I have had two careers, and India has been central to both of them. At Microsoft, I watched as the country developed a world-class IT sector that is still driving innovation in the field. At our foundation, I focus on global health. India’s immense diversity and size make it a source of both defining challenges and cutting-edge solutions for our sector.
One of the most important questions in India today is, what will it take to trigger rapid economic growth in the years and decades to come? Drawing on both of my careers, I can say with confidence that it will take investments in health and nutrition, or what economists call human capital.
Human capital has always been important. For example, research shows that investments in fundamentals like health and nutrition account for almost 40% of China’s phenomenal growth since the late 1970s. And, as India charts its course for the future, the productivity and skill level of its workforce is becoming even more critical.
The export-oriented, low-skill, large-scale manufacturing jobs that developing economies have relied upon (and that were the key to much of China’s success) are on the wane around the world. Automation is reducing the amount of low-skill work the manufacturing sector requires.
More importantly, high tech sectors offer by far the greatest opportunity for growth. Advances in areas like artificial intelligence and machine learning are spurring innovation and economic dynamism on which India can capitalize.
For these high tech sectors to grow at an optimal rate and spur the Indian economy, they’ll need to be able to rely on Indian workers who are prepared to excel at these new and more demanding jobs. And that requires a long-term plan to address health and nutrition across the country.
Part of the issue is productivity. More than half of Indian women and almost a quarter of Indian men of working age suffer from anaemia. According to studies, they are anywhere from 5-15% less productive than they could be, as a result. India also has the largest tuberculosis burden in the world, costing 170 million workdays in the country annually.
But what’s just as important as lost productivity now is lost potential in the future. It is becoming increasingly clear that on many measures of cognitive ability, malnourished Indian children perform two to three times worse than their adequately nourished peers.
Data from 2005-6 show that 48% of young children were malnourished. Since these children were born between 12 and 17 years ago, it means that approximately half of new entrants to the workforce today, about 4.5 million each year, are less likely to fulfill their potential due to poor health and malnutrition.
For an economy that will be more dependent on highly skilled workers, this poses a significant challenge. And it’s one that really should be addressed now, given India’s demographic outlook.
The next 15 years could be a time of extraordinary opportunity, as the working age population grows relative to other population segments. India is poised to enjoy a prolonged period of what economists sometimes call a favourable dependency ratio – a greater proportion of economic producers compared with those who are economically dependent.
But whether the country makes the most of its demographic good fortune will depend on its ability to close the gap between the current and potential health of its people.
Of course, India’s growth will depend on additional factors beyond health and nutrition. Structural transformation, including the flow of capital investment into more productive, high-tech sectors, is also necessary. As Indians move from the countryside to cities in increasing numbers, investment must follow them.
However, without concurrent investment in health and nutrition, India won’t have the thriving workforce it needs to take advantage of this structural transformation. Opportune investments in human capital can maximise the impact of structural changes to India’s economy, and trigger growth that is swift, inclusive, and sustained.
For this to happen, India urgently needs to boost its public investment in health while also improving how private health spending is channelled. The emphasis needs to shift from current massive levels of out-of-pocket spending to pooled spending.
Moreover, the country needs to develop a stronger primary healthcare and nutrition system, ensure that both private and public sector providers offer high-quality services, and complete the unfinished agenda on infectious disease control. With these changes, India will derive more value from its health expenditures and increase their impact on people’s lives and their collective economic future.
Since I started paying attention to India during my “first” career, the country’s evolution has been phenomenal. With the right investment in India’s economy and India’s people, what lies ahead will be even more impressive.
(The article is first published on Times of India written by Bill Gates who is the co-founder, Microsoft, and currently co-chair of the Bill and Melinda Gates Foundation)
This post was last modified on November 17, 2017, 9:03 am