with SAARC countries and beyond.

India has the second largest Road network across the world at 5.4 million km. This road network transports more than 60 per cent of all goods in the country and 85 per cent of India’s total passenger traffic. Road transportation has gradually increased over the years with the improvement in connectivity between cities, towns and villages in the country.

The Indian roads carry almost 90 per cent of the country’s passenger traffic and around 65 per cent of its freight. In India sales of automobiles and movement of freight by roads is growing at a rapid rate.

 However the Logistics cost in India accounts for 13-17% of the Gross Domestic Product (GDP) which is nearly double (6-9%) the logistics cost to GDP ratio in developed countries such as the US, Hong Kong and France. Much of the higher cost could be attributed to absence of efficient intermodal and multimodal transport Systems (Inefficiencies in the logistics chain currently cost the economy an estimated US$95 billion).

Lack of High volume Freight corridors (heavy duty all season) coupled with Inter modal Hubs (connecting train & roads) increases the cost of Last Mile Delivery. Due to lack of a central policy on roads the stress is laid on only to the laying of roads and not on quality.

Due to absence of an organized sector player the fragmentation is to the tune of 80%-90%. The sector is crippled with Beuracratic Red tapism and complexity of paper works (though the same has been addressed to a large extent post GST).

If reports are to be believed we need to build 50,000 km of roads worth US$ 250 billion by 2022 as part of a long-term goal of doubling the length of the national highway network to 200,000 km.

(c)    Warehousing –

The warehousing market in India is highly fragmented as majority of the warehouses measure less than 10,000 square feet. Further, almost 90% of the warehousing space is controlled by unorganised players and comprises small-size warehouses with limited mechanisation. The present warehousing market in India can be categorised into three categories :

–      lower stratum,

–      middle stratum and

-       higher stratum.

The lower stratum is just godowns of the past converted into warehouses. These are old buildings, mostly Reinforced Cement Concrete (RCC) structures and their only utility is storage. The middle stratum warehouses comprise similar structures as in the lower stratum, but these are built with pre–engineered slabs and are known as pre–engineered building (PEB) structures. Their planning and functioning is very basic, like that of the lower strata, but their buildings are in a comparatively better condition. Higher stratum warehouses are the modern and massive structures that perform a lot of supply chain functions along with storage.

Another practise in Indian warehousing market is the lack of attention to warehouse designing. This ignorance stems from lack of awareness and/or lack of willingness on the part of land owners and developers to cater to the requirements of end users.

Most warehouses are built keeping in mind the developer’s perspective and not that of the end user. Hence, the focus is to save cost which results in the construction of a very basic structure for a warehouse. Such warehouses do not adhere to market standards and therefore, end users are frequently plagued with issues like lack of basic amenities and sub–standard infrastructure with lower longevity. This approach needs to change.

The concept of Built–to–Suit (BTS) is still a far–fetched idea in India but practices like warehouse designing and end user centric warehouses need to be definitely focused on.

Cold storages are very less in number due to which we lose 10%-15% of our farm outputs leading to loss in GDP. India produces much more than we require but perishable products needs to be stored in a hygienic manner. With the total warehousing space requirement in the country’s top 7 markets expected to grow from 621 mn sq ft in 2016 to 839 mn sq ft by 2020, the warehousing sector has shown a tremendous traction in the last couple of years. Further, investment in warehousing can provide an opportunity of realizing returns in the range of 10%–24% per annum. 

Road Ahead :-

Well then, lot’s of issues at hand and a very small time to overcome the gap. What are the actionables? What are the time frames? Where are we presently  & what has been planned?

Let’s have a sector wise outlook:

1.   Mining sector

(a)   Government should auction mines rather than allot them to private companies. This, they say, will boost mineral output and minimize the scope for corruption.

(b)   Government should also replace outdated mining laws. The new laws should encourage commercial mining, address environment and social issues, share benefits of mining equitably and bring in technology to modernize the sector.

(c)   Coal imports cannot be a long-term option as global prices of coal are increasing and will add to the cost of power generation. We need to streamline the legal ambiguities which have delayed approvals and mining leases. As many as 65,000 mining applications are pending with states, apart from those with the Centre.

(d)   Central government needs to clear the roles and responsibilities of the center and states related to mining permits. There can’t be a policy paralysis at the Centre for their indecision.

(e)   New mining areas are located either in forests or regions inhabited by tribal people and permission to mine is hard to come by. As a result, investors are jittery and are holding back investments.

