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GS Paper: Indian Economy

  • Formal sector and fine print

    Context

    A recent study by SBI has reported that the Indian economy witnessed accelerated formalisation under the distressed conditions of the pandemic and the lockdown last year. The study estimates that the share of the informal economy has fallen to a mere one-fifth of GDP — a figure comparable to many advanced economies.

    Understanding informality

    • ILO definition: The ILO’s globally accepted framework for definitions is as follows: Informal sector enterprises are defined as private unincorporated enterprises owned by individuals (or households) that are not constituted as separate legal entities independently of their owners.
    • They are not registered under specific national legislation (such as Factories’ or Commercial Acts).
    • Definition of a formal worker in India: Formal workers in India, on the other hand, are defined as those having access to at least one social security benefit such as a provident fund or healthcare benefits.

    What explains the decline of informal sector in GDP

    • Significance of informal sector: In 2017-18, as per the latest official statistics, India’s informal sector accounted for approximately 52 per cent of its GDP, employing 82 per cent of the total workforce.
    • These ratios have broadly remained unchanged over the last decade.
    • Most affected due to pandemic: As the informal (unorganised) sector bore much of the brunt of the economic contraction during 2020-21, a decline in its share in GDP is unsurprising.
    • Lack of financial strength: The sector had neither the financial strength nor the technical wherewithal to face the Covid shock.
    • Inadequate policy support: Additionally, policy support, mostly supply-side measures, was mainly focused on firms in the formal sector, with the informal sector left to fend for itself.

    Issues with decline

    • Undeniably, the informal sector’s share in GDP is likely to have shrunk due to the Covid shock.
    • However, alarmingly, the purported decline in the informal sector’s share in GDP has not been accompanied by an expected reduction in its employment share. 
    • Data from the official annual Period Labour Force Survey (PLFS) 2017-18 and 2019-20, where the latter includes the period of the Covid shock from April to June 2020, shows that the employment share in non-agricultural informal enterprises has increased from 68 per cent in 2017-18 to 69.5 per cent in 2019-20.
    • These figures do not include the agricultural sector, where employment is almost entirely in the informal sector.
    • The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.
    • The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.

    Implications

    • Impact on investment and growth: The lack of remunerative jobs for the vast majority of Indian consumers implies that eventually the lack of growth in demand will adversely impact investment and economic growth.
    • After all, a mere 17-18 per cent of the workforce in the organised sector cannot sustain growth of the economy in the long run.
    •  Squeezing out informal enterprises: The increase in the formal sector’s share in GDP due to Covid-19 is a result of large, formal enterprises squeezing out informal enterprises.
    • It is important to note here that the increase in formalisation is not a consequence of micro and small informal firms transitioning to formality.

    Increasing productivity: A way forward to formalisation

    • Promoting formalisation: Over the last five years, the economy has officially witnessed a significant drive towards formalisation.
    • Multiple reasons for avoiding formalisation: It is crucial to recognise that firms exist in the informal sector for various reasons and not simply to evade regulations and taxation.
    • Significance of productivity: Many own account enterprises and MSMEs cannot afford to survive in the formal sector due to their low productivity.
    • It is essential to view the process of formalisation as a development strategy that requires stepping up investment in physical and human capital to boost productivity and the extension of social security benefits for all workers, not just a registration strategy on myriad portals.

    Consider the question “Informal sector has been affected disproportionately in the wake of the pandemic. What are the implications of this for the economy? Suggest the way forward for the formalisation.”

    Conclusion

    The informal sector will come back to life as much of it represents the survival efforts of the working poor. Celebrating formalisation based on the misery and devastation of poor informal workers (and their meagre productive assets) is not just misplaced but also callous.

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  • Taproot upgrade in Bitcoins

    Bitcoin went through a major upgrade that enables its blockchain to execute more complex transactions, potentially widening the virtual currency’s use cases and making it a little more competitive with Ethereum for processing smart contracts.

    What is the new upgrade?

