Fiscal discipline has cut cost of capital to build businesses, jobs: World Bank’s Neelkanth Mishra | HTLS 2026 | Business News

The Indian economy is on the cusp of a structural change with never-before enablers like cheap capital and technology access for its entrepreneurial class. Even as India targets a larger share of manufacturing in its national income, it should work on helping young Indians find employment in countries with ageing populations, Neelkanth Mishra, executive director, World Bank, said in an interview.

Neelkanth Mishra was speaking from Washington DC via video, ahead of the 24th Hindustan Times Leadership Summit which opens in New Delhi on November 14.“One of the most transformative developments in the last 10 years is (how) we managed to solve for inflation," said Mishra, who is in charge of India, Sri Lanka, Bangladesh and Bhutan at the bank. "We have done that by being very disciplined on the fiscal side,” Mishra said. This, in turn, has brought down the cost of capital.

Mishra was speaking to Mint from Washington DC via video, ahead of the 24th Hindustan Times Leadership Summit which opens in New Delhi on 14 November.

India’s consumer inflation, recorded at 10.5% in FY13, has dropped over the years, falling to 3.41% in FY19, before rearing up and further dropping to a decadal low 2.06% last fiscal year.

“And, now, effectively, the government is telling the private sector and the entrepreneurs, you know what, money in your hands is more productive than in my hands,” Mishra said. “Your cost of capital will be lower. Now, go build businesses and create jobs.”

It appears the signal has been well-received - the number of active companies in India is up by a third in three years, growing to 2.2 million from 1.6 million, Mishra pointed out. “It is remarkable.”

Technology, centred around artificial intelligence and the Aadhaar-based digital public infrastructure, could also be a game-changer for India's small and medium business class, he added. “So far, we had five to six million people – that's the number of software engineers in India – who would tell a computer what it would do. Imagine if that is 100 million people,” said Mishra, a graduate from the Indian Institute of Technology, Kanpur.

While electronics shined in India's performance-linked incentive (PLI) schemes, Mishra was not as confident of similar success in other sectors under free trade agreements.

“I'm not sure that in the current design, the PLI schemes may be very functional,” the World Bank executive director said. “One of the reasons that the mobile PLI works so nicely was that it focused on… and was rewarding scale.” In a PLI-supported footwear business, for instance, similar high scale will have to be thought of. “See, if Nike buys 500 million pairs of shoes, they are not interested in contracting half a million, one million pairs of shoes. Unless you can offer 20 million, 50 million pairs of shoes, it doesn't make sense to them to engage with you.”

Mishra was optimistic, however, that India will increasingly be able to align its demographic dividend with demand from countries such as Japan, the UK, the US and Australia that are dealing with ageing populations.

“They need human bodies to provide many of the services. But if you allow immigration to happen just because you need hands and bodies and you have no control on it, then you get into problems of assimilation, of cultural change and then resistance to immigration. (Instead) you can control it, meaning that you say that I'll have 200,000 people (with specific skills).”

This would require country-to-country coordination—India has so-called migration and mobility partnership agreements with over two dozen countries—and 10-15 years to get to scale, but when it does, it could potentially absorb a fourth of India’s incremental workforce, Mishra said.

However, while the potential is immense, the road ahead is hard, an expert said.

“Some countries feel we are dumping labour. Notwithstanding the fact that our workers are much better, there is a strong right-wing, social backlash in some countries,” said Dammu Ravi, former secretary of economic relations at the external affairs ministry. The solution, he said, is for countries to agree to standards and quality of labour rather than fixate on the number of people that each side will permit.

Mishra addressed criticism around India's position around the bottom of the value chain in electronics manufacturing, despite having achieved volumes of scale in items such as mobile phone exports. India accounts for about 20% of annual phone production in the world, data from the government’s Press Information Bureau in December 2025 showed.

“If the criticism is that assembly does not add a lot of value, there's no point debating it; that is true. But as you build an industry, that's where you start,” he said, pointing to the beginnings of the industry in Japan, Korea, Taiwan, and China.

The competitive advantage in India is its resident design engineer workforce. “There are one and a half million chip design engineers in the world; 300,000 are in India. Twenty years back, they were doing low-end work, like the graphics chipset of Intel was getting designed in India. Today, (work on) the two-nanometre chips, the cutting-edge GPUs of many of the best companies in the world are in India.”

Still, for broader manufacturing to move the needle as a percentage of GDP, it will need a boost in domestic material demand from construction, infrastructure, real estate, and power plant sectors. “I think that is a cycle which is now underway. So, my expectation is that manufacturing and industry as a percentage of GDP will now start picking up,” he predicted.