(f)   Allowing private players to mine minerals for commercial purposes will boost output and help improve productivity. Estimated figures show that US and China are capable of mining approx. thrice the quantity of India.

(g)   The ratio of proven resources to total resources is dismal in India. There is a huge need to convert the vast resources into proven deposits. India must spend more on mineral exploration. According to an E&Y study, India's exploration budget is just 0.5 per cent of the global spend.

(h)   An independent regulatory regime is a prerequisite before the government can think of allowing private players into commercial mining. This is crucial to avoid illegal mining and environmental degradation. Today, environmental issues have been left to the Supreme Court to tackle.

(i)   Government should improve infrastructure facilities. Construction of some railway lines and roads that pass through forests and Naxal-dominated areas in Chhattisgarh, Orissa and Jharkhand - the states with the biggest   mineral deposits - has been stuck for years because of delays in approvals and threats from Naxals.

(j)   The call of the day is Renewable resources and so the country should invest heavily on cleaner options as substitute to coal based power plants (Nuclear, wind & solar).

No doubt the mining sector faces plenty of problems. But the problems are not insurmountable. The government must send the right signals to investors that it is serious about modernising its mining sector. And it must send those signals quickly. Or else, investors like Arcelor Mittal and Posco will keep pulling out of India.

2.   Educational sector & Vocational Training -

(i)    First and foremost, the pedagogy needs an overhaul. The right way, I believe, is to develop a system of teaching which encourages students to learn concepts by questioning.

(ii)   Students should be guided towards the concepts rather than being taught some standard definitions. This would not only help them to have a better understanding of the concept, but will also help them develop the habit of “learning by questioning”.

(iii)  Students will start tackling the problems from first principles instead of simply using standard formulas. This way, they’ll be better equipped to solve practical problems which, more often than not, are way off from the ideal theoretical problems which we are made to solve in school.

(iv) To complement this style of teaching, creative and practical question papers should be set for examinations rather than the conventional question papers that need just memorizing. Such a practice will lead to a fundamental understanding of things. Lastly, for this system to be effective, teachers should be trained properly and they should be re-trained from time to time.

(v)  Hands-on learning and projects based learning must be given more emphasis in the classroom. Students should be allowed to do more experiments in science & math to understand concepts better from a younger age.

(vi)  They must also create a good number of projects (10-12 per year) in subjects like History, Geography, English, Hindi, etc where these projects should be a part of the marking system that will help students build natural interest in these topics.

(vii)Students must undertake more classes on life skills such as banking, insurance, money management, economy through expert talks, board games & field trips to the local bank or post office or LIC office, etc. These will reinforce their understanding of how the real world works and will positively affect their learning patterns.

(viii)               At the end of all of it, through human interactions (via teachers) and analytics (via practice platforms, analytics), the effort should be to find how each student learns best and give them those tools to explore learning. Students love to play, talk to friends, watch television, etc. This is because they are interested in it. If a similar interest is created towards education by making it more interesting, hands-on, they will enjoy the process which is the ultimate success for any education system.

(ix) The only way we are going to improve K-12 Education is by starting today, taking one step at a time and the respective Governments must wake up and work smartly taking help of exceptional educators & the private sector in completely overhauling the present standards and lead India into a golden era of prosperity.

 Yes, we need to strike a right balance between rote-learning and creative learning. For this to happen, we need to change things at the grassroots level. We have to do away with the present style of teaching and bring in the new system which encourages students to learn concepts through questions and answers. 

Most importantly, we need to teach them how to learn rather than what to learn

3.   Educational Infrastructure  -

It is estimated that India’s higher education will need to:

(a)     Adopt transformative and innovative approaches in Higher education.

(b)     Have an augmented Gross Enrolment Ratio (GER) of 50 per cent.

(c)     Reduce state-wise, gender based and social disparity in GER to 5 per cent.

(d)     Emerge as a single largest provider of global talent, with one in four graduates in the world being a product of the Indian higher education system.

(e)     Be among the top 5 countries in the world in terms of research output with an annual R&D spent of US$ 140 billion.

(f)      Have more than 20 universities among the global top 200.

Various government initiatives are being adopted to boost the growth of distance education market, besides focusing on new education techniques, such as E-learning and M-learning.

Education sector has seen a host of reforms and improved financial outlays in recent years that could possibly transform the country into a knowledge haven.

