The CEO of India’s largest human capital firm Teamlease points out that structural reforms are the need of the hour in India
Covid may have widely disrupted the world economy, but it has done something really good for India—the pandemic has shown that per capita gross domestic product matters more than the total GDP, and so structural reforms are the need of the hour in this country, says Manish Sabharwal.
“India is 4th in GDP, but 138 in per capita GDP. There are only four countries ahead of us in GDP. There are 138 countries ahead of us in per capita GDP. So, I think all reforms need to recognise that per capita GDP matters more to our citizens,” the CEO of India’s largest human capital firm Teamlease said in a recent podcast interview with media outlet The Print.
According to Sabharwal, a country’s willingness to give living wage depends on the productivity of the economy. “So, fiscal or monetary policy can’t change India, structural reforms are needed. And that includes formalisation, financialisation, urbanisation, industrialisation and skilling,” he said.
Explaining his five-point formula for structural reforms, the Teamlease founder said formalisation meant streamlining the businesses in India.
“We can’t have 63 million enterprises in India translating into only 19,500 companies in India, given 12 million don’t have an office, 12 million work from home and only 1 million pay goods and services tax. US has only 22 million enterprises being eight times our size. So, formal enterprises have always behaved more honourably because they have access to money and equity.
“Moreover, our labour is handicapped without capital and our capital is handicapped without labour, 63 million enterprises have lots of labour and no capital, and 19,500 companies have lots of capital and no labour,” he said.
On financialisation, Sabharwal stressed on the need for having more banks. “We have only 94 banks since 1946, we should have 200 banks,” he said.
The human resources expert also asserted the need for rapid urbanisation in this country, that’s more cities.
“Cities are engines of economic activity. India has only 52 cities with more than one million people, China has 375. We have six lakh villages, 2 lakh of which with less than 200 people, so you can’t take jobs to people, you have to take people to jobs, but for that you have to do good urbanisation,” he said.
Pointing out that 45% of India’s labour force work in farms to generate 14% of the country’s GDP, Sabharwal said for the good of the farmers, “we need less farmers and massive non-farm jobs”. And that’s what he called industrialisation.
The Teamlease CEO also spoke about skilling, emphasising the need for free quality school education in India. “Only 45% of our kids are left in government schools, contrary to only 8% of kids who go to private schools in Japan, and 15% in the US. If anything has to be free in a country, it’s got to be schools and quality,” he said.