Viksit Bharat @ 2047 Initiative and Role of Banks

Introduction:

The proposed ‘Viksit Bharat’ is the Government of India’s ambitious vision to transform our nation into a developed country by 2047, coinciding with the Centennial Year of its independence. This vision aims at mobilizing efforts across economic, social, environmental, and governance domains to achieve comprehensive and sustainable development. Thus, by achieving a ‘Developed Nation’ status by 2047, it is expected to ensure an enhanced global standing, greater economic prosperity for its citizens and an overall improvement in their well-being. To realize this broad vision, the NITI Aayog, Government of India, has  prepared a document entitled, “Vision for Bharat @ 2047: An Approach Paper,” which outlines the strategic direction for achieving the ‘developed nation’ status.

I. Framework:

(A) Objectives:  As stated above, the objectives of ‘Viksit Bharat’ are relating to:

(i). Economic, (ii) Social, (iii).Environmental and, (iv).Governance. To elaborate, (i). Economic objectives would enable the country to achieve a substantial GDP, with targets ranging from USD 30 to 40 trillion by the year 2047 and per capita income is expected to remain between USD 15,000 -18,000. Coming  to (ii). Social objective, the document aims for the ambitious goal of zero poverty, seeking to uplift the underprivileged through inclusive development and financial empowerment And, it is also ensuring quality education and healthcare for all citizens is another paramount objective. About (iii).Environmental objective, Viksit Bharat is committed to achieving net-zero carbon emissions and promoting sustainable and green growth across all sectors. Lastly, coming to (iv). Governance objective, Viksit Bharat intends to establish transparent, efficient, and citizen-centric systems, besides making India a global leader in technology and innovation. Thus, in terms of these objectives, the document proposes to empower citizens through a focus on health, education, women’s empowerment, and social justice, besides planning to strengthen India’s global position and influence in the international arena.

(B)Basic Layers of Viksit Bharat:

To fulfill the above objectives, there are certain basics which include: (A) Pillars (primary and specific areas of focus), (B).Themes and, (C).Identified sectors for the Viksit Bharat initiative. Under  (A). Pillars, Youth, Poor, Women, and Farmers represent the key demographic and occupational groups whose empowerment and progress are central to India’s development. Additionally, there are another six Identified areas of focus which include: making India a global manufacturing hub, reviving the glory of Indian knowledge systems, ensuring global presence of Indian products, powering green energy, expanding tourism, and promoting inclusive global development.  Coming to (B) Themes, these include:  Empowered Indians, Thriving and Sustainable Economy, Innovation, Science & Technology, Good Governance & Security, and India in the world. Lastly, about (C). sectors, Viksit Bharat prioritizes Agriculture; Micro, Small, and Medium Enterprises (MSMEs); Investment; and Exports as key drivers of economic transformation. In particular, manufacturing and services sectors are also considered crucial for achieving the desired growth trajectory. The initiative also strategically focuses on the ‘Sunrise Sectors’ such as digital public infrastructure, renewable energy, and overall technological advancement to propel India into the future.  Thus, the above discussed multiple Pillars, Themes and  Identified sectors call for effective coordination and coherence across these various layers for the successful realization of the Viksit Bharat vision.

Projections and Requirements:

A central tenet of the Viksit  Bharat vision is the ambitious target of transforming India into a USD 30-40 trillion economy by the year 2047 by maintaining GDP of 7-10 %. For this, Viksit Bharat initiative emphasizes the crucial role of the manufacturing and services sectors in contributing significantly to the GDP. A significant expansion in exports is also considered vital. Furthermore, substantial infrastructure development and increased investment across various sectors are deemed essential to fuel economic growth. The integration of digital transformation and technological innovation across all sectors is also considered a critical enabler for achieving sustained economic progress. Achieving these ambitious economic growth targets will necessitate a cohesive and dedicated effort across various sectors, with a particular emphasis on strengthening manufacturing and leveraging India’s inherent strengths in the services and digital domains.