    • The enhancement, called Taproot, is the most significant change to the bitcoin protocol since the SegWit (Segregated Witness) block capacity change in 2017.
    • SegWit effectively increased the number of transactions that could fit into a block by pulling data on signatures from bitcoin transactions.
    • Smart contracts are self-executing transactions whose results depend on pre-programmed inputs.

    What is Taproot?

    • The Taproot upgrade consists of three separate upgrade proposals.
    • However, at its core, the upgrade introduces a new digital signature scheme called “Schnorr” that will help bitcoin transactions become more efficient and more private.
    • Schnorr can also be leveraged to let bitcoin users execute more complex smart contracts.

    When was Taproot officially activated?

    • Taproot was officially activated on block 709,632.
    • Blockchains settle transactions in batches or blocks.
    • Each block can contain only a certain number of transactions.

    What is its impact on Bitcoin?

    • The biggest impact would be the bitcoin network’s ability to process more smart contracts, similar to what Ethereum does.
    • Bitcoin has historically been much more limited in processing smart contracts compared with Ethereum.
    • Taproot increases privacy by obscuring what type of transaction is being executed.

    What are the other enhancements?

    • The Schnorr signatures can make more complex transactions on the bitcoin protocol, such as those from wallets that require multiple signatures, look like just any other transaction.
    • This makes transactions more private and more secure.
    • Bitcoin transactions will also become more data-efficient, optimizing block capacity and leading to lower transaction fees.

    What does Taproot mean for investors?

    • Large-scale upgrades have paved the way for the next phase of innovation in the bitcoin network.
    • The last major upgrade in 2017 helped launch the Lightning Network, which facilitated much faster and cheaper bitcoin payments than before.
    • Taproot to lead to a similar wave of innovation in bitcoin centered around smart contracts.

    Also read:

    Cryptocurrency

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  • Central bank digital currency (CBDC)

    Context

    Recently, Nigeria joined the Bahamas and five islands in the East Caribbean as the only economies to have introduced central bank digital currency (CBDC). This is a shortlist, but one that is likely to be supplemented.

    Benefits of CBDC

    • Desire to make domestic payments systems and cross-border remittances cheaper, faster and more efficient, and deepen financial inclusion, represent key areas of priority for most other emerging market and development economies (EMDEs).
    • Between 2019 and 2021, the last three surveys conducted by the Bank for International Settlements showed that the primary drivers for central banks of EMDEs to study CBDCs were domestic payments efficiency, financial inclusion and payments safety.

    Design features of CBDCs

    • In theory, the potential of CBDCs are only limited by their design and the capabilities of the central bank issuing it, but their appropriateness and form also depend on the state of the domestic banking and payments industry.
    • Ultimately, CBDCs must be seen as a means to an end.
    • A particular CBDC could, for example, be account-based or tokenised, may be distributed directly by the central bank or through intermediaries, may be interest-bearing (even the possibility of a negative interest has been considered), may be programmable, may offer limited pseudonymity to its holders (similar to, but not to the extent of, cash) and so on.
    • Whether it may be one or the other depends on what its country requires it to be.

    Challenges

    • An economy that adopts an interest-bearing CBDC could make the interest rate on CBDCs the main tool of monetary policy transmission domestically (assuming a high degree of substitution of fiat and fiat-like currency).
    • On the other hand, as former RBI Governor D Subbarao recently warned, rendering an Indian CBDC as an interest-bearing instrument could pose an existential threat to the banking system by eroding its critical role as intermediaries in the economy.
    • If CBDCs compete with bank deposits and facilitate a reduction of bank-held deposits, banks stand to lose out on an important and stable source of funding.
    • Banks may respond by increasing deposit rates, but this would necessitate a higher lending rate to preserve margins, and dampen lending activities.
    • The resultant shrinking of balance sheets will lead to a more pronounced disintermediation role for financial institutions, which could have long-term effects on financial stability, and facilitate easier bank runs.
    • The introduction of CBDCs would require central banks to maintain much larger balance sheets, even in non-crisis times.
    • They would need to replace the lost funding (because of migration of deposits) by lending potentially huge sums to financial institutions, while purchasing correspondingly huge amounts of government and possibly private securities.
    • CBDCs could also have implications for the state from seigniorage as the cost of printing, storing, transporting and distributing currency can be reduced.

