Amitabh Kant's Vision for India's Economic Transformation
In a detailed analysis ahead of the Union Budget, Amitabh Kant, chairperson of the Fairfax Centre for Free Enterprise, has articulated a comprehensive growth agenda for India. The central challenge, as he identifies, is sustaining an annual growth rate of 8-9% over the next two decades to realize the vision of a Viksit Bharat by 2047. This ambitious target requires strategic reforms across multiple sectors, with the upcoming budget playing a pivotal role in setting the trajectory.
Addressing the Cost of Capital and Enterprise Growth
First, Kant emphasizes the critical need to lower the cost of capital in India. He points out that the country's private credit-to-GDP ratio remains disproportionately low given its economic size and aspirations. A significant factor is the statutory liquidity ratio (SLR), which mandates banks to hold a substantial portion of deposits in government securities. Kant advocates for a calibrated, phased reduction in the SLR, arguing that this would unlock substantial lending capacity, reduce borrowing costs, and enhance overall competitiveness.
Equally important is tackling the "missing middle" in enterprise development. While India boasts a vibrant startup ecosystem and robust large corporations, there is a notable gap in small enterprises scaling up to become medium-sized champions. To bridge this, Kant suggests expanding credit guarantees to medium enterprises, with enhanced coverage for exporters. This approach, he believes, can attract private lending, facilitate scaling, and generate employment without undermining market discipline.
Transforming Cities into Engines of Growth
Second, Kant calls for a paradigm shift in how Indian cities are perceived and managed. He asserts that cities must be treated as primary engines of growth, yet they are currently hampered by weak municipal finances, fragmented planning, and capacity constraints. To address these issues, the budget must operationalize the Urban Challenge Fund, linking funding directly to measurable outcomes.
Key areas for investment include Geographic Information System-based master planning, modern property tax systems, professional urban staffing, efficient waste management, and effective land value capture mechanisms. Kant stresses that urban reform is not merely a municipal concern but is integral to India's broader growth narrative, requiring coordinated efforts at all levels of governance.
Enhancing Trade Competitiveness and Innovation
Third, improving trade competitiveness demands an integrated approach to customs and tariffs. Despite advancements in logistics and port infrastructure, India's customs processes and tariff structures often create uncertainty and inflate costs. Kant recommends advancing customs reforms and transitioning to a risk-based regime to expedite clearances and lower transaction costs. Digitization and integrated platforms can foster transparency, trust, and reduced human interface, thereby boosting trade efficiency.
Alongside this, tariff rationalization, particularly for intermediate goods, is essential to strengthen export competitiveness. Fourth, Kant places innovation at the heart of India's growth strategy, viewing it as a key driver of productivity. He urges the budget to advance the Deep Tech Fund of Funds, providing patient capital for cutting-edge technologies. Additionally, scaling domestic data centre capacity and establishing sovereign compute parks are crucial to position India as a global leader in digital services under its jurisdiction.
Leveraging Tourism and Circular Economy for Job Creation
Fifth, Kant highlights the untapped potential of tourism and the circular economy. Tourism remains one of India's most underutilized job engines. Declaring 2027 as Visit India Year, coupled with deregulation, destination infrastructure development, and improved last-mile connectivity, could generate large-scale employment, especially for youth and women.
Simultaneously, growth must translate into improved quality of life. Addressing productivity losses from environmental issues like air and water pollution is an economic necessity. Kant calls for strong enforcement, clean mobility initiatives, waste reform, and water quality management as essential investments in human capital.
Finally, he proposes a National Circular Economy Mission to reduce import dependence, create new industries, and generate jobs by converting waste into value. Circular economy parks, demand mandates, and blended finance mechanisms can accelerate this transition.
A Cohesive Strategy for Sustained High Growth
Kant's message for the budget is unequivocal: focus on capital, cities, trade, innovation, and quality of life. These elements are not competing priorities but rather interconnected pillars that form the backbone of sustained high growth. By implementing these reforms, India can navigate its economic challenges and move decisively towards becoming a Viksit Bharat by 2047.
The views expressed by Amitabh Kant are personal, reflecting his expertise in economic policy and development.