With human resource increasingly gaining significance in the overall development of the country, development of education infrastructure should remain the key focus in the current decade. Infrastructure investment in the education sector should see a considerable increase in the current decade, the manifestation of above should be physically reflected on ground.

Moreover, availability of English speaking tech-educated talent, democratic governance and a strong legal and intellectual property protection framework are enablers for world class product development.

The Government of India has taken several steps including opening of IIT’s and IIM’s in new locations as well as allocating educational grants for research scholars in most government institutions.

4.   Research & Development

Researchers in India and abroad say that the country has a relatively weak foundation in science and engineering. The following immediate actions have been planned and will put us in best stride :

(a)    Indian research is hampered by stifling bureaucracy, thus first and foremost the current govt. needs to work around the bureaucratic hurdles. The administrators of several state universities are political appointees rather than leading academics.

(b)   Poor-quality education at most universities and insufficient funding is a chronic concern. Successive governments have pledged to increase support for research and development to 2% of India's gross domestic product (GDP), but it has remained static at less than 0.9% of GDP since 2005.

(c)    Despite its huge size, India has a relatively tiny number of researchers, and many of its budding scientists leave for other countries, never to return. Only by tackling its systemic problems can India compete with other emerging powerhouses such as Brazil and China.

(d)   India is battling criticism over the quality of some of its pharmaceuticals. Research needs to work at tandem with the IPR and Drug Licensing regulations at the International Market.

(e)   The challenge for the sector will be to graduate from reverse engineering to new-drug discovery. The government and private sector are trying to jump-start such efforts by setting up incubators that help transfer university and lab know-how to industry, and provide infrastructure and financial support to start-ups. Such incubators are the “greatest changer in the drug-discovery sector in India”.

(f)     Out of the 38 national laboratories that are part of the CSIR, only 25 have full-time directors. The rest are making do with acting directors, or temporary arrangements. We need to immediately take cognizance of the same and set them up as world performing institutes.

(g)    Publicly supported universities which are dependent on the Ministry of Human Resource Development for funds, must get the deserved allocation for  the higher-education budget.

With the above Government’s support, the R&D sector in India is all set to witness some robust growth in the coming years. According to a study by management consulting firm Zinnov, engineering R&D market in India is estimated to grow at a CAGR of 14 per cent to reach US$ 42 billion by 2020.

India is also expected to witness strong growth in its agriculture and pharmaceutical sectors as the government is investing large sums to set up dedicated research centres for R&D in these sectors. The Indian IT industry is also expected to add to the development of the R&D sector.

5.   Industrial  & Manufacturing sector

Turnover of capital goods industry is expected to increase to US$ 115.17 billion by 2025. India’s engineering R&D market will increase from US$ 28 billion in FY18 to US$ 45 billion by 2020. Sales of construction equipment are expected to cross the 100,000 mark by 2022, while the market size of construction equipment industry is expected to grow from US$ 4.3 billion in FY18 to US$ 5 billion by FY20.

(a)    India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country. The state needs to keep up the tempo to stretch up and provide the all needful support for realizing the same.

(b)   The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025 and India is expected to rank amongst the top three growth economies and manufacturing destination of the world by the year 2020. The implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of US$ 2.5 trillion along with a population of 1.32 billion people, which will be a big draw for investors. Ease of doing business combined with conducive labor laws will be the call for the day.

The impetus has to be on developing industrial corridors and smart cities. The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing.

6.       Supply Chain Infrastructure -

Investment into India’s supply chain infrastructure is gaining momentum. The introduction of the Goods and Services Tax (GST), liberalizing foreign direct investment (FDI) rules, and increased government spending has helped spur growth in the sector. India’s aspiration to become a global manufacturing powerhouse and the government spotlight on ‘Make in India’ also compels nationwide supply chain reform, prompting several federal and state-based schemes and investment incentives.

The following actionable sub-sector wise have been earmarked and will streamline the making of a world class Infra for India.

Ports –

Increasing investments and cargo traffic, point towards a healthy outlook for the Indian ports sector. Providers of services such as operation and maintenance (O&M), pilotage and harbouring and marine assets such as barges and dredgers will be benefiting from these investments.

The capacity addition at ports needs to grow at a CAGR of 5-6 per cent till 2022, thereby adding 275-325 MT of capacity.

Under the Sagarmala Programme, there are envisioned a total of 189 projects for modernisation of ports involving an investment of Rs 1.42 trillion (US$ 22 billion) by the year 2035. This needs immediate executon.

Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020, which would be driven by participation from the private sector. Non-major ports are expected to generate over 50 per cent of this capacity.

India’s cargo traffic handled by ports needs to reach 1,695 million metric tonnes by 2021-22, according to a report of the National Transport Development Policy Committee.

Within the ports sector, projects worth an investment of US$ 10 billion have been identified and will be awarded over the coming five years.

Rail & Roads –

Rail –

The Indian Railway network is growing at a healthy rate. In the next five years, the Indian railway market will be the third largest, accounting for 10 per cent of the global market. Indian Railways, which is one of the country's biggest employers, can generate one million jobs.

In order to develop three new arms of Dedicated Freight Corridor (DFC) in the various regions of the country, Indian government needs planning to invest Rs 3,30,000 crores ($50.98 billion).

 Also, Indian Railways has to invest in order to adopt European Train Control Systems (ETCS) which will help in the development of the infrastructural facilities.

Technological interventions related to Upgraded Loco units and faster signaling and Track shifting needs immediate execution.

Roads -

The government, through a series of initiatives, is working on policies to attract significant investor interest. There are plans to develop a total of 66,117 km of roads under different programmes such as National Highways Development Project (NHDP), Special Accelerated Road Development Programme in North East (SARDP-NE) and Left Wing Extremism (LWE).

Identification of the development of 2,000 km of coastal roads to improve the connectivity between ports and remote villages needs urgent focus.

The National Highways Authority of India (NHAI) plans to build 50,000 km of roads worth US$ 250 billion by 2022 as part of a long-term goal of doubling the length of the national highway network to 200,000 km. However this has to be executed without further delay.

The Government of India will spend around Rs 1 lakh crore (US$ 15.26 billion) during FY 18-20, to build roads in the country under Pradhan Mantri Gram Sadak Yojana (PMGSY).

The nation requires a dedicated investment of Rs 7 trillion (US$ 107.82 billion) for construction of new roads and highways over the next five years.

Warehousing –

As India allows 100 percent FDI in the development and maintenance of warehousing and storage facilities. The following aspects will have to undergo an overhaul.

-       Free Trade Warehousing Zone (FTWZ) Schemes, where there will be several designated zones in India reserved for warehouse development needs to be put up with state of art connectivity.

Panvel near Mumbai, Khurja near New Delhi, and Siri City in Chennai, are some of the designated FTWZs. The connectivity of these zones with major railways, roads, airways, and ports is well established.

-       Incentives such as duty free import of building materials and equipment for these zones will attract investors to this sector. Late last year, the 100 acre FTWZ in Nanguneri in the southern state of Tamil Nadu began operations.

-       Need to look for SMART warehousing   SMART WAREHOUSING involving:

(a)    3D PRINTING

(b)   AUGMENTED REALITY

(c)    BIG DATA

(d)   ROBOTICS

(e)   CLOUD LOGISTICS

(f)     DIGITAL SUPPLY CHAIN

(g)    INTERNET OF THINGS

(h)   SELF DRIVING VEHICLES

(i)      DRONES OR UNMANNED AERIAL VEHICLES

(j)     TEMPERATURE-CONTROLLED

(k)    MULTI-STOREY

-       Warehousing needs to be adept with proper Equipment handling infrastructure with rest houses for the operators/drivers etc.

-       Because of GST, there will be consolidation in the warehousing industry. Instead of state wise warehouses, companies will consolidate into zone wise larger warehouses. This will lead to a surge in demand of Grade ‘A’ and large sized warehouses which will ultimately result in an increase in rentals.

-       The ambitious Delhi - Mumbai Industrial Corridor (DMIC), and freight corridors, such as the Western and Eastern Dedicated Freight Corridors, are gaining renewed focus thereby adding a further fillip to the warehousing sector.

Bottom line :-

The story of India’s development has been a story of mis-construction of facts, Lope-sided view to basic crux of the matter, skewed planning,  lots of unwarranted politics and costly executions.

It’s time we think and act together with a clear vision of FUTURE INDIA in our mind. Structural changes & investments at Government level must be complemented by the positive attitude and zeal by her citizens. Political parties should carry on with the developmental work irrespective of their political ideologies. This great land needs constructive indulgence of her sons & daughters.

It is NOW or NEVER for us, as we stand poised for a quantum leap amongst the world civilizations to regain our lost pride.

Ultimately, the only thing that is non negotiable is the development of our great nation.