The budget proposes a technological boost in almost every area. From education to agriculture, the use of technology is likely to boost sectoral productivity.
New Delhi: What does India need to grow in the next 25 years or till 2047 when it celebrates 100 years of independence from British rule? At the most fundamental level, it needs a boost in productivity.
This is the most basic equation in correlation between total output which is equal to total capital input, total labour input and something called total factor productivity. Increasing productivity is the secret sauce that gives quantum leaps in growth and output, and the x-factor is usually understood to be the introduction of new technology. Technology has always boosted productivity—from the wheel to the steam engine to broadband connectivity.
Whether it’s agriculture or labour, India needs to boost productivity to ensure its high growth levels—highest in the world among major economies this year and the next—and jobs are created (around 90 million workers would need jobs by 2030 estimates McKinsey).
It is in this light that Budget 2022-23 ought to be seen. The budget proposes a technological boost in almost every area. From education to agriculture, the use of technology is likely to boost sectoral productivity.
By using smart monitoring systems, irrigation productivity could be vastly improved, especially in water-stressed areas of the country. Micro-irrigation is based on the idea of extracting more value from every drop of water—a policy and moral imperative as global warming alarm bells go off all around us—and water supply and its use could only be made more productive if it is monitored and regulated.
The use of drones (in the manner that the budget has suggested in “kisan drones”) could dramatically increase logistical—first mile and last mile—connectivity, thus, heightening agrarian productivity and labour productivity. The cost of transporting our agrarian produce can reduce, and, more importantly, products from remote areas can be transported and sold across the country with the help of such technology.
The quest for productivity lies at the heart of the GatiShakti initiative—by connecting the various modes of transportation in the country, the effort is to make all conduits interconnected and seamless, from roads and railways to ports, waterways to airports. And not just that, the budget talks about connected these networks to “complementary roles of energy transmission, IT (information technology) communication, bulk water and sewerage, and social infrastructure [and] powered by clean energy”. The “focus will be on planning, financing including through innovative ways, use of technology, and speedier implementation”.
So, whether it is the expansion of the highways network (by 25,00 kilometres in 2022-23) or the creation of a Unified Logistics Interface Platform (ULIP) or one hundred cargo terminals for multimodal logistics facilities to be built over the next three years, the idea is to drive better productivity across the entire logistical cycle.
Consider the “one station, one product” idea. What does it contain? It is an extension of course of the “one district, one product” policy, which seeks to champion (and economically promote) unique products from each of India’s districts. Now once these products have been identified and the clusters strengthened, the question arises where these products can go, how, and what the easiest way is to sell them.
The use of local railway stations, therefore, come into play. If airports can be good hubs for selling local craftsmanship, why can’t railway stations, especially since many of them are being upgraded to reflect their local character these days? Therefore, if each station can become a focal marketing spot for promoting one key product, it would create business for the region and give producers a quick way to offload goods. Railways could of course be used to bulk transport the goods too.
The entire productivity of the value chain, thereby, could rise.
Indian agriculture, always considered lagging in the productivity stakes, could get a real push-up with the budget proposals. One of the biggest and most lucrative parts of farming these days is chemical free, organic produce and by creating a five-kilometre corridor on the banks of river Ganga, as suggested in the budget, Indian organic produce “from the Ganga riverbank” could become a mini-brand, perhaps it could find markets not just at home but also around the world.
An effort to promote millets (2023 has been announced as the International Year of Millets in the budget) is fundamentally sound because the overdependence on rice and wheat cultivation is affecting India’s water tables—millets are healthier for the body and for the environment. And their production, promotion, and greater consumption would add to agrarian diversity and productivity.
Agriculture also needs technological interventions and for that, and apart from the kisan drones mentioned earlier, the budget proposes “for delivery of digital and hi-tech services to farmers with involvement of public sector research and extension institutions along with private agri-tech players and stakeholders of agri-value chain, a scheme in PPP (public-private-partnership) mode will be launched”. With such support, the agri-start-up industry (already a bright spark) could grow exponentially, and therefore the budget suggests “a fund with blended capital, raised under the co-investment model, will be facilitated through NABARD. This is to finance startups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these startups will include, inter alia, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support.”
All the MSME (Micro, Small and Medium Enterprises)-related digital portals would be interlinked to maximise benefits and break silos, and a digital ecosystem for skilling and livelihood—the DESH-Stack e-portal—will be launched. The budget says that this “aims to empower citizens to skill, reskill or upskill through on-line training. It will also provide API-based trusted skill credentials, payment, and discovery layers to find relevant jobs and entrepreneurial opportunities”.
In each of these fields, the idea is to maximise gains and increase productivity through the introduction of technology or through streamlining.
I would like to conclude this essay by talking a little bit about one of the big stories from this budget—capital expenditure, which by the budget’s own admission has been “stepped up sharply by 35.4 per cent from 5.54 lakh crore in the current year to 7.50 lakh crore in 2022-23. This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9 per cent of GDP.”
Why? Because the multiplier on capital expenditure is around 2.5 or higher while for revenue expenditure it is only around 1 or lower. This makes capital expenditure more “productive” than short term revenue expenditure. And for a country that is in the process of building world class infrastructure for its citizens, this is invaluable.
Hindol Sengupta is historian and award-winning author.