Infrastructure Development:

The Viksit Bharat initiative proposes for comprehensive infrastructure development across both physical and digital domains. This includes significant upgrades and expansion of transportation networks, encompassing highways, railways, ports, and airports. The development of smart cities with advanced amenities and sustainable urban planning is also a key component. The energy sector will also witness significant development, with a focus on expanding both renewable and traditional sources to meet the growing demands of a developed economy. Similarly, recognizing the transformative power of technology, Viksit Bharat places a strong emphasis on expanding digital infrastructure and promoting digital literacy across the nation. The development of Digital Public Infrastructure (DPI), including digital identification and payment systems, is considered a key enabler for economic growth and financial inclusion. Realizing these ambitious infrastructure plans requires significant investment. The government has expressed a strong commitment to increasing capital spending in these crucial sectors. Public-private partnerships (PPPs) are also expected to play a significant role in mobilizing the necessary resources and expertise for these large-scale projects. While the scale of infrastructure development required is immense, the government’s commitment and strategic focus on this area are crucial for achieving the overall economic and social goals of Viksit Bharat.

Role of Existing Programs under Viksit Bharat Initiative:

The existing   five major national programs of the Government of India (GOI) and initiatives will also continue to be integral to the Viksit Bharat strategy. Such programs include: (1) Make in India and Aatmanirbhar Bharat, which aim to boost domestic manufacturing and reduce import dependence.(2). The Digital India initiative seeks to expand internet access, promote digital literacy, and enhance e-governance. (3).The Skill India Mission focuses on equipping the youth with relevant skills to enhance their employability.  (4). The PM Gati Shakti Master Plan aims to integrate infrastructure projects across sectors for expedited development. Lastly,(5). The National Education Policy (NEP) 2020 introduces transformative reforms in the education sector.

Social Development Goals and Progress:

Viksit Bharat places significant emphasis on achieving key social development goals to ensure inclusive growth and improved quality of life for all citizens. In the realm of education, the initiative aims for universal and quality education, with a focus on implementing the National Education Policy (NEP) 2020. A key goal is to achieve 100% literacy and enhance the quality of educational institutions across the country. Furthermore, the strategy emphasizes skill development and vocational training to equip the workforce with the necessary skills for a modern economy. Similarly, in the healthcare sector, Viksit Bharat aims to provide universal access to high-quality, affordable, and comprehensive healthcare services. A key objective is to increase the average life expectancy of the population. Further,  poverty reduction and social inclusion are central to the Viksit Bharat vision. The initiative aims to achieve zero poverty through inclusive development and financial empowerment of marginalized communities. Specific attention is given to women’s empowerment and the development of tribal communities through targeted programs and policies. The overarching goal is to foster social equity and reduce existing inequalities across various dimensions. While India has made commendable progress in poverty alleviation, addressing the persistent challenges of inequality and ensuring that the benefits of economic growth are equitably distributed among all segments of society remains a critical undertaking for realizing the Viksit Bharat vision

Funding:

The Government of Outlay:  The Union Budget outlines the government’s priorities and allocates substantial resources towards key sectors and initiatives aligned with this vision. A significant emphasis is placed on increasing capital expenditure for infrastructure development, recognizing its multiplier effect on economic growth. The government also remains committed to fiscal prudence and managing the fiscal deficit responsibly to ensure long-term economic stability.

People Participation:

Recognizing that the vision of Viksit Bharat requires the active participation of all citizens, the government has launched initiatives to engage the youth and also the wider population. Programs like the Viksit Bharat Ambassador – Yuva Connect Programme and the Viksit Bharat Youth Parliament aim to foster youth engagement and leadership in the nation’s developmental transformation. The “Ideas for the Vision Viksit Bharat@2047” platform on the MyGov portal provides a channel for citizens to contribute their suggestions and ideas towards realizing the vision. The emphasis on “Jan Bhagidhari,” or people’s participation, underscores the importance of a collective effort in building a developed India. This focus on engaging various stakeholders highlights the government’s understanding that achieving such an ambitious vision requires a collaborative and inclusive approach.

Governance Reforms and Enabling Environment:

Lastly, creating an enabling environment for sustained growth and development is a key priority under Viksit Bharat, with a strong emphasis on governance reforms. A critical aspect of this is improving the ‘ease of doing business’ in India by streamlining regulations, reducing compliance burdens, and fostering a more business-friendly ecosystem. Initiatives such as the Government e-Marketplace (GeM) are aimed at enhancing transparency and efficiency in public procurement. Promoting digital governance and transparency is another key focus area. Leveraging technology to improve the delivery of public services and reduce corruption is considered essential for building a developed India. The Direct Benefit Transfer (DBT) scheme is a significant step towards enhancing transparency and ensuring that government benefits reach the intended beneficiaries directly. Strengthening institutions and upholding the rule of law are also considered fundamental for creating a stable and predictable environment conducive to development. While specific details on these broader institutional reforms are not extensively covered in the provided snippets, their importance is implicitly acknowledged as a prerequisite for achieving the goals of Viksit Bharat. Overall, the focus on governance reforms, particularly through digitalization and transparency, aims to enhance efficiency, reduce corruption, and build trust in government institutions, thereby fostering an environment that supports India’s developmental aspirations.

