Will India’s growing economy benefit everyone?

India has become a business giant, and the upper echelons of its economic pyramid are among the most successful in the world. But how can we ensure that this prosperity also reaches other strata of society?

Mumbai, India's financial capitol, highlights the diverse facets of India's economic makeup.
Mumbai, India’s financial capitol, highlights the diverse facets of India’s economic makeup.

From a “gasping elephant” to a bull market, India’s rate of economic growth has been meteoric in the last two years. It now outpaces China, making it the “darling of emerging market investors,” according to a report by Forbes. With Prime Minister Narendra Modi pledging to make India the easiest place to do business, there is much optimism among business leaders about the country’s future.

But the same questions have dogged India through numerous economic cycles: Who will benefit? Does economic growth help the poor, or will newly-invested capital circulate only at the top of India’s social pyramid?

Looking at the past, the evidence is divided. Anti-poverty non-profit The Borgen Project argued in 2013, at the end of another boom cycle, that poverty in India had risen alongside GDP, and that the average Indian actually had less food to eat despite sustained national growth. (160 kg/year, down from 200.)

On the other hand, numerous Indian intellectuals and businessmen, including Nandan Nilekani, Jagdish Bhagwati, and Arvind Panagariya, have argued persuasively that the free market, and resulting economic growth, is the only long-term solution to India’s battle with poverty. India’s progress since the notoriously restrictive “Licence Raj” was relaxed in the early 1990s testifies to this point of view. But again, there are doubts about whether this rising tide lifts all boats, or only a select few.

Streetside stalls like this one are an important part of India's economy.
Streetside stalls like this one are an important part of India’s economy.

India is driven by small businesses, many of them informal: Streetside stalls, smallholder farms, waste and recycling collectors, and independent manufacturers. These sectors face numerous challenges, political, social, and environmental, that make upward mobility difficult, sometimes impossible. So how can rising prosperity for India’s upper classes reach these people also?

While there are no easy answers to that dilemma, one thing is clear: India matters. “What happens in India is not only a reflection of the worldwide trend but one of its major determinants.” (Deaton, Kozel)

At the Tata Center, we believe that engineering and innovative design can play a role. Here’s a spotlight on some of our projects that aim to broaden economic opportunity for poor and working-class Indians.

[headline]uLink: Peer-to-peer electricity distribution[/headline]

ulink circuitLack of access to electricity is a major problem in rural India, affecting every aspect of life. For many remote villages, connection to the main power grid is totally unfeasible. Without reliable power, not only is it difficult to be economically productive, it is difficult for children to become educated, which in turn limits their future prospects. An executive from Tata Steel CSR describes seeing children studying at night beneath a solar streetlight the company had provided: “I thought that kind of thing only happened in romantic Bollywood movies.” Clearly, access to even small amounts of electricity has the potential to cause dramatic change in rural communities.

The uLink is a power management unit that creates ad hoc microgrids at a village scale. This means one person generating electricity with a solar panel could sell any excess to a neighbor instead of letting it go to waste. As more panels and units are linked, a microgrid forms organically. Utilizing a pay-as-you-go system, each user has full control over their consumption, and is empowered to use electricity as needed. The unit manages transactions and also controls electricity flow in the grid.

In January 2015, a successful field demo of the uLink was performed in rural Jharkhand, eastern India.

[headline]Urban waste management in low-income communities[/headline]

wasteThe infrastructure for collecting, sorting, and recycling waste in India is largely dependent on an informal workforce. Wastepickers across the developing world provide a valuable service, sifting through the detritus and salvage valuable materials such as glass, plastic, and paper which can be reused industrially, yet they are often ignored or even ostracized by their governments and society at large. Additionally, the level of waste disposal service provided to communities across India varies widely according to their economic status.

This project seeks to create a model for extending waste collection services to low-income communities and help informal waste workers gain wider recognition and thus a firmer economic foothold.

[headline]Optimized farming techniques[/headline]

ag workerA number of Tata Center projects are focused on providing tools and resources to India’s massive agricultural workforce, which comprises more than half of the nation’s total workforce. Smallholder farms continue to produce food and raw materials using centuries-old techniques: carts and plows pulled by teams of bullocks, rudimentary irrigation schemes, fields worked by hand.

It is only through sheer ingenuity and hard work that many of these farmers make a living. However, their yields and labor efficiency could be improved with modern resources designed to suit their particular needs. Tata Center projects in this vein include:

precision soil sensing, which will enable farmers to use fertilizer more effectively

solar water pumping and drip irrigation, designed for the demands of specific Indian water tables and crops

turbocharging the single-cylinder diesel engine, applicable to a variety of farm equipment, including tractors, pumps, and generators

Working directly with farmers and local experts, Tata Fellows are putting an emphasis on designing specifically for developing world conditions, ensuring that their products are appropriate and desirable to the enormous global agricultural market.

For more on Tata Center projects across our 6 focus areas, visit our Project home.

(All photos by Ben Miller except “Apple Vendors” by Mike Laracy and waste image via iStock.)