NEW INDIA'S MOONSHOTS
As India pivots to a new growth path its policy gambles are getting bolder and increasing in frequency, ambition and success. EPISODE #108
Dear Reader,
A very Happy Monday to you.
While readying for the recording of my show on StratNews Global last week, I stumbled upon an interesting sight that set me thinking about India’s ongoing makeover.
The field location for the shoot was the electric vehicle (EV) charging station, outside the Talkatora Sports Complex in Delhi.
All of a sudden, an electric hail-cab pulled up at one of the charging outlets. The driver alighted, connected the charger to his car and then nonchalantly proceeded to scan the QR code pasted on the charging station with his mobile phone to make the payment: Rs200 for two hours worth of charging.
The driver, with some time to kill I guess, strolled over to an improvised tea stall, located a few yards away, for a cup of tea on what was a cold blistery day in Delhi. When it came to the payment, out came his phone once again, the QR code displayed by the vendor was scanned and the charge of Rs10 paid.
I had serendipitously witnessed two of the new icons that are defining ‘New India’. The digital payments bridge as well as the electric car, are outcomes of two policy moonshots that India undertook recently. So this week I put the spotlight on this trend and examine its implications.
The cover picture this week is from the Talkatora EV charging outlet I mentioned above.
A big shoutout to Abhijit, Ranjini, Saurabh, Balesh, Gautam, Premasundaran and Vandana for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by readers. Gratitude also to all those who responded on Twitter and Linkedin. Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊
POLICY GAMBLES
Taking up from where I left off in the introduction, it is clear that the policy moonshots I allude to are not one off. The Collins dictionary very succinctly defines a moonshot as something that “is on a scale that is so large it is almost impossible to achieve”.
Look around and you will also realise that increasingly these kind of policy gambles are beginning to pay off. Whether it is about payments, growth in EVs, push for infrastructure building, access to credit or stoking manufacturing investments, almost every move is meeting with reasonable if not super success. Something, which even a decade ago was difficult to imagine, leave along experience.
To be sure, it is not that policy moonshots have never been attempted in India. Neither is the point that all the past efforts were failures. It is just that the degree of success (failure is always part of a policy risk) has never been so good and the change that it is bringing in its wake is staggering.
A collateral gain is the growing self-confidence, not just among the policy mandarins, but the nation as a whole—exactly why the scale and ambition of these moonshots is growing.
Often the change is incremental and hence not easy to discern—till it reaches a critical mass. In any case, the noise and incessant doomscrolling often drowns out the good.
The Origins
The history of India’s successful moonshots has to begin with the setting up of the Indian Space Research Organisation (Isro). For a country ravaged by colonial rule—wherein at the time of Independence, less than 10% were literate, the economy was bankrupt and it social fabric was strained following the partition of India and Pakistan—the idea of pursuing ambitions in space was a tall ask (or as critics argued a luxury India could ill afford).
Yet, India did go down the path. And it was lucky to have stalwarts like Vikram Sarabhai at the helm. If state of the country’s economy was a dampener, then the nuclear tests in 1974 led to severe sanctions being imposed on India’s space programme. Isro stood up to all this hazing and grew India’s space ambitions to world class standards.
Similarly, India also seeded its nuclear programme at a time when the country could not dare to dream. Thanks to Homi Bhabha, this ambition gained flight. And today, together with a very successful space programme, India has acquired an enviable strategic advantage globally.
The green revolution would be another example of a successful moonshot in the early years. It transformed Indian agriculture and put the country on the path of self-sufficiency in food grains.
And, I would throw in the Maruti story. A little car, equipped with a 796 cc engine, buried the legacy of the License Raj, taught us to drive and unleashed the automobile revolution in India. The big moonshot was that it chose to install a production capacity of 100,000 cars in 1983—this was twice the number of cars sold in the country every year at that time.
Data Democracy
It is both baffling and frustrating to know that India failed to build on the success of these policy gambles in the past. This is what has changed in the last decade. Guess it is better late, than never.
If you ask me the turning point was the launch of Aadhaar—the 12 digit unique identity accorded to 1.4 billion Indians—and India’s experiment with data democracy. It was not (with all due respect) about flying to the moon, securing the country against nuclear threats or realising middle class aspirations.
Instead, this was about every citizen, most of whom struggled to establish their identity, especially when it came to avail any government scheme—whether it be about receiving subsidised food grains from the public distribution system, obtaining admissions to a school/university, getting a job or even a passport.
Most often the lack of a verifiable identity denied access, unless of course it was circumvented through retail corruption. Thanks to Aadhaar, overnight India had discovered over 1 billion stakeholders in these policy moonshots.