 Emerging Challenges:

 The path towards achieving Viksit Bharat by 2047 is fraught with several challenges and potential obstacles across various domains. To elaborate,  economically, India faces the risk of falling into the middle-income trap, a phenomenon where countries experience stagnation after reaching a certain income level. Sustaining the high annual growth rates required to break free from this trap and achieve developed nation status over the next two decades will be a significant challenge. Persistent income inequality and the significant rural-urban divide could also hinder inclusive growth and create social tensions. Creating sufficient job opportunities and ensuring adequate skill development for India’s large and growing workforce remains a significant challenge. Managing inflation and ensuring macroeconomic stability will also be crucial. Furthermore, achieving the required levels of investment in infrastructure and other key sectors will necessitate significant efforts to attract both domestic and foreign capital. Further, Socially, disparities in access to and quality of education and healthcare persist and need to be addressed to ensure equitable development. Deep-rooted gender inequality and social discrimination continue to be significant challenges that require sustained efforts to overcome. Rapid urbanization presents its own set of challenges, including pressure on infrastructure and resources in cities. Lastly, Environmental concerns, particularly climate change and the overexploitation of natural resources, pose significant threats to sustainable development. In terms of governance, bureaucratic hurdles, corruption, and policy uncertainty can impede effective implementation and hinder progress. Addressing these multifaceted challenges will require sustained commitment, effective coordination, and a holistic approach involving all stakeholders.

Suggested Strategies:

To effectively pursue the Viksit Bharat vision and overcome the identified challenges, several policy recommendations emerge from the analysis. A continued and strengthened focus on bolstering the manufacturing sector and enhancing export competitiveness is crucial for driving economic growth and creating employment opportunities. The government must also maintain its strong emphasis on infrastructure development across all sectors, including physical and digital infrastructure, while actively seeking to attract greater private investment to supplement public funds. Investing in human capital remains paramount. This requires a continued focus on improving the quality and accessibility of education at all levels, alongside robust skill development and vocational training programs to enhance the employability of India’s youth. Promoting innovation, fostering a strong research and development ecosystem, and encouraging the adoption of advanced technologies across sectors will be crucial for enhancing productivity and global competitiveness. Strengthening governance mechanisms, continuing the efforts to reduce corruption, and further improving the ‘ease of doing’ business will create a more conducive environment for economic activity. A strong emphasis on sustainable development and green growth is essential to ensure long-term environmental and economic well-being. Finally, concerted efforts are needed to address income inequality and ensure that the benefits of economic growth are shared by all segments of the population. A collaborative approach involving the government, private sector, and active citizen participation will be essential to navigate the complexities of this journey.

II. Role of Banks:

Indian banks are expected to serve as the financial backbone for the Viksit Bharat. Towards this end, they are expected to play a key role which is discussed as under:

