Hindustan Unilever : Developing human capital for a growing India

DEVELOPING HUMAN CAPITAL

FOR A GROWING INDIA

was the subject of the speech,

delivered by Nitin Paranjpe, Chairman,

Hindustan Unilever Limited, at the

Annual General Meeting held on 21 June 2024.

DEVELOPING HUMAN CAPITAL

FOR A GROWING INDIA

India took 60 years since independence to become a one-trillion USD economy. The next trillion came in 7 years, and the final trillion in 5 years. India's pace of growth and rise to becoming the 5th largest global economy seems even more remarkable at a time when, by contrast, most nations are seeing a slowdown in their growth to low single digits. Even more importantly, India has set itself an ambition to become a middle-income country, growing its economy to USD 10 trillion and grabbing the slot of the 3rd largest economy by 2030. It is an ambitious plan that includes pulling millions out of poverty, providing housing for all, ensuring suitable livelihood opportunities for people and as a result, making significant progress on the Human Development Index.

This ambitious goal will require the nation to step up its growth rate from a historical average of

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around 7% CAGR over the last decade, to over 8%. While not easy, it is much needed and certainly possible.

Several factors will help us along in this journey: first, we have momentum on our side. We have been one of the fastest growing large economies in the world over the last decade. A growth rate well ahead of the largest economies - US and UK at 2%, Japan at 1%, and almost on-par with China (~7%).

Second, investments made over the last decade, have created the foundation of what is already amongst the best digital public infrastructure in the world, driving financial inclusion and stimulating economic growth. India's Unique identification programme (Aadhar), which was launched in 2010 drove financial inclusion. That coupled with UPI, has driven a massive step up in digital transactions in the country. Today there are more than 42 crore UPI transactions per day, more than any other country in the world. In fact, India accounts for 46% of all digital payments in the world. This, along with initiatives like the ONDC (Open Network for Digital Commerce), that have the potential to democratise

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commerce, makes the India tech stack, as it is called, one of the most enviable in the world. And one that will help stimulate further growth.

Thirdly, there is an opportunity to significantly step- up women participation in the workforce. At present, women participation stands at close to 29% which is lower than neighbouring Bangladesh at 32%. Even a late entrant to the women empowerment journey like Saudi Arabia stands at 35%. Increasing women's participation in the workforce, of course requires India Inc to champion inclusive and supportive policies aimed at attracting and retaining female talent. And the payoff can be significant; a study by National Family Health Survey indicates that advancing gender equality could potentially lead to a 30% increase in India's GDP.

Finally, I truly believe that it is our growing working age population that could prove to be our greatest asset in the next phase of our growth journey. With thoughtful nurturing and development, this can unlock incredible rewards for India and Indians.

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It is our demographic dividend - the human capital

above all capital.

REAPING 'DEMOGRAPHIC DIVIDEND' -

A NARROW WINDOW OF OPPORTUNITY

What is Demographic Dividend? It is a moment in time when dependency rates (children and older adults) are low, which translates into more people being able to participate in the workforce and, consequently, higher GDP and growing individual wealth. By this definition, we are indeed uniquely placed.

India, with a median age of 28 years and over 65% of its population in the working age, is already younger than countries like the US, UK, China or Japan. In fact, over the coming years, as a consequence of falling birth rates and increasing longevity, the young working age population in these countries is likely to fall further. In contrast, by 2030, India's share of working age population will rise to be about 69%. In fact, India will be home to one-fifth of the global working age population;

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giving us an opportunity to harness the growth of our productive labour force to boost economic development. Of course, falling birthrates and increasing life expectancy will mean that India too will start ageing and hence we need to capitalise on this window of opportunity.

While the aforementioned tailwinds have the potential to step up India's growth rate, we need to take action in certain areas to realise our vision. Unquestionably, this growth needs to be sustainable i.e., delivered within the planetary boundaries. But just as importantly, it needs to be 'inclusive'. Over the last 10 years, India's GDP growth has been primarily productivity led. While productivity will always be an important driver of growth, the further step up to 8% and beyond, that we both aspire for and need, must come from higher job creation. Projections indicate that over the next decade, India will need to create 90 million non-farm jobs to both, manage the inevitable migration of labour from agriculture, and to provide meaningful employment opportunities to the people entering the working age population.

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This is not easy and will need concerted and systemic action with particular focus on sectors that have a high employment elasticity. In the coming decade, India's service sector will present a potential for growth and employment generation. At the same time, the Financial Services sector, driven by increasing demand in banking and insurance services, presents an opportunity for increased employment. Other industries that present employment growth opportunities include health and hospitality, consumer retail services, global capability centres and e-Commerce. Importantly, the MSME sector needs to play a bigger role. For instance, share of employment generated by MSMEs in most developed nations is over 60% while in India, it is about 45%. We will need to tap the potential of these sectors and deliver on our vision of a more prosperous India, with no one left behind.

DEVELOPING CAPABILITIES TO BOOST

HUMAN CAPITAL

In parallel to creating jobs to absorb the growing

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population in the working age, we need to ensure that our working age population is employable and that they contribute towards the economy. To do this, we need to focus on four key areas:

• We will need to build a strong foundation in primary education.
• We need to provide access to vocational skill building.
• We need to make continued efforts in re-skilling and upskilling the existing workforce.
• And finally, we need to retain skilled talent in the Indian economy.

Building a strong foundation:

Let us first talk about the foundation that our students get in schools across India. The Right to Education Act (RTE) that came into force in 2010, offers free and 'compulsory' primary education to children aiming to ensure that all children receive foundational education and that every school-going child learns how to read and write. However, according to a study by Unicef and the World Economic Forum, 'almost 70% of children in

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grade 3 in India have been reported to have no basic reading and arithmetic skills.' There is clearly a burning need to give more importance to the education system and to educators who shape the base on which human capital for the future will be built. To deliver this, we need a four-pronged approach - strengthen early-learning content to develop foundational literacy among school-going children; develop teacher capability through training programmes and career progression charts; ensure better school-to-work transition by implementing vocational courses as part of the curriculum and lastly, widen the reach by connecting the unconnected through technology.

Technology can play an important role in educating and skilling those who missed the symbolic 'school' bus. The Government's efforts in the area have been evident through initiatives like PM e-Vidya, PMGDISHA, and SWADES, aimed at enhancing digital accessibility and inclusivity.

While several actions are being taken to further strengthen primary education through interactive content and use of digital in schools, as well as in

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