As one of the world’s fastest-growing large economies, India occupies a prominent position on the global stage - and its ambitions are high. The Narendra Modi government aims to turn the Indian subcontinent into a $5 trillion economy by 2024. To do this, it will have to expedite its current rate of expansion and achieve growth at a rate of more than 12% per year.
Unsurprisingly, the rise of advanced technologies and digitalisation has been identified as a vital growth enabler for India and its neighbours. The OECD’s Economic Outlook for Southeast Asia, China and India 2018 was devoted to the topic, noting that each region has enthusiastically embraced this new wave of change.
As a result, internet penetration – the basic prerequisite for participation in the digital economy – has rocketed. According to the market research agency Kantar IMRB, India’s internet users will register double-digit growth this year to reach 627 million as rural areas are increasingly switched on. Meanwhile, government and private businesses have led the charge on digital identity, artificial intelligence, fintech, cryptocurrencies and the use of Unmanned Aerial Vehicles (UAVs) or drones.
There’s no doubt that hastening the adoption of these and other technologies that come under the umbrella of the Fourth Industrial Revolution could help India come close to or achieve its ambitions and leapfrog to an advanced state of development.
What about the challenges?
However, the OECD report also highlights that while digitalisation undoubtedly presents many opportunities, there are considerable challenges in realizing its potential to support inclusive and sustainable economic growth. It’s right to do so for two reasons:
Findings by the Business Roundtable – a lobbying organization that represents many of America’s large businesses – give an insight into the effects of prioritizing shareholder interests, including customer distrust and employee discontent. As such, 181 CEOs have signed up to rethink the purpose of corporations and committed to lead their own businesses for the benefit of all stakeholders. Though not directly involved, India’s Tata Steel has echoed the sentiment of the roundtable’s initiative: “We have amply demonstrated that our definition of stakeholders is much broader and goes beyond just shareholders.”
Multiple studies suggest that embedding sustainability in company agendas strongly correlates with creating shareholder value - the Dow Jones Global Sustainability Index (DJSI) has closely tracked and performed slightly better than the Dow Jones Industrial Average (DJIA) in recent years, for example. As an AT Kearney colleague wrote earlier this year, the notion that there has to be a trade-off between shareholder and stakeholder value is becoming an increasingly false dilemma.
With India on the threshold of advanced economic development, the leapfrogging opportunity is not only relevant to digitization, industrialization and economic growth; its governing administration and corporations also have the opportunity to overtake their international peers in terms of achieving growth with purpose.
There are two vital aspects of India’s make-up that can help it achieve this kind of growth:
By 2022, the average age in India will be just 28, in contrast to 37 in China and the US, 45 in Western Europe and 47 in Japan. This means its workforce will be dominated in the near future by millennials and Gen Z-ers – groups that place more emphasis on trust and shared values than their baby boomer and Generation X predecessors.
This applies both to the companies they want to buy from and the organizations by whom they want to be employed. A.T. Kearney’s Global Future Consumer Study finds that younger generations actively look and are willing to pay more for environmentally friendly and socially-minded brands, while, according to Amanda Hammett, an expert on millennials, the number one thing that drives young people to quit their job is a lack of trust.
Disproportionately affected by climate change, India has nevertheless built on its heritage as one of the world’s least wasteful economies. It took top position in the World Economic Forum’s 2017 Greendex report, which ranks consumer response to environmental concerns.
India also played a leading role in shaping the Paris Agreement and has implemented forward-looking policy measures, including efforts to reshape its energy mix in favour of green sources and phase out single-use plastic.
However, there are signs that results have yet to trickle through to the corporate world. In 2019 Global 100, which highlights the world’s most sustainable corporations, no Indian companies were included. Clearly, more effort is needed by the private sector, and quickly, if true progress is to be achieved.
I urge India’s businesses to follow their government’s lead and do the right thing for all of their stakeholders. This means putting equal emphasis on inclusion and sustainability as economic goals. By doing this, India as a whole can pursue growth with purpose and provide an ethical economic model for others to follow.
Saurine Doshi is partner and Head of Asia Pacific, AT Kearney.