P&G succession: Let’s applaud the Indian diaspora’s success but also look within

Even as we celebrate success within the Indian diaspora, we must also note that it comes at a time when many successful Indians are leaving India for good,  a trend that’s the subject of a recent book, Secession of the Successful, by Sanjaya Baru. 

While we must not return to wringing hands over our ‘brain drain’ that once drew long sighs of dismay, nor fret about a scarcity of business leaders to create and run companies that can generate value and aid the economy’s emergence, we still need to confront a lack of dynamism at home that tends to get glossed over. Although high domestic taxation is frequently cited as a reason for a tilt in favour of working abroad among those who have the luxury of choice, shouldn’t a faster growing economy like ours promise greater prospects?

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Gross fixed capital formation has struggled to get above 30% of India’s GDP, credit growth is so lukewarm that the central bank may rue opening its gusher of liquidity, and our economic expansion has slid below the ‘miracle’ rate of 7%. All this, even as worries arise over staff downsizing in our once-dynamic tech  sector, which seems caught on the wrong foot by the onslaught of AI on its growth model of revenue rising roughly in line with recruitment. 

The government cannot be faulted for investing public funds to compensate for the private sector’s slack. The Centre’s enlarged outlay on infrastructure has not been able to ‘crowd in’ private investment to meet the ancillary demand created by its spending, but it has clearly held GDP growth in good stead. 

Given that about a quarter of India’s manufacturing capacity still remains unused, perhaps the private sector could set its sights on infra projects again. Except for renewable energy, however, there is no effective policy in place for public-private partnerships in this field. These are all real hurdles in the path of faster growth. Yet, something more basic seems to  be at work that’s acting as a constraint. 

Also Read: Rama Bijapurkar on the flight of Non-Returning Indians (NRIs): Cause for celebration or concern?

As the Nobel award of 2024 underlined, whether economies thrive or languish depends on the quality of their institutions. This may hold clues to what ails the Indian economy’s quest for acceleration. 

We might think that economic progress in general has little to do with weak enforcement of contracts, as seen in the real-estate sector despite regulatory legislation, or with court verdicts being overturned by higher courts for flimsy evidence, as witnessed recently in the Mumbai train blasts case. We would be wrong. 

Also Read: Mint Quick Edit | Why are so many wealthy Indians leaving?

How well our institutional framework functions is crucial to the economy’s success in the long run. Critically, it could determine if India can go from low-middle-income to high-income status, a transition very few countries have achieved. 

As of now, India spends just 0.64% of GDP on R&D, a sum that’s below the budget of a single American Big Tech company like Amazon. Even the R&D spend of P&G, which mostly markets products that address household demand in well-settled segments, is around 2.5% of its revenue. Innovations from India remain well below our potential. These are debilities to be dealt with, not swept aside by inspirational narratives. 

A country on the move can’t expect to get very far without asking itself some hard questions.