India emerging as a nation of job creators: RBI
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India, the fastest-growing major economy in the world, is witnessing a significant shift from being a nation of job seekers to one of job creators. A growing number of graduates, particularly from engineering and management backgrounds, are choosing the path of entrepreneurship, driving a surge in startup activity across the country.
To harness the full potential of its vast talent pool, India must continue to ascend the global value chain, according to Sanjay Malhotra, Governor of the Reserve Bank of India (RBI). He was speaking at the U.S.-India Economic Forum organized by the Confederation of Indian Industry (CII) and US India Strategic Partnership Forum (USISPF), Washington DC.
'To take further advantage of the huge human resources, we need to move further up the value chain,' the RBI governor emphasized.
India's startup ecosystem is flourishing and fueled by supportive government initiatives such as Start-Up India, Digital India, and the Atal Innovation Mission. The country now ranks third globally in terms of the number of unicorns—privately held startups valued at over $1 billion. These unicorns are increasingly found in cutting-edge sectors like artificial intelligence (AI), financial technology, and clean energy, Malhotra informed. India's cultural shift towards innovation and self-employment has led to the emergence of around 150,000 officially recognised start-ups.
'When I left college, getting a job in a[n] MNC was the preferred choice. None took up the challenge of starting a venture of his own. In recent years, however, a large number of engineering and management graduates are taking to entrepreneurship and start-ups. As a result of the entrepreneurship culture that this generation is embracing, we have about 150,000 recognised start-ups,' Malhotra said.
India's commitment to innovation is also reflected in its impressive climb on the Global Innovation Index, moving to 39th position in 2024 from 81st in 2015. It currently leads among lower-middle-income nations.
The RBI governor's comments follow closely on the heels of remarks made by U.S. Vice President JD Vance, who highlighted the strong potential for collaboration between the United States and India in technology and innovation. During a four-day visit to India in April, Vance emphasized the natural synergy between American advancements in hardware and artificial intelligence and India's dynamic, rapidly expanding startup landscape.
According to Vance, the United States continues to lead globally in developing high-end AI hardware, while India boasts one of the most promising and energetic technology startup ecosystems in the world. Vance noted that this complementary strength positions both nations to benefit immensely through deeper cooperation in emerging technologies and entrepreneurial ventures. India's digital growth boosts economy
'India's digital transformation, recognised worldwide, has emerged as a significant enabler of ease of doing business and ease of living and an important driver of economic growth and innovation. Conducive government and regulatory policies, increasing digital penetration, and a young and aspiring demography have fostered this vibrant ecosystem,' Malhotra said in his speech.
The RBI governor said that the government has invested in several digital building blocks like the JAM trinity, Unified Payments Interface (UPI), GSTN, ONDC, Digilocker. Digitalization improves efficiency, raises productivity, enhances formalization, and promotes inclusiveness in the economy.
'Take any domain of the government and one will find that digitalisation and e-governance have enhanced turnaround times, reduced costs and improved customer satisfaction levels,' Malhotra pointed out.
'I was here last year in one of the sessions to speak about how, among other measures, digitalisation in the department of revenue not only enhanced the tax buoyancy but also improved customer experience and processing of returns… On an average, it now takes less than 10 days to process income tax returns in India: down from 93 days in 2014. In contrast, in some countries, it still takes months to get their tax refunds,' Malhotra added.
The Reserve Bank is also promoting and nurturing digitalization and innovation, with the UPI as one example. UPI processes about 18 billion monthly transactions, setting global benchmarks in seamless, secure, real-time systems. UPI has also demonstrated how public digital infrastructure can empower private sector innovation to promote financial inclusion.
'Our encouragement and support extend beyond the payment space to the broader fintech ecosystem through various initiatives including the regulatory sandbox. The Unified Lending Interface (ULI), which is currently in a pilot phase, has the potential to transform the lending space. The ULI is expected to transform lending and access to finance just as UPI did to payments,' Malhotra said.
The ULI was designed and developed by the Reserve Bank Innovation Hub (RBIH), a subsidiary of the RBI. Launched as a pilot program in August 2023, RBI's ULI is expected to completely transform credit delivery in the country. It is a technology platform built to facilitate access to authenticated data from various sources through a standardized Application Programming Interface (API) to which all lenders can connect seamlessly through a plug-and-play model.
Watch: 'Disruptive' blockchain can be useful for India
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