Mass Prosperity from Higher Productivity

INDIA CREATED MASS

democracy on the infertile soilof the world’s most hierarchical society but failed to create mass prosperity on the fertile soil of a culturally open and assimilative society. In the remaining years to India@100,we have a real chance to combine both in abold plan that reimagines our economic ecosystem through three pillars: deregulation for employers, decentralisation of power,and deepening ofhuman capital.

DEREGULATION FOR EMPLOYERS

Nobel Laureate Daniel Kahneman reminded us that we tend to press the acceleratorwhen we want to go faster, but often achieve better results by lifting our foot offthe brake. India doesn’t have a jobs problem but wages problem; this challenge reflects the productivity ofour cities and firms more than citizens. Increasing our population of high wage employers requires cutting the regulatory cholesterol for employers captured by 60,000-plus compliances and 25,000-plus jail provisions embedded in state and central laws. Laws such as the Industrial Disputes Act require government approval for layoffs in firms with more than 100 employees, deterring formal hiring, and most organisation are dwarfs (small that stay small) rather than babies (smallthat willgrow). We should also be careful inpositioning self-employment as a solution to mass prosperity; not everybody canbe an entrepreneur, not all entrepreneurship isviable. Already half of India’s labour force is self-employed. The poor cannot
afford to be unemployed, so they are self-employed. Deregulation is not merely about ease of doing business. It is about unlocking an explosion in our population of formal, non-farm, high-productivity employers that will pay high wages.

DECENTRALISE POWER TO STATES

Indira Gandhi’s notionthat strong states lead to a weak nation was wrong then and is wrong now. India
can’t berun from Delhi and centralised policy making oftenignores thevast differences among states in
terms of infrastructure, labour markets, and industrial readiness.Real growth demands empowering states to craft solutions tailored to their unique strengths. Prime Minister Modi’s remark that “29 chief ministers matter more than one prime minister” echoes economic anthro pologist Karl Polanyi’s insight that labour markets are inherently local, not abstract national aggregates and that a “worm’s eye view” of entrepreneurs’ daily challenges offers far more actionable policy insights than a distant “bird’s eye view.” Notably, 80% of India’s 26,134 employer related legal provisions and 65% of its 69,233 employer compliances could be streamlined at the state level. Implementing a unified grid State Employer Compliance Grid, modelled on the Digital Public Infrastructure’s open-architecture simplifies compliance processes, including filing returns and issuing licences, registrations, and permissions, enabling efficient end-to-end digital processing. International experience supports this approach.
Decentralisation involves devolving regulatory and fiscal powers so states can address local bottlenecks in land use, skilling, and compliance. States with greater labour flexibility and policy autonomy consistently attract more manufacturingand private investment.

DEEPENING HUMAN CAPITAL

Human capital is the only renewable source of energy for any country. India stands at a demographic
crossroads; 65% of our population is under 35 (nearly 900 mn youth). Nearly 12 million people enter the
workforce each year,but only a fraction receive formal skilling. India’s dependency ratio (46.2) is lower than China’s (45.9) and farbelow Japan’s (68.4), underscoring the growth potential if this workforce is effectively skilled. Despite high enrolment rates, the employability of Indian graduates can be better.
Globally this gap is bridged through strong academia-industry linkages. Germany’s dual apprenticeship
model remains a benchmark. For In dia, the challenge is not just access, but also aligning education with sectors such as manufacturing, green energy, and digital services. Degree apprenticeships-structured as
tripartite agreements between employers, universities, and students offer a selt-healing skilling model
built on five principles: learning while carning, learning by doing, degree integration, multi-modal
delivery, and industry-recognised certification.

India will soon be the third largest economy in the world, but we will still rank above 10o in percapita income. Mass prosperity will come from higher productivity of our states, firms, and citizens that
the three pillar detailed above will deliver. All three require breaking with the past, taking on vested
interests, and imagining a new firm ecosystem with the fierce urgency of now. This need courage but our
ancestors reminded us that Veer Bhogya Vasundhara. The Brave shall inherit the earth.

This article was first published on Business Today India