There is a lot of conversation about ease of doing business, and ease of living, and in this essay I want to argue that despite the hurdles of a developing country with a large population, hope in, and about, India, remains strong.

I also want to go beyond the usual reasons given for this: size, and demographic advantage, and strategic location. At a time when latest government data shows that between 2000 and 2020, India has crossed $500 billion in foreign direct equity inflows, the trajectory of investor confidence in India is important to understand. In the middle of the Covid-19 pandemic, in April-August 2020, India received its highest ever FDI (more than $35 billion) for any comparable period. UNCTAD, the United Nations Conference on Trade and Development, has now awarded India’s national investment promotion agency (IPA), Invest India, the prize as the best IPA in the world in 2020.

There are three pivots of the Indian economy post-independence. One was independence in 1947, a turning point as the economy started to decouple from England, the second was 1991, when the Indian economy started to open its statist shackles attracting global investors. What first attracted global attention was the size and growth potential in some of India’s marquee companies. Then, at the turn of the millennium, India’s tech-driven industries leapt to prominence as they captured a significant share of the ‘world’s back office’, soaking up newsprint adulation and investment. To explain all this, in my 2012 book, The Liberals, I coined the phrase ‘per capita hope’ through which I explained the mood of anticipation about a growing India.

The 2008 financial crisis was an economic turning point from which, in some ways, the world has never really recovered. This compelled companies and countries to start to think differently about their economic future. That these effects were felt alongside one of the most powerful technological transformations in history strengthened the case for change.

The case for India, as it were, had been based on the rising prosperity of a growing middle class. But now a deeper unlocking of value was needed. By the middle of the decade, it began to become apparent where that unlocking of value would come from. Citizens who had hitherto been seen as consuming units, now, it turned out, also had another valuable resource—they generated data. The hope and economic interest in India that had started with concepts like ‘demographic dividend’ has now turned to per capita data generation and what value could be unlocked from them. The citizen now has an additional asset.

As digital technology makes everything from identification to disbursement of government funds, access of health records, and ease of online education, faster and smoother, new investor hope is being driven in many ways by many elements of the digital economy—tech unicorns, new startups in health and education that are turning into unicorns (not least by change in audience behaviour during the Covid-19 pandemic), and as more and more Indians shift their lives onto the Internet (around 700 million users at the moment), the audacity of this hope is reaffirmed. Take for instance what could be the new age of ‘India as the world’s office’. Two nuggets of information need to be connected to understand this. First, India’s leadership in SaaS (Software as a Service) technologies. A new Nasscom report suggests that the Indian SaaS industry has been growing at a rate 1.5 times faster than the global SaaS industry in recent years. India is likely to become the preeminent hub for SaaS software by 2025, the report suggests. Connect this to the sweeping reforms announced recently by Prime Minister Narendra Modi in the business process outsourcing and information technology sector that frees firms from archaic locational rules in the age of the cloud.

What started in a realm of the big tech giants has now firmly become national priority—gathering, storing, securing, and unlocking the value of data. The World Economic Forum now has a concept called ‘digital FDI’ which explains why countries that digitise the best might attract the highest, and best quality, foreign direct investment. Even Invest India’s UNCTAD win had a major digital component—it built a definitive online support platform for investors, businesses, and others during the pandemic lockdown called the Business Immunity Platform. It is therefore my argument that the deep digitisation of India has ushered in new ‘ease of doing hope’. It was my argument in 2012 that per capita hope was as important as the moves in per capita GDP (gross domestic product) as the two were irretrievably interlinked. It is my argument now that ‘ease of doing hope’ is as important as ‘ease of doing business’, and the two are as deeply connected.

This then is the third age of investor hope in India where the anticipation of a fundamental transformation of the Indian economy ground up is changing the landscape and fuelling in record levels of investment.

Views are personal. The author is vice president and head of research at Invest India, the national investment promotion agency of the government of India.

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