India needs to take urgent measures to fix the ‘fundamental gaps’ in the country in areas like water, health, education, besides addressing the ‘inconsistent’ policies of financial sector regulators and refrain from ‘drum beating’ in its pursuit of becoming a larger economy in the world, Boston Consulting Group’s India chief Janmejaya Sinha suggested on Thursday.

“We have foundational and fundamental gaps which stay unfixed and not talked about as much as they should be. Let’s address them,” observed Mr. Sinha, speaking at the the CII Global Economic Policy Summit. “China started its growth by first fixing water. We, far away from fixing water, mess up water…  our water pricing is flawed. Are we talking with urgency about water here?” he asked rhetorically.

Stressing that the ‘level of inconsistency’ among financial sector regulators was ‘just not okay anymore’, Mr. Sinha said, “If we talk about capital gains tax, it varies by product type. If we take a housing finance company, an NBFC and a bank, they will have different risk weightages for the same asset. This is just mindbogglingly foolish – we need to fix it”. 

“We need to fix defence in today’s geopolitical environment, without which we run major risks. We need to take these things seriously and not just drumbeat to say we will be the third- or fourth-largest economy. There is a journey to getting there,” he emphasised. 

India’s water table, he noted, had plummeted to a dangerous level that could trigger droughts of such severe magnitude in about a decade’s time that they could possibly trigger ‘major unrest’. 

“If we don’t fix water, which is a complicated area, we can’t double agricultural productivity which we need for internal food security and to release the labour force,” he noted, adding that health and education spends also needed to double to prevent the demographic dividend from becoming a ‘disaster’. “We have an average age of 27 but that doesn’t help if there is complete lack of productivity,” he said. 

Emphasising the need to focus on innovation in India’s quest to enhance its global economic standing, industrialist Baba Kalyani of the Bharat Forge group said: “We are still a factor-driven economy. Unless and until we become an innovation-driven economy, which would lead to much larger manufacturing and investments, we are not going to see the kind of per capita income that will drive the economy to the goals that we have set”.

“The good news, at least from a policy perspective, from the government, in most areas, the policy is moving or has already moved in that direction. The not-so-good news is – for 100s of years, we have been a country of traders, not been a country of manufacturing. And it’s going to take some time to get that mindset out… China had the same problem. When they converted from traders to manufacturers, that is when you saw all this growth. Of course, that requires investments, massive capital and all this has to come together to make things happen,” he added.