    Conclusion

    Recent comments by RBI officials have focussed on the desirability of introducing CBDCs. But the path to a “Digital Rupee” is not clear.

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  • What is the Retail Direct Scheme for investors in G-Secs?

    The RBI has announced proposals for the Retail Direct Scheme for investors in government securities and the Integrated Ombudsman Scheme.

    What is the Retail Direct Scheme?

    • Under the scheme, small investors can buy or sell government securities (G-Secs), or bonds, directly without an intermediary like a mutual fund.
    • It is similar to placing funds in debt instruments such as fixed deposits in banks.
    • However, the same tax rules apply to income from G-Secs.

    Benefits of RDS

    • With the government being the borrower, there is a sovereign guarantee for the funds and hence zero risk of default.
    • Also, government securities may offer better interest rates than bank fixed deposits, depending on prevailing interest rate trends.
    • For example, the latest yield on the benchmark 10-year government securities is 6.366%.

    How can individuals access G-Sec offerings?

    • Investors wishing to open a Retail Direct Gilt account directly with the RBI can do so through an online portal set up for the purpose of the scheme.
    • Once the account is activated with the aid of a password sent to the user’s mobile phone, investors will be permitted to buy securities either in the primary market or in the secondary market.
    • The minimum amount for a bid is ₹10,000 and in multiples of ₹10,000 thereafter. Payments may be made through Net banking or the UPI platform.

    Why was it necessary to introduce this scheme?

    • Broader investor base: The scheme would help broaden the investor base and provide retail investors with enhanced access to the government securities market — both primary and secondary.
    • Institutional investment: Accessing retail investors could free up room for companies to bring funds from institutional investors which may otherwise have been cornered by the government.
    • Diverse borrowing for government: This scheme would facilitate smooth completion of the Government borrowing programme in 2021-22.
    • Structural reform: It is a major structural reform placing India among select few countries which have similar facilities.

    Why is the RBI setting up an Integrated Ombudsman?

    • Prior to the introduction of this scheme, the RBI had three different ombudsman schemes to aid dispute resolution with respect to banks, NBFCs, and non-bank pre-paid payment issuers (PPIs).
    • They were operated by the RBI through 22 ombudsman offices.
    • The RBI would now appoint the Ombudsman and a Deputy Ombudsman for three years.
    • Complaints may be made either physically to the Centralised Receipt and Processing Centre or the RBI’s offices; or electronically through the regulator’s complaint management system.

    Back2Basics: Government Securities

    • These are debt instruments issued by the government to borrow money.
    • The two key categories are:
    1. Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    2. Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years
    • T-Bills are issued only by the central government, and the interest on them is determined by market forces.

     

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  • [pib] Reserve Bank – Integrated Ombudsman Scheme

    The PM will launch two innovative customer-centric initiatives of the Reserve Bank of India.

    What are the schemes?

    [A] Integrated Ombudsman Scheme

    • It aims to further improve the grievance redress mechanism for resolving customer complaints against entities regulated by RBI.
    • The central theme of the scheme is based on ‘One Nation-One Ombudsman’ with one portal, one email and one address for the customers to lodge their complaints.
    • There will be a single point of reference for customers to file their complaints, submit the documents, track status and provide feedback.
    • A multi-lingual toll-free number will provide all relevant information on grievance redress and assistance for filing complaints.

    [B] RBI Retail Direct Scheme

    • It is aimed at enhancing access to government securities market for retail investors.
    • It offers them a new avenue for directly investing in securities issued by the Government of India and the State Governments.
    • Investors will be able to easily open and maintain their government securities account online with the RBI, free of cost.

     

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  • Charting a trade route after the MC12

    Context

    The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) is being convened in Geneva, Switzerland at the end of this month.

