How can the new government make India a global manufacturing hub?Essay Composition -For W.B.C.S Examination.

নতুন সরকার কীভাবে ভারতকