Keeping the momentum | Business Outlook

Whichever party comes to power when votes are counted on June 4, there is no doubt that the new government will lead India as it rapidly emerges on the global stage, both economically and geopolitically. Consecutive quarters of solid gross domestic product (GDP) data have cemented India’s position as a positive economic outlier, routinely improving market analysts’ expectations. Given growing supply shortages around the world, India’s performance bodes well for its ambitions to overthrow Japan and Germany and become the world’s third-largest economy in the next five years.

With a resilience unmatched in other major economies, India’s next step in its growth story will be defined by its ability to continue to pursue economic reforms and address fiscal vulnerabilities. In any case, the years since Covid-19 have shown that incremental reforms have served us better than big bang policy changes, and a sense of economic continuity may prove crucial to maintaining the momentum of recent quarters. To fully realize our true growth potential, the new government must pay particular attention to several key areas.

Banking in the service sector

While the Make in India program has undoubtedly increased India’s manufacturing capacity, it is difficult to ignore the role of the services sector. Services, which are the backbone of the Indian economy, constitute a large part of GDP. According to a recent report by Goldman Sachs, India’s services exports will be worth $800 billion by 2030, up from $340 billion last year.

Our information technology (IT) services have long been a boon to the world, and exports will continue to grow thanks to our large and talented workforce. While the software industry will still account for a significant portion of total exports, newer directions in the services space mean there are many opportunities to explore.

With our digital technology skills, leveraging areas such as banking, financial services and insurance can help us move beyond IT and provide much-needed diversification in our service exports. For example, the Unified Payments Interface – already in use in countries such as Singapore, Nepal, France and the United Arab Emirates – is a scalable technology that has the potential to become India’s next export frontier.

At the same time, it is important to ensure that exports are not limited to a few geographical areas. Since the United States and Europe account for most of our trade in services, we need to look beyond traditional markets. Asian countries have shown an appetite for finance, insurance and telecommunications services, and we need to capitalize on this. In the coming years, India has the potential to establish itself as a services giant – much like China has achieved in manufacturing.

Taking wings

India’s economic growth is perhaps embodied in the rise of an aspiring Indian middle class. Greater purchasing power and the need for better experiences have led to an increase in demand for premium products and services. This trend is best reflected in tourism. According to a report by Booking.com and McKinsey, total travel spending in India will reach $410 billion in 2030.

Improved road and rail connectivity, renovated airports and new air routes have contributed significantly to the growth of domestic tourism, which may be further fueled by the popularity of religious and spiritual travel. Lots of young travelers are flocking to places like Ayodhya, Mathura, Varanasi and Amritsar, once visited by the older generation. At OYO, religious travel has become a key focus area which will enable us to expand our operations and launch 400 properties in these cities this year.

The current government’s investment in building and revitalizing important spiritual centers is commendable and such efforts should continue to reap the economic benefits of domestic tourism. After all, travel and tourism grows the economy and offers enormous job creation opportunities, especially in rural and remote areas.

I say yes to AI

Artificial Intelligence (AI) has changed the way we work and innovate, and it is encouraging to see India moving with the times and harnessing the AI wave. The launch of the IndiaAI Mission, with an outlay of over Rs 10,000 crore by the central government earlier this year, signaled its intention to make India an AI powerhouse. While others are gripped by fear that AI could take over jobs, we see it as an essential innovation tool that can increase productivity.

In fact, the massive shift towards new-age technology has focused attention on many sectors of the sunrise. Technological advances and an emphasis on innovative business models have seen industries focused on electric vehicles, clean energy, drones, space technology and agricultural technology continue to attract investors despite a relative slowdown in funding in recent months.

The push towards artificial intelligence will largely benefit India’s startup ecosystem, which has become the third largest in the world after the US and China. India’s Viksit Bharat goal cannot be achieved without the contribution of startups that are ready to drive the next wave of economic growth and double up as wealth creators.

Watch out for the gap

Countries with a highly skilled workforce are better positioned to attract investment, spur innovation and engage in profitable international trade in an extremely competitive global economy. The Indian workforce is reported to have one of the world’s highest skills gaps, a problem that is exacerbated by socio-economic disparities and the constant migration of labor from one sector to another.

For India to meet its national requirements, it is necessary to ensure that the current workforce meets the requirements of employers. Technology-enabled education and training is necessary to equip the workforce with the right skills. The demand for skills, especially vocational skills, will only increase as more jobs are automated and cheaper and more efficient technologies become available.

The Ministry of Skills Development and Entrepreneurship has already prepared a 100-day plan for the next government, which assumes the introduction of unified qualification courses to facilitate employee migration, as well as counseling and mentoring. This is a welcome step, especially since the projects will be focused on emerging sectors such as fitness, wellness, hospitality and healthcare.

The development of skills and talents not only fosters the spirit of competitiveness, but is also essential for inclusive economic growth, which will be key to Visit Bharat and help transform India’s economic gains into real human development.

Ritesh Agarwal is the founder and CEO of OYO group