Millennium Post

Suggesting a high growth path

The Modi Government’s unabashed use of technology for the economy, emblematic of its recent decision to demonetise high denomination notes and triggering a tumult across the nation in a bid to propel people to cashless dealings, is no doubt in keeping with his declared credo of minimum government and maximum governance. His digital predilections right from the run-up to his electoral battle in May 2014, and till date manifest in various acts of his government, is no doubt desirable. But in a country where the use of mobile phone has penetrated into far-flung areas with no matching spurt in literacy and numeracy among millions of people eking out their existence on the margins of mundane life, technology provides no solution to the complexities of quotidian life. But this does not necessarily invalidate the immense use to which technology could be harnessed in building the physical infrastructure and other basic parameters of development such as health and education to innumerable people who do not see any shaft of light in their somber day-to-day living.

It is precisely in these areas a war-footing battle needs to be relentlessly waged if India is to secure its rightful and respectful place in the comity of developed nations before long. In order to take a baby step in this direction, the UN Conference on Trade & Development (UNCTAD) engaged in a knowledge partnership with the German-based Ellen MacArthur Foundation came out with an intellectually-stimulating report titled “Circular Economy in India: Rethinking Growth for long-term Prosperity” on December 12 in Geneva, preceded by its India release in New Delhi on December 5.

Accordingly, the report argues that adopting circular economy principles would put India on a path to positive, regenerative and value-creating development, with annual benefits of Rs 40 lakh crore or $624 billion in 2050, compared with the extant development path equivalent to 30 per cent of India’s current GDP. Besides creating cost savings for businesses and households, following a circular economy development path would whittle down negative externalities, i.e., by lowering the baleful greenhouse gas (GHG) emissions by a hefty 44 per cent in 2050 compared to now and effecting a tangible decline in congestion and pollution that plague most of the country’s sprawling cities. This is bound to engender health and economic benefits to Indians immeasurably.

Without mincing words, the report puts it pointblank that in a context marked by unprecedented economic dynamism and a rapidly expanding population but confronting crucial issues on urbanisation, resource scarcity and high levels of poverty, India stands at the crossroads of comprehensive choices about the path to future development. The emerging Indian economy could adapt the paradigm of industrialisation comparable to that of mature markets, with the concomitant negative externalities that this entails or adapt a trajectory towards positive, regenerative and value-creating development.

Amplifying what the circular economy connotes, the report said shifting from selling cars to providing vehicles as a service could foster a new revenue streams for automotive industry and capture the value of more intensive use of each car. Innovative vehicle design to render maintenance easier and boost fuel efficiency too can create by augmenting utility (in terms of total kilometers driven) and lowering running costs. In the built milieu, again construction companies could innovate by applying design methods for modular buildings. Retrieving materials left over after construction and demolition work and keeping them in cycles could capture their value and eventually prune overall construction costs which are now going through the roof in India.

In the three significant thrust areas such as cities and construction, food and agriculture, and mobility and vehicle manufacturing analysed threadbare in the report, virgin material consumption would be 24 per cent lower in 2030 and 38 per cent lower in 2050 compared with the current development path. Water usage in the construction industry would be 19 per cent lower in 2030 and 24 per cent lower in 2050, while synthetic fertiliser and pesticide use would be 45 per cent lower in 2030 and 71 per cent lower in 2050 compared as of now. This should be music to Prime Minister Modi’s ears because the outlined outcome is in sync and consonance with his vision for decarbonised development path and his motto of zero defect, zero effect to keep environment free from toxic elements in the manufacturing business.

What is particularly noteworthy is that with India on the inflexion point for leveraging its immense potentials to demonstrate and develop, it is also in the sweetest sport to leverage the interplay between circular economy and digital technology. All three focus areas studied deeply in the report could take maximum advantage of digital technology and the increasing ease of connectivity, the report said adding that in the food system, digitised supply chains and platforms for sharing assets (thus optimising their utilisation rate) and knowledge (best practices) among small farmers, could spawn significant fallouts. Similarly, in the mobility sector, digital devices could provide seamless door-to-door transport planning, combing diverse modes of transport and providing direct access to mobility when it is needed. In cities, digitally enabled sharing solutions are already being deployed to enhance the utilisation of floor space in buildings.

The report rightly contends that pairing circular economy principles with digital intelligent assets (internet of things) generates many additional value creation opportunities which both established businesses and emerging entrepreneurs could easily capture. Current government initiatives such as Digital India could bolster these opportunities by embracing circular economy canons with gusto, the report wistfully notes. As India invests in long-term infrastructure to ameliorate denizens’ quality of life through the Smart Cities mission, it could incorporate circular economy ideas into the design of infrastructure needed to provide water, sanitation, and waste services at scale creating effective urban nutrient and material cycles. Besides, more systemic planning of city spaces integrated with circular mobility solutions could contribute to higher air quality, lower congestion and reduced urban sprawl. Flexible digital applications could increase utilisations rates, getting more value out of the same assets. Interestingly, the resultant higher efficiency and lower overall building and infrastructure costs could also help meet the housing needs of the urban without compromising safety and quality.

In the farm front, leveraging the current small-farm structure, India could create large-scale networks of farmers, interconnected and symbiotic in their practices and committed to regenerative approaching. Blending local knowledge and traditional methods (like working with a large variety of species) with modern technology such as precision farming and digitally enabled asset and knowledge-sharing systems could enhance yield while markedly decreasing requirements for resources such as water, synthetic fertilisers and pesticides.

In sum, even as India notoriously missed the manufacturing bus to move from agrarian to services-oriented economy, the secondary sector revival is still feasible with India’s superiority in knowledge economy. Once this is realised and seized upon zealously by the Modi Government, sky is the limit to growth for India. The circular economy report has not come a day too soon in this regard.

(The views expressed are strictly personal.)
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