In India, brick-and-mortar industries receive the same traction as the digital industry which comprises IT- and technology-related industries. (Photo credit: Ashwini Vaishnaw/ Twitter)
In conversation with the Financial Times’ Chief Economic Commentator, Martin Wolf, Union Minister Ashwini Vaishnaw discussed PM Narendra Modi and his own ministry’s approach towards ‘bricks’ and ‘clicks’.
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- Expenditure on infrastructure development helped India emerge from the pandemic with a 6.9 per cent growth rate and moderate inflation of 5.8 per cent.
- In December 2022, India’s payments platform registered total digital payment transactions worth $1.5 trillion on an annualised basis.
- India’s smartphone, train set, and telecom manufacturing have also achieved new levels with increased production capacity and global demand.
India’s prudent approach towards spending during the pandemic helped the country emerge from the shadow of COVID-19 with a GDP growth rate of 6.9 per cent with a modest inflation rate of 5.8 per cent and world class infrastructure in both the traditional as well as the digital domain, said Ashwini Vaishnaw, Union Minister for Railways, Communications, Electronics and Information Technology during a panel discussion on ‘Bricks or Clicks: What kind of investment do economies need?’ at the World Economic Forum 2023 in Davos.
In conversation with the Financial Times’ Chief Economic Commentator, Martin Wolf, Vaishnaw discussed Prime Minister Narendra Modi and his own ministry’s approach towards ‘bricks’ and ‘clicks’, from manufacturing smartphones, to trains, and providing a digital stack for payments to small-ticket loans.
PM Modi has emphasised the need to balance investment-driven growth and IT-related growth, said Vaishnaw.
Pandemic spending
During the pandemic, PM Modi decided to spend on focused consumption, instead of splurging money on pure consumption, unlike other economies. Expenditure on infrastructure development helped India emerge from the pandemic with a 6.9 per cent growth rate and moderate inflation of 5.8 per cent.
On the click-side, the India Stack was started in 2016 when PM Modi launched the Digital India programme.
The government invested public funds into the creation of a very robust platform. Its payments platform was joined by more than 300 banks, insurers, e-commerce companies, more than 800 startups, and 1.2 billion users. In December 2022, the platform registered total digital payment transactions worth $1.5 trillion on an annualised basis. That is four times more than the combined value of digital transactions in the US, the UK, Germany, and France.
Electronics manufacturing
Ten years ago, the industry’s output in the country was negligible. Today, India is a $87 trillion electronics manufacturer, said Vaishnaw. Smartphone exports are expected to touch $9 billion this year. The Apple iPhone 14 is now Made in India. The supply chain is shifting and deepening, the component ecosystem is coming to India.
FT’s Martin Wolf said that Vaishnaw had underlined a view held by him for quite a long time–since the 1970s– that it is pretty overwhelmingly certain that for the next 10-20 years India will be the fastest growing of the big economies.
Of train sets and telecom
Under the bricks economy, India has the example of a 180 kmph speed train. Only eight countries in the world have that kind of design capability, said Vaishnaw. “I am an engineer by training and believe you me it’s a very, very complex process. It’s a difficult and complex piece of engineering. We have successfully designed and manufactured the whole thing in India,” the minister added.
To take an example from the clicks economy, India is working to develop and end-to-end 4G and 5G telecom technology stack, since telecom is the backbone of the entire digital economy, the Union minister said.
Bricks or clicks?
On an audience question on how to choose between bricks and clicks when you don’t have the resources to do both, Vaishnaw said that “an example of this very close to my heart and which the PM has clearly targeted is availability of credit to very, very micro business persons who seek $10 credit for 2-3 days.”
“Go and talk to the Indians. There’s a lot to learn from what they’ve managed to do in the last 30-40 years. It is important how countries are developing new forms for public-private partnerships,” Wolf added.