    Ministerial Conferences

    • The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions.
    • The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements

    The task ahead for MC12

    • Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend.
    • The MC12 needs to consider how in these good times for trade, the economically weaker countries “can secure a share in the growth in international trade commensurate with the needs of their economic development’, an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.
    • Some of the areas are currently witnessing intense negotiations, these include adoption of WTO rules on electronic commerce, investment facilitation, and fisheries subsidies.

    Following issues will form the basis of MC12 discussions

    1) IPR waiver for Covid-19 related technologies

    • Pharmaceutical companies have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how, thus undermining the possibility of production of vaccines in these countries.
    • To remedy this situation, India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on “health products and technologies including diagnostics, therapeutics, vaccines, medical devices.
    •  This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates.
    • The unfortunate reality of the current discussions is that an outcome supporting affordable access to COVID-19 vaccines and medicines looks distant.

    2) Fisheries subsidies

    • Discussions on fisheries subsidies have been hanging fire for a long time, there is considerable push for an early conclusion of an agreement to rein in these subsidies.
    • The current drafts on this issue do not provide the wherewithal to rein in large-scale commercial fishing.
    • Large scale commercial fishing is depleting fish stocks the world over, and at the same time, are threatening the livelihoods of small fishermen in countries such as India.

    3) E-commerce

    • Discussions on e-commerce are being held in the WTO since 1998, wherein WTO members agreed to “continue their practice of not imposing customs duties on electronic transmissions”.
    • The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.
    • However, in 2021, a key focus of the 1998 e-commerce work programme, namely “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations.
    • On the negotiating table are issues relating to the liberalisation of the goods and services trade, and of course guarantee for free flow of data across international boundaries, all aimed at facilitating expansion of businesses of e-commerce firms.
    • In fact, the decision on a moratorium on the imposition of import duties agreed to in 1998 has become the basis for a push towards comprehensive trade liberalisation — a perfectly logical way forward, given that the sole objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms.

    4) Investment facilitation

    • Inclusion of substantive provisions on investment in the WTO has been one of the more divisive issues.
    • In 2001, the Doha Ministerial Declaration had included a work programme on investment, but developing countries were opposed to its continuation because the discussions were geared to expanding the rights of foreign investors through a multilateral agreement on investment.
    • An investment facilitation has reintroduced the old agenda of concluding such an investment agreement.

    Issues with the negotiations

    • The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner.
    • Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO.
    •  This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”, as India and South Africa have forcefully argued in a submission against the JSIs early this year.

    Conclusion

    Current favourable tidings provide an ideal setting for the Trade Ministers from the WTO member-states to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.

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  • RBI issues revised Prompt Corrective Action (PCA) framework

    The RBI has issued a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at “appropriate time” and also act as a tool for effective market discipline.

    What is the PCA framework?

    • Prompt Corrective Action Framework refers to the central bank’s watchlist of weak banks.
    • The regulator imposes restrictions like curbs on lending on such banks.
    • The PCA Framework applies only to commercial banks and does not cover cooperative banks and non-banking financial companies.

    When was PCA introduced?

    • The RBI’s PCA Framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the US Federal Deposit Insurance Corporation’s PCA framework.
    • The last PCA Framework was issued by the RBI on April 13, 2017, and implemented with respect to banks’ financials as of March 31, 2017.

    Latest PCA norms

    • The revised PCA framework will be effective from January 1, 2022.
    • Capital, asset quality and leverage will be the key areas for monitoring in the revised framework.
    • That apart, RBI has also revised the level of shortfall in total capital adequacy ratio that would push the lender to “risk threshold three” category.

    When exactly does a bank fall into this list?

    • The RBI has specified certain regulatory trigger points with respect to three parameters for the initiation of the process:
    • Capital-to-risk weighted assets ratio (CRAR): It is a measure of a bank’s capital to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.
    • Net Non-Performing Assets (NPA)
    • Return on assets (RoA): It is an indicator of how well a company utilizes its assets in terms of profitability.

    What are the trigger points on capital and how does a breach invite action?

