The next frontier for India: Building a 'frugal economy'

I am amazed how fast India is growing economically. In 2007, we felt proud when India became a $1 trillion economy. Today, a single state - Tamil Nadu - is on its way to become a $1 trillion economy by 2032.

There are, however, no guarantees India will - and could - keep on growing forever and become Viksit Bharat in 2047.

As much as 54% of India is already facing severe water stress. Thirteen of the 20 most polluted cities in the world are in India. According to Azim Premji University researchers, over 500 districts across India will grapple with a temperature increase of 1°C or more in the coming decade.


Meanwhile, to keep its economic engine humming, India must create a whopping 115 million jobs by 2030, especially in the manufacturing sector. We must also bridge the gnawing North-South economic divide by distributing growth opportunities all across India.

Given this hash reality, India can't afford to pursue hypergrowth like the US. If we Indians start to produce and consume like Americans do, we would need five planets to supply us in resources and absorb our waste, which is not sustainable.

India could not afford degrowth either. Degrowth is now a popular concept in Western economies, which have reached peak growth.

Hence, India must avoid the two extremes - hypergrowth and degrowth - and choose a wise middle path of inclusive and sustainable growth that benefits all Indians.

This third way is what I call a Frugal Economy, which aims to create greater economic, social, and ecological value while also minimising resources and emissions. This frugal economy is no utopia. It is rapidly emerging and is supported by three core pillars.

The first pillar of the frugal economy is business-to-business (B2B) sharing. Rather than compete, Indian companies must learn to cooperate and share their resources to co-create value together. These resources can be waste, equipment, vehicles, personnel, and even intellectual property. In Kalundborg, an eco-industrial park in Denmark, a dozen co-located companies share energy, water, and waste materials with each other as an integrated ecosystem. This mutually beneficial sharing is called industrial symbiosis.

In India, startups are using AI to build digital platforms that enable Indian small businesses to share their logistics and manufacturing capacity. Vahak is an online logistics marketplace that aggregates multiple shipments in a single load. Vahak increases the trucks' fill rate - which creates more income for small carriers - and reduces carbon emissions.

The second pillar of the frugal economy is distributed manufacturing. Eschewing the centralised mass-manufacturing model espoused by China, which is energy-intensive and polluting, India can pioneer a decentralised manufacturing model where companies produce personalised goods and services closer to where customers live by leveraging local resources.

The third pillar of frugal economy which I call triple regeneration. Sustainable businesses cut their carbon footprint and reduce and recycle their waste. But regenerative businesses go one step further and vie to boost the health (swastha) and vitality (prana) of people, places, and the planet altogether. This holistic and synergistic approach is what I call triple regeneration.

Pakka is a company based in Ayodhya that offers regenerative packaging solutions for food products. It transforms sugarcane waste sourced locally into biodegradable products. Its factory is powered 100% by bio-based energy.

India is the birthplace of frugal innovation. Let us use our jugaad ingenuity and our millennia-old Vedic wisdom to build a frugal economy that truly benefits people, society, and the planet.

(Radjou is an innovation scholar and the author of 'The Frugal Economy'. He will be speaking at The Economic Times World Leaders Forum in New Delhi)