Once identity was monetised, the rest of the innovations were logical, though not easy. Yet, India did come up with its own tech stack that set off the payments boom. Now this tech stack is being deployed to disrupt e-commerce (Open Network for Digital Commerce), cash flow-based lending (Account Aggregator), sachet credit for those at the bottom of the pyramid (Open Credit Enablement Network) and monetising health data. It was also very successfully used in delivering over 2 billion covid-19 jabs.
The one common theme tying all these innovations is data democracy—it has solved for the problem of access and thereby generated public good at unprecedented scale. As a regular reader of this newsletter you will be aware that this is and will continue to be a recurring theme.
Simultaneously, the government is busy retooling the public sector units (in some instances shutting down the unviable ones or like in the case of Air India sell them outright to private bidders). This is another moonshot. Never before has a government, invested so much of its social capital to aggressively pursue a radical reset of the public sector.
Another moonshot was to go out boldly and commit the country to achieving net-zero emissions by 2070. Not only has it foisted an ambitious and daunting target on the nation, it has overnight reset the global narrative about India—as a country which wants to be part of the solution than being part of the problem.
As a follow-up the government is encouraging investment and research in green hydrogen (covered extensively by Capital Calculus on StratNews Global and shared below).
This growing boldness in the policy stance coupled with steady improvement in the ease of doing business norms (though this is a still a work in progress, especially when it comes to the state governments) is what is encouraging the startup sector in the country. Venture capitalists claim that in climate tech alone about 200 new companies are pitching for funds every quarter.
In another ambitious play to promote large scale manufacturing in India, the union government offered production linked incentives (PLI) in 14 sectors—including chip manufacture. Essentially, the PLI scheme tacitly acknowledges the lack of productivity (mostly an outcome of the seven decade legacy of neglect and sloth) in Indian manufacturing and compensates companies—the government has earmarked Rs3.46 lakh core for this to be paid out over five years—to enable a level playing field vis-a-vis foreign competitors.
New India
Such boldness is inevitably infectious. All of a sudden several state governments are experiencing a ‘Yes we can’ moment.
Maharashtra, Tamil Nadu and Karnataka have announced that they will scale their state economies to $1 trillion—at present the entire Indian economy is about $3 trillion. Most recently, Uttar Pradesh, a perennial laggard for the last 75 years, displayed chutzpah to make a similar claim.
The point here is not about the ability of these states to walk the talk; for the record, none of them are even at the half-way mark. Instead it is about daring to dream. Even this was missing in their lexicon till as early as the turn of this Millennium.
This is my limited point: India has broken fresh ground with respect to its own self-belief. And the growing frequency of moonshots is a manifestation of this.
The thing is that we have gotten so used to scraping the bottom of the barrel for the last seven decades that this realisation is yet to sink in for most of us.
Recommended Viewing
Sharing the latest post of Capital Calculus on StratNews Global.
This time I took up from the nearly Rs20,000 crore mission announced by the Union government to promote green hydrogen production in India. At present India is playing catch-up in electricity consumption—its annual per capita consumption of electricity at 1,200 killowatt hours is the among the lowest in the world.
All this is about to change as India embarks on an ambitious growth path. The good news is that India has the option of creating additional capacities using green resources.
In this context green hydrogen offers a good alternative. While the potential is great the technology has still not scaled sufficiently to make green hydrogen affordable. A challenge is always an opportunity, especially for startups looking to disrupt the existing order.
To understand the technology and scope of Hydrogen as an alternative green energy source, I spoke to Prasanta Sarkar, co-founder and CEO of NewTrace, a Bengaluru-based startup that is working on plans to disrupt the sector.
Do watch. Sharing the link below:
Till we meet again next week, stay safe.
Amazing pointers to India's growth story Anil. Add another one to the list is the T+1 settlement of stocks which means if you trade today the script will be in your demat a/c the next day. The only stock exchange in the world to achieve this. Hats off to hamara Bharat mahaan.
Dear Anil,
Well researched and interesting article!!
India has set an ambitious target of carbon neutrality by 2070, it is a gaint target as at present India is ranked fourth in the world amongst the biggest emitters of carbon dioxide. Our target is to produce green hydrogen for domestic use and also for export to other countries!! Moonshots it seems!!
As you mention in your video there are many startups( around 3400) in India now working on renewable energy sector to reduce carbon emission . Support from the government and well formulated policies are needed to provide a ready market for green fuels and encourage the use of non Fossil fuels like ethanol , biomass and green hydrogen.
Reading your article, I am reminded of the webseries Rocket Boys on Sonyliv ,set in the era of 1940s to 1960s, a story of two extraordinary men, Homi Bhabha and Vikram Sarabhai who created history and Made India a nuclear power!! The series was so interesting and informative about how history was created and the slow transformation of our country.