    1. CRAR

    • If CRAR falls to less than 9 percent, the RBI asks banks to submit a capital restoration plan, restricts new businesses and dividend payments.
    • The RBI also orders recapitalisation, restrictions on borrowings from the inter-bank market, reduction of stake in subsidiaries and reduction of exposure to sensitive sectors.
    • Such sectors include the capital markets, real estate or investments in non-statutory liquidity ratio securities.
    • If CRAR is less than 6 percent but equal to or more than 3 percent, the RBI could take additional steps if the bank fails to submit a recapitalisation plan.

    2. NPA levels

    • If net NPAs rise beyond 10 percent but are less than 15 percent, a special drive to reduce bad loans and contain the generation of fresh NPAs begins.
    • The RBI reviews the bank’s loan policy and takes steps to strengthen credit-appraisal skills.

    3.Return on assets

    • If RoA is less than 0.25 percent, restrictions on accessing/renewing costly deposits and CDs kick in and the RBI bars the bank from entering new lines of business.
    • The bank’s borrowings from the inter-bank market, making dividend payments and increasing staff will be restricted.

    Significance of PCA

    • The financial health of a bank: Essentially PCA helps RBI monitor key performance indicators of banks, and taking corrective measures, to restore the financial health of a bank.
    • Averting a crisis: PCA is intended to help alert the regulator as well as investors and depositors if a bank is heading for trouble. The idea is to head off problems before they attain crisis proportions.

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  • Mixed signals on growth-inflation dynamics

    Context

    We are now at that point in the cycle where all central banks — the RBI, the US Fed, the European Central Bank, Bank of England and others — have begun to signal, a process of normalisation from the unprecedented loose monetary policy stimulus post the onset of the pandemic in early 2020.

    Recovery momentum

    • Surveys and data prints are now signalling that the recovery momentum in the first half of 2021 is decelerating in many countries, although the direction and momentum may vary.
    • The RBI Governor notes that “the external environment, which had been supportive of aggregate demand over the past few months, may lose momentum for a variety of reasons”.
    • China — its policy and economy — is the most salient risk for a sustained global recovery.
    • The Chinese authorities’ seeming determination to push ahead with structural reforms, de-carbonising initiatives, and curbs on real estate appear designed to sacrifice some short-term growth for medium-term efficiencies, and reduce financial risks and inequality.
    • Inflation in almost all major economies continues to remain high.
    • The US Personal Consumption Expenditure (PCE) survey measure of core inflation is running over 4 per cent.
    • The story is similar in Europe.

    Assessing India’s growth recovery

    • India’s growth–inflation dynamics are also becoming favourable, but are still subject to multiple risks.
    • In assessing India’s growth recovery, a risk of the global economy going into “stagflation”, going by US signals seems to be that if at all, it is likely to be mild.
    • The recovery of economic activity continues, although the high-frequency indicators we track suggest that the momentum observed in July and August has moderated.
    • Electricity consumption growth is also down from August levels, but part of this can be explained by both cooler, rainy weather, as well as coal shortage related cutbacks in many electricity-intensive manufacturing.
    • The residential real estate is reportedly doing exceptionally well, with low-interest rates on home loans, cuts in stamp duty and registration charges, and indeed behavioural shifts towards own home ownerships with hybrid and work from home shifts.
    • Even the commercial real estate sector is reviving.
    • The Union government also has large unspent cash balances, which can be judiciously deployed to boost both capex and consumption.
    • The overall inflation trajectory suggests a gradual glide path towards the 4 per cent target by March 2023 or a bit beyond.
    • There are risks of overshooting this forecast trajectory, despite a benign outlook on food prices.
    • This emanates from global metals, minerals, crude oil prices, and from supply bottlenecks persisting till well into 2022.

    Conclusion

    In summary, the growth–inflation signals remain mixed. Multiple episodes of global spillovers in the past couple of decades have taught us that imminent normalisation will have implications for all emerging markets.

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  • How to create a truly digital public

    Context

    Despite the push for the adoption of digital technologies, large segments of Indians still can’t access or haven’t learned to trust digital artefacts.