• Infrastructure and Sustainable Financing: Banks are expected to provide the massive, long-term capital required for large-scale physical and digital infrastructure projects. Further, as a part of sustainability in the banking sector, they also need to increase financing initiatives for mega business and projects that contribute to sustainable development goals like renewable energy, climate financing, infrastructure and rural development.
• MSME Financing: Banks will finance MSMEs using modern cash flow-based models to stimulate job creation and ease of business. Further, they will have to strengthen their underwriting processes and increase coverage of Earning Warning Signals (EWS) to identify and reach out to high-risk borrowers for preventing any build-up of bad debts that have been successfully arrested by several banks over the past few years.  In addition, banks are expected to recalibrate their internal credit rating systems so that they know their borrowers better. Similarly, banks would be told to change their collection and recovery processes  that are good at anticipating delinquencies and take corrective steps in advance. Lastly, they will also continue to use multimodal collection and recovery channels that makes collections and recovery processes smoother. This may involve the use of call centre like facilities and other outsourced agencies as also bringing in dedicated officers for the process.
• Product Development: Banks are expected to invest in specific economic research activities to understand various micro clusters of the economy as well as upcoming new segments like semi-conductors etc., to better understand the new associated risks and provide guidance to their customers operating in these clusters. Further, tailoring the product and services would  meet the customers’ needs (e.g. offering micro-loans with flexible terms and conditions tailored to agricultural cycles or local business needs). Advancements in areas like open banking, Central Bank Digital Currency (CBDC) and Digital ecosystems amongst others will force banks to move towards new business models. Lastly, they can also engage in product innovations to promote sustainable banking, like carbon offset products (purchase carbon credits or invest in carbon reduction projects), eco-friendly credit, trust based banking etc.
• Operational Innovation: Banks need to focus on augmenting process efficiencies, adopting lean methodologies and building productivity metrics to optimize acquisition and servicing costs. This can help banks to respond more swiftly to market changes and customer needs. Further,  banks  will continue to invest in intelligent automation to streamline operations, reduce errors and increase efficiency. Activities like Know Your Customer (KYC), loan sanction and transaction monitoring are expected to become more intelligent with lesser manual interventions using emerging technologies like Artificial Intelligence (AI).
• Collaborative Banking: Banks will build partnerships with FinTechs and neo-banks along with collaboration with other financial institutions to provide access to new markets and customer base. Further,   they  will come together for data collection and building platforms for integrated exchange of data sources as it can help them increase their knowledge of market participants, e.g. platforms like unified KYC, CKYC can simplify processes and help banks better manage risks.
• Financial Wellbeing Initiatives: Banks will continue to educate customers on financial management and planning to empower them. Partnering with universities and other educational institutions for financial literacy programmes which can help banks to build brand recognition and trust among younger demographics.
• Technology and Cyber Security: As part of the strategy, banks will use technology to process automation across every domain including back-office operations. To remain competitive and relevant,  they must proactively embrace digital transformation and  enhance customer-centric strategies, By leveraging these innovations, they can drive sustainable growth, optimize operational processes, and meet the evolving demands of the modern financial ecosystem. Similarly, by adopting AI-driven, transparent, and resilient technology, it would be possible to lower operational costs and secure financial systems. Similarly, banks are also expected to focus on robust risk management practices to mitigate cyber security risk and prevent build up of bad debts. For this purpose,  they need to continuously invest in ongoing initiatives around cloud, generative AI and other emerging technologies to enhance product offerings, digital capabilities and improve the overall customer experience. AI has become a transformative force in enhancing customer service within the banking sector, working on regional language translation for masses, which can also be beneficial for banks.  Hence, these must continue to leverage historical data to make proactive, data-driven decisions which enhance customer service, improve operational efficiency, service delivery and manage risks effectively. Regarding Cyber Security, banks need to focus on protecting themselves as well as their customers from digital threats and frauds. In order to do so, they need to increase their investments in cyber security solutions and customer awareness programmes. Though some banks have already commenced working on these areas, it is imperative that all other banks collectively adopt these practices.. A continuous monitoring process should also be adopted to measure the impact of these initiatives across key metrics such as revenue, efficiency and governance. Together, these efforts aim to create a more inclusive, innovative, and sustainable banking environment that aligns with the vision of Viksit Bharat.
• Social responsibility: Banks also need to engage and invest in community development projects and promote financial inclusion to support social wellbeing. And, these  must also come together and focus on environmental issues and concerns related to food production, energy generation, transportation and infrastructure.
• Robust compliance: Regulators must use advanced analytics to enhance efficacy and efficiency of supervision and increase monitoring of all activities for which banks need to invest in and improve their compliance function.
• Consumer protection: Regulators also need to strengthen consumer protection regulations to ensure fair banking practices, thereby requiring banks to continuously improve and strengthen their governance practices. Better supervision of grievance and redressal mechanisms shall lead to a seamless banking experience for customers and enhance their trust in the organization.

Conclusion:

To enhance the role of the banking sector in achieving the vision of ‘Viksit Bharat’, the Government should focus on improving the current infrastructure, encourage the expansion of financial services into rural areas, support financial education initiatives, develop AI-based solutions and introduce frameworks and guidelines for the governance of these solutions. While the government focuses on infrastructure and extending banking services across the country, regulators  will have to continue to focus on risk governance, customer protection, financial literacy, sustainable banking goals and innovation, and adoption of new technologies like blockchain and GenAI. Thus, the road ahead looks promising for the banking sector. Though many banks have begun their transformation journey and are focusing on digital solutions, innovation and impact-led initiatives, there is much more to accomplish before the sector can become an integral part of the country’s economic development. In any case, the next decade is critical, and banks must develop well-defined strategies to ensure that the sector can act as an enabler for other sectors and support them in their growth journey to contribute towards the Viksit Bharat initiative.

Authored by:

 

 

Dr. V.  S.  Kaveri,

Former Faculty, NIBM, Pune.