India needs to empower its communities to turn them into high value producers

India has seen transformational change over the last three decades. Such a transformation has turned India into a highly aspirational country. Today the country wants better jobs, better health care, better public infrastructure and quality of life, better governed cities and modernization of agriculture and rural economy (see 2018 ADR voter survey). To achieve these aspirations India needs to empower its communities and turn them into producers of high-value goods and services.

Moving up the value chain
The first priority of Indians today is to enjoy better employment opportunities. This requires Indians to quickly move up the value chain, so that their skills and services can have greater demand in the labor market. China has been successfully making such a transformation. Consider the case of Indian IT firms like TCS and Infosys that were once supposed to turn India into an IT superpower. Today they have become stunted giants, while Chinese firms have built competitive global brands (Huawei, Tencent) in the same technology industry. While China has assertively moved from low cost manufacturing to production of high end goods and services, India has not. Indian IT "giants" still continue to do backoffice tasks, and are not providers of high end goods and services like Microsoft.

The rural economy needs to move up the value chain as well, and we need more processing done at the rural level so that they do not lose the surplus of their produce to intermediaries. India needs Indian products to turn into global brands, not intermediary inputs to production of other companies. At the same time, for certain regions like North India, we need specific interventions to promote urban development as it suffers from a metropolitan vaccum.

Why is India not moving up the value chain?
Moving up the value chain requires rapid improvement in skill set of Indian people. For example, Indian healthcare needs about 2.7 million doctors (three times the current number) to satisfy India’s healthcare needs, which requires a radical new scale at which Indian education system needs to function. The current system of university degree based education although necessary (e.g for training doctors), has become inadequate for the needs of India’s large young population.

Today with help of ICT, learning can be commodified, and people can learn specific skills in shorter duration, and upgrade their capability. We need an education system that encourages “constant learning” and we need to reimagine universities not as ivory towers in gated communities, but as open public spaces where citizens can walk in and learn. We need to also link high schools and diploma institutes to regional industries where students are taught necessary skills and do not wait for employment until they are in their mid 20s. For the future of India, the role of ITI type vocational institutions is crucial. If India wants IITs to matter too, then it needs to rapidly expand its research budget. For Rs 3000 crore (at cost of a mega statue), as many as 400 high end science labs with seed grant of a million dollars can be established.

Strengthening the community
The above ideas aren’t radical. Most Indians aspire for common sense investments: better infrastructure, governance and quality of life. Yet, simple demands do not get delivered. Why? It is important to note that a nation of 1.35 billion cannot be governed from New Delhi. The average size of an Indian province is 45 million which is larger than most European nations. Central governments and Lutyens mandarins can keep proposing policies after policies, yet such top down policies are bound to fail in a country of the size and scale as India. Consider a community of size of an Indian village with a population of around 1350 people each, then each of these 10 lack communities, need to get greater devolved powers. India needs effective and local community governance, which has four characteristics:
1. Citizen accountability, and open democracy where each household is member of the governing council.
2. The council has the power to raise funds and taxes, and to enact regulations.
3. Executive accountability of local mayors who are responsible for their village or neighborhood affairs.
4. Establishment of an independent local press, and a public square, with library (museum), community center etc as community amenities

Of the 25 lack crore rupees the central government collects as taxes annually (which should rise with greater growth and formalisation of the economy), it should return a significant fraction (about 20% of the budget), directly to the local communities. If 20% of central funds were distributed among the 10 lack communities of 1350 people (less than 300 households) each, then each community would get a grant of around Rs 50 lack annually as a corpus to fund public goods within the community, over which a governing council will have full budgetary power.

One can envision a kind of tax democracy, where each household gets a size weighted fraction of this Rs 50 lack community grant (about Rs 18500 each) and it can decide which public projects they will contribute their portion of funds to. The choice of public projects can be proposed by a mayor and its executive cabinet, and the governance council made of all village households can vote which public project gets how much funds, or else if the fund gets invested in a community savings account. Such a community grant can go a long way in establishing a baseline of services and quality of life, that each Indian deserves, fostering open democracy and provide real significant but constrained devolved powers to local governments.

Empowering communities was a promise of independence (Swaraj) that is left undelivered, and when communities are empowered to invest in themselves, what shall they invest in? In their future. They shall invest in resources that make them compete better in the increasingly connected and globalized world.

PS: The figure below digramatically represents the ideas of Swadeshi and Swaraj and its various components, which I elaborate in the caption and the link here.

First set of measures (Swadeshi) are fundamental, which help citizens succeed, and are well acknowledged: Without an educated and healthy population base, economic success cannot be broad. Thus the focus on Human Development. Similarly, without a strong economic engine that supports free enterprise and flow of capital/resources, an educated and healthy population cannot be sustained. Thus the focus on Enterprise Development. At the core of a strong economic engine lies the ability of a nation to generate enough innovation, that it can create value in a competitive global economy. Thus the focus on Knowledge Development. However, while these development measures are fundamental, achieving them is dependant on the specific regional characteristics. Hence, Swaraj. We have to empower individuals and free them from social restrictions that bind their abilities. Colonial laws and social mores that restrict the pursuit of happiness of women and sexual minorities need to go. The same way, we have to take the government away, and bring back the focus on communities. Mahatma Gandhi and APJ Kalam both dreamt of autonomous village republics. India had a proud history of Janpadas. These republics were built around voluntary and engaged communities. These engaged communities need to be empowered in the government, through decentralised governance. What is not necessarily the purview of the centre and the state, should be local. There should be stronger mayors and empowered panchayats, that are publicly accountable.