    Issue of exclusion

    • Recognising the power of technology to drive inclusion at a massive scale, the state is doubling down on technology to reach more citizens and serve them better.
    • However, often the paradigm of technology for such services is built around the “elite” citizen, who is comfortable with technology.
    • Often, this imagined citizen is male, urban, upper class.
    • Large segments of Indians still can’t access or haven’t learned to trust digital artefacts.
    • Many among marginalised groups struggle to access digital civic platforms, and instead rely on trusted human intermediaries.

    Suggestions to make digital space truly public

    1) Design with the citizen

    • Encouraging human-centric design, and mandating user-assessments prior to roll out of GovTech platforms should be a key priority.
    • This is a shift from the default “build first and then disseminate” approach.
    • For example, formative research and human-centric design was informative in the creation of the first UPI payments app, BHIM.
    • BHIM’s simple interface and onboarding, use of relatable iconography and multi-language capabilities played an important role in early adoption of UPI among non “digital natives”.
    • Similarly, as the “Human Account” project demonstrated, it is possible to start with users in designing pro-poor fintech products, like the “Postman Savings” product which India Post Payments Bank designed for the rural poor.

    2) Harness trusted human interface to serve those who are not comfortable with technology

    •  Local intermediaries, such as formal and informal community leaders and civil society organisations, can play a key role in bridging the digital divide.
    • Working with existing networks (for example ASHAs) or carefully setting them up (such as the Andhra Pradesh Ward Secretariat programme), where pre-existing trust, community knowledge, and embeddedness can play a significant role, should be prioritised.

    3) Institutionalise an anchor entity that brings together innovators, policy makers and researchers

    • Such an entity will help to push the frontier on citizen-centricity in GovTech.
    • Such a platform — like the Citizen Lab in Denmark — can play a role in generating formative research.
    • Embedding this research in practice by partnering with the government as well as market innovators, and working with civil society organisations to enhance access to GovTech.

    Conclusion

    As India makes rapid strides in its digitalisation journey, it is timely to invoke Gandhiji’s talisman and ensure that GovTech can serve its highest and greatest purpose, that is, serving those who are last in line.

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  • The three acts of entrepreneurship that accelerated India’s start-up ecosystem

    Context

    Three acts of entrepreneurship from five years ago — Jio, UPI, and GST — have converged to accelerate our startup ecosystem.

    Let’s look at each in more detail

    • Impact of JIO: India’s per GB internet data costs are just 3 per cent of those in the US.
    • A bold and risky $35 billion bet made by a private company transformed Indians from being data deprived to data-rich; consumption has jumped 15 times because costs fell by over 90 per cent.
    • The addition of millions of consumers and smartphones since Jio’s delightful five-year disruption of the market has exploded the most important universal metric in startup valuation — addressable market.
    • Affordable digital connectivity is transforming 75 crore of them into consumers, entrepreneurs, employees, and suppliers.
    • Role of UPI: Google’s letter to the US Federal Reserve suggesting America learn from India’s Universal Payments Interface (UPI) acknowledged that our real-time, low-cost, open-architecture payment plumbing is a public good.
    • UPI’s mobile-first architecture is a key pillar of the paperless, presenceless, and cashless framework of the Aadhaar-seeded India Stack.
    •  Impact of GST: GST attacked complexity and incentivised law-abiding supply and distribution chains.
    • It was long in the making but going live needed the risk-taking of starting with a second-best architecture, accepting some unjustifiable rates, and state revenue guarantees.
    • The doubling of indirect tax registered enterprises since GST creates a virtuous economic cycle of higher total factor productivity for enterprises and employees.

    Flourishing startup ecosystem

    • India now has the highest ratio of unlisted to listed companies with a $1 billion valuation.
    • Initial public offering documents filed by early startups like Nykaa, Paytm, Zomato and PolicyBazaar roughly average a 10x valuation rise since the triad did IPO.
    • Estimates suggest India’s startup ecosystem valuation will explode from $315 billion today to $1 trillion by 2025.

    Conclusion

    Gandhiji’s notion of democracy — where the weakest have the same opportunity as the strongest — needs an economic meritocracy only possible when entrepreneurs have all the ingredients in the right proportions.

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