Unlocking frictions in nine core sectors over the next three years can significantly uplift the economy: PwC India report

Mumbai: PwC India’s report ‘Full Potential Revival & Growth – Charting India’s medium term journey’ launched in the independence day week, outlines key themes and an execution approach in nine key sectors that can achieve significant economic uplift over the next three years.  COVID-19 has created an unprecedented crisis experienced by all of 1.35 billion Indians through a lockdown. The report based on interviews with business, public sector and citizen leaders, sectoral analysis, and a country-wide survey. It concludes that over a three-year time frame by removing frictions that have been highlighted, and through joint action, a fast revival and subsequent higher growth can take place.

Shyamal Mukherjee, Chairman, PwC India said, “This is a severe exogenous shock for the Indian economy, but it can also be a transformative moment for India. We have an opportunity to rethink our approach, reconfigure our business ecosystem, and restart our economy. Adopting a whole-of-society execution, bringing together the public and private sector along with citizens, would be key to spur faster revival and growth. This national collaboration demands a full potential mindset that could positively turn around the economy in the medium term.”

Shashank Tripathi, Government Strategy & Transformation Leader, PwC India said, “Our report highlights eight pillars of recovery that constitute ‘house of revival & growth’. As we reconstruct our economy, it is imperative that we remove frictions that have hampered growth historically. While each sector must grow on its own, increasing flow of data and convergence between sectors and across institutions will be key. By deepening, widening and heightening our economy in this period, we will accelerate our growth and make it more inclusive.”

Health and Economic situation

The health situation continues to be dynamic with the continuing spread of the virus. This has created a direct shock to the economy resulting in a recession. The report outlines the key macroeconomic drivers of growth in Domestic expenditure, Private investment, Government expenditure and next exports. These macro economic factors will influence revival and growth.

House of Revival and Growth

Based on discussions with leaders, the report outlines 8 key sub pillars of growth in Demand, Supply, Resource and Institutions. For driving full demand the report outlines two sub pillars related to ‘engaging all sectors’ and ‘enabling stimulus, decentralisation, and infrastructure’. For supply revival, two key pillars outlined are ‘shift in operating model’ and ‘supply chain rearrangement’. ‘Natural, financial and data’ as well as ‘human and cultural’ resources would help unlock resources. Finally institutions require ‘reforms and governance’ and ‘business sustainability’ for providing wider policy enhancements and engendering trust. These pillars will be supported by data and technology to recover momentum and create resilience. All together the report highlights 27 key themes for revival and growth.

Deep dive of nine sectors with specific implications

Nine key sectors that make up 75% of our pre-pandemic GDP and MSME segment are analysed in the report. The consumer and retail, health and pharma, automotive and industrial products (IP) sectors will be influenced largely as consumer demand shifts to create new products and services influenced by wellness, safety and health. Opening up of power and mining, infrastructure and logistics, information technology and education sectors will influence seamless flow of data, thereby enabling the core infrastructure and resources to become friction free. Financial service sector freeing up will ensure robust capital flows in the economy; while the government sector is a key enabler, and during the coming few years will also be a direct stimulus provider. Agriculture, which supports the largest employment number in the country will be a key focus for all stakeholders. Finally, while MSME is not a sector, it influences employment and productivity across all the nine sectors, and has been examined for key revival themes.

Predicting a revival is difficult, but the report cites a recent PwC CXO Survey as well as a wider consumer survey done across 1,500 people from across the country, which indicates that the most likely horizon for the economic revival is Q2 of FY 22. This will depend on the control of the contagion and the discovery and administration of a vaccine.

Value propositions and a “whole-of-society” approach

The report outlines ten value propositions that organisations can consider as they look at a revival and growth approach. These relate to demand sensing, models for capturing decentralised demand, Rebalancing the product and service portfolio; Fit-for-future cost structures, comprehensive digital transformation and reorienting global and local supply chains and Upskilling, reskilling and employment, gaining insights from data and capital for survival and revival. Finally, engendering trust across different elements would be important for growth.

A ‘whole of organisation’ approach will be required to drive a coordinated response in organisation. On a broader level this would encourage a whole-of-society execution approach that uses technology so that better coordination takes place.

Full potential ambition 

This is a transformative moment for India. A full-potential mindset understands that if we remove friction holding the economy back, we can not only revive, but also come out stronger. Initial indications are that the average growth rate of 6.8% over the past 5 years can be increased significantly post the recovery phase, if we can remove friction, work together at speed. The report outlines ten key vectors for action to achieve full potential ambition. If we did this we can not only receive the economy, but also reinvent it.

This report launched in the Independence Day week appeals for a new mindset, a full-potential mindset, from the private sector, public sector but by the entire country. With joint effort, we can revive and put the economy and the country back on track in the medium term.