India needs more women workers to become a $5 trillion economy, says World Bank India chief

by MMC
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India needs to increase the share of women in the workforce to 50% to increase its growth rate and become a $5 trillion economy, said Auguste Tano Kouamé, India director of the World Bank. In an interview, he spoke about the impact of India’s inclusion in global bond indices and India’s potential growth drivers. Edited excerpts:

India is the fastest growing emerging market, but private investment and consumption are slowing. What will drive India’s growth?

First of all, let’s recognize that (India’s) growth has been quite good in a global environment with many headwinds. India grew by 7.2% last year and is expected to grow by 6.3% in FY24. That said, it is true that India could grow faster, and India wants to reach a $5 trillion economy by 2028; India wants to become an advanced economy by 2047. For this, a growth rate of 8% is required. The first thing to do is not in India’s hands, because it needs a conducive global environment. If the global environment is what it is today, it will be very difficult to reach 8%. We need global solutions to global challenges, and the G20 has shown us that indeed, we must work as a global community to connect demand and supply of various products, whether food or energy, in order to be able to reduce inflation on a global scale. Geopolitical tensions must decrease. We need to support growth engines elsewhere, in Europe, America or Africa, as these will also provide a market for Indian exports.

Secondly, what is in India’s hands is private investment. There is a need to find ways for public investment to attract private investment so that public investment does not have to bear the full burden of creating growth. Another thing that is in India’s hands is to ensure that the skills needed for the job market are provided, which requires reskilling and investment in new skills needed (by sector) so that there is a match between supply and demand at the global level. the local level.

Third, India has done very well in financial inclusion and the financial sector, so the private sector may have access to some financing, but it is not widespread. Some MSMEs (micro, small and medium enterprises) still struggle to access financing. So there is a need to ensure that there is financing, especially for MSMEs, and that the cost is not so high.

Finally, businesses have had difficulty accessing other inputs and other factors of production. Land is one of them, and it’s not very easy to access here.

What is the impact of the inclusion of Indian bonds in the JPMorgan Emerging Markets Government Bond Index? We are told this will attract investments of $25 billion to $40 billion.

So, first of all, I completely agree with your analysis that India’s inclusion in the JPMorgan Emerging Markets Bond Index can attract $25 billion in investments, maybe more. Inclusion will not be affected until 2024, but even before then, the announcement and expectations can attract up to $7 billion in investment. This can help Indian companies raise funds globally. Indian companies would benefit when they invest, whether in Asia, Europe, America, Africa or Latin America; When India is connected to the global market, whether through global value chains or other means, it changes the way we do business here in India, and companies are now increasingly adopting global standards.

The World Bank is talking about including more women in the workforce, especially in countries like India.

It is absolutely important to have more women in the workforce. According to our analysis, increasing women’s labor force participation in India from around 25% today to 50%, which is India’s average, would alone add 1 percentage point percentage to GDP growth. So that alone will be enough to help India achieve the 8% growth rate it needs without even spending more money to buy more equipment, more capital or anything else. To me, this low-hanging fruit represents the biggest opportunity for India to achieve a growth rate of 8%.

It would also be better for the macroeconomy, because when you spend more money to buy more equipment or investments, you buy things; therefore, you increase demand and therefore put pressure on prices because supply may be limited. So it would be better in a global environment where inflation is a concern. That said, when you employ more women and pay them a fair wage, which is normal, you also need to be aware that this will create more demand, but that demand will be met because you are also employing women to increase provide. So, on the banners, that’s the best thing, you know; I call it the Milky Way to achieve 8% growth. If you do that, don’t worry, everything will fall into place, and that’s what we could do. If I were Indian, this would be my dream.

Policymakers are increasingly realizing that the manufacturing sector’s ability to create large numbers of jobs could be declining due to automation, technology and now artificial intelligence (AI). What should India focus on to achieve sustainable growth?

The Indian government aims to increase the share of the manufacturing sector in GDP from 17% today to 25% by 2030. It is therefore recognized that the manufacturing sector is a good thing. India has of course shown the world that services are also very good, especially modern and sophisticated services, but the two are not mutually exclusive. We also need to look at the manufacturing sector, and I think India is moving in the right direction. That said, if productivity is to be improved, the manufacturing industry must become more sophisticated; therefore, AI and computing are important, and these are areas where India has global leadership, particularly in computing and, increasingly, AI. So combining this with manufacturing would be the way forward for India. To boost manufacturing, we need to think of it as a state-level program. We need to find out what the constraints are to manufacturing growth in different states, whether it’s access or restrictions due to regulation. It is also important to connect the state and local investors with global investors, especially for modern manufacturing, and we at the World Bank can contribute to this.

Tell us your views on World Bank reform and the need to look inward.

Multilateral Development Banks (MDBs): we are a global public good. We belong to countries, to the world. At the World Bank, we are looking at this issue very carefully. Our new president, Ajay Banga, spoke out forcefully and said we need to examine our mission and vision – eliminating extreme poverty and promoting shared prosperity – is not enough. Our new vision is now to eliminate poverty on a livable planet. Second, we need to look at how we operate internally. We were established perhaps 75 years ago, at a time when development was a slow process. We need to be faster to prepare projects, approve them, implement them and achieve results. Finally, we need more resources. Today, the world is bigger, economically speaking. Our size has remained more or less the same while the global economy has been growing. We don’t wait for resources to come to us. We’re trying to stretch our balance sheet, trying to find ways to mobilize, leveraging what we’ve had to mobilize more resources outside of the MDB systems, like the private sector. We are trying to work within our system to find ways to provide guarantees so that countries can mobilize more resources. So we’re trying to do financial engineering to use what we have, the resources we have, more efficiently until we get more resources from our shareholders.

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