Tuesday, 3 June 2014

Reaping The Winds of Change

Image Courtesy: http://bit.ly/ChangeIndia 

The decisive mandate handed to the Narendra Modi-led BJP reflects India’s overwhelming desire for strong leadership that will drive change. Expectations are high from the new government, which will have to deliver on its promise of a better life for every single Indian.

The lacunae in our governance and economic models have thwarted the aspirations of a billion Indians. Runaway inflation has eaten into the savings of the common man, lack of meaningful economic reforms have hurt business and industry and a slowing economy has led to job losses. Basic needs like health, education and a clean environment have remained unmet.

The Indian economy needs a complete overhaul and the No. 1 priority of the new government will be to navigate India towards a path of sustainable economic growth. It will have to embrace the aspirations of the common man and work on narrowing the gap between the privileged and the underprivileged.

To accomplish these goals the new government will have to come up with new and innovative solutions to tackle the current challenges and create an enabling ecosystem that supports the development agenda for the country.

Smarter Regulation for Ease of Doing Business

To begin with, the government will have to focus on regulatory reforms that will improve the ease of doing business, reduce transaction costs and expedite approval timelines. 

We thus need to move away from over-regulation to a system of self-regulation. The regulatory process should be re-engineered to replace the current inordinately lengthy tiered approval system with time-bound ‘deemed approvals’ and ‘automatic approvals.’ There is also a need to make regulations unambiguous and transparent so that their interpretation is uniform across the land.
FDI requires an environment of fast-track project clearance and unambiguous tax and compliance regulations.  These measures alone can attract and augment FDI that can contribute to GDP growth.

Leverage IT to Push E-Governance

It is time for a paradigm shift in administrative governance in India through increased application of smart IT platforms for e-procurement, e-tendering, e-documentation etc.

Several schemes to address India’s myriad challenges have failed in the past because of one fundamental shortcoming: the governance mechanism to deliver these schemes is mired in inefficiency and unaccountability. This needs to be rectified urgently.

A good example is Tamil Nadu’s  IT-enabled Drugs procurement model that  has ensured its citizens access to a reliable supply of affordably priced, generic essential drugs. Such a model should be replicated throughout India.

Similarly, there is a need for a wider application of the Aadhar unique ID program.  Aadhar has the potential to provide a strong platform for e-governance and e-healthcare.  The next government has the opportunity to build on the 600 million Aadhar cards and create a unique e-delivery model across a plethora of services. 

Focus on Science & Technology, Incentivize Innovation

Science & Technology is of strategic importance to India’s future leadership.  

Innovation is key to value accretive growth and India needs to step up its investment in research and translational innovation. 

We must identify key areas in which to build world class scientific and technological excellence, e.g., genomics, nanoscience, analytics, synthetic biology, information technology, space technology etc. 

Incentivizing innovation and IP creation is important for India’s future growth prospects. Enabling entrepreneurs to propel ideas into sustainable businesses will add value to our economy in the long run.

The government should give R&D a boost by providing a 10-year tax holiday on products developed indigenously, provide tax breaks for venture funding, and allow zero duty on R&D equipment.

Promote Green Technologies, Prudently Manage Natural Resources

The new government needs to leverage the power of biotechnology in promoting green technologies.

Energy independence must become a driving mantra to reduce our precarious balance of payments which is so vulnerable to the vagaries of fossil fuel resources.  If Brazil could achieve this through sugarcane based Biofuels, we can also aim to do so through newer forms of renewable energy that encompass solar, wind and biofuels that can light up the lives of energy-starved rural India.

Sanitation is another big challenge for India where only half the population have access to toilets.   We need rapid and large scale solutions based on bio-toilets that can eliminate the need for sewers, sanitation treatment plants and water. Innovative bioconversion systems can convert solid waste into renewable energy and fertilizers, eliminating landfills.

Water scarcity continues to threaten drought like conditions across the country posing grave challenges to our agrarian economy.  It is well known that India has a large perennial source of fresh water from the Himalayas, most of which remains unharnessed and wasted. The next Government must set up a  high-powered ministry that plans for the optimal management of water resources on a war footing to address the looming danger of widespread water scarcity. 

Make Healthcare a Priority

The new government will have to address the ‘Right to Health’ through a Universal healthcare program which hinges on affordability and access.

In attempting to fulfil the needs of ‘Affordability’, ‘Availability’ and ‘Access’ for its citizens, the new government has an opportunity for creating a system of universal healthcare that can set a global benchmark.

Additionally, other healthcare-related issues need to be urgently addressed as part of this agenda:

> FDI in Pharma: The FDI policy on pharma needs to revert to the previous UPA1 regime that allowed automatic infusion of foreign equity of up to 100% in both greenfield and brownfield projects, so that it is not left to the government’s discretion to introduce riders for clearing investment proposals.

> IPR: India must clearly enunciate the rules governing patentability for pharmaceutical products. Our stand on IP laws that discourage ever-greening of patents is gaining acceptance. We have also adopted a thoughtful pre-grant patent opposition which should serve to protect us from frivolous patents.  However, we must ensure that we demonstrate our commitment to legitimate patent protection. 

> Pricing policy: The unilateral demand on the Indian pharma industry to bear the full burden of making medicines affordable is untenable.  The imposition of price control on a large number of essential drugs has seen the replacement of a number of Indian bulk drugs with Chinese imports.  This policy needs urgent amendment if we are to restore our supremacy in drug manufacturing.   It is imperative that the Government increases public spending on healthcare to at least 3% of GDP in order to fund schemes that can offer basic healthcare to all.

> Clinical trials:  If India is to pursue drug research and drug innovation, the present moratorium on clinical trials must be removed post haste.  Additionally, the proposed regulations and strictures around conducting clinical trials need to be revisited.  Most of the regulatory recommendations are impractical and will severely disadvantage Indian drug research. 

> Incentives to spur R&D: To spur investment in research and development in life sciences,  the government should extend the current benefit of 200% weighted tax deduction on all in-house R&D spends including those attributable to  international patenting and overseas clinical development as well as any licensed technology that is required for drug innovation.

> Incentives to indigenous manufacturers:  The Indian Government has done little to advantage indigenous industry over foreign competition in Government tenders. It is well known that MNCs have always adopted predatory pricing in developing markets through cross subsidizing the higher prices they enjoy  in protected western markets. The Indian Government must therefore provide   preference and advantage to indigenously manufactured pharma products and in fact, mandate local manufacturing as an eligibility criterion as is the norm in many countries Eg. Mexico, Brazil, Russia etc. It is important to note that the Indian Government practises this in the case of vaccines but needs to extend this to drugs.

We Need Development-oriented Politics

The fundamentals of the Indian economy are strong.  However, our economic engines of growth have been throttled by wrong policies and regulations in the past.

The new government needs to exhibit strong political will to implement bold economic reforms, create world-class infrastructure, usher in overdue tax, labour, land and regulatory reforms, address the power deficit and roll back unfriendly business regulations.

The mandate for change must translate into a more enlightened and development-oriented political discourse in India that rises above partisan politics and instead focuses on putting the nation on the path to robust, inclusive and equitable growth.

This article first appeared as a feature in Forbes India on May 28th, 2014


  1. Very Good suggestions. Hope government will implement them. Wind up Planning Commission. Big bang reform neither anti poor nor anti people. Will reduce fiscal deficit.Will be a major exercise in downsizing.

  2. Very nicely analyzed, highly informative, a must read for all people who aspire to contribute to nation building! Thank you so much!

  3. Very nicely analyzed, highly informative and a must read for all the people who aspire to contribute to nation building! Thank you so much!

  4. Very nicely analyzed, highly informative and a must read for all the people who aspire to contribute to nation building! Thank you so much Dr. Kiran Mazumdar Shaw for this highly insightful analysis.

  5. Very good suggestions. Hope the government will implement many of them. The Planning Commission should be wound up. It would be a big bang reform neither anti people nor anti poor. It will reduce the fiscal deficit. It will be a major exercise in downsizing.

  6. Thank you all for your comments. I am happy to know that you all agree with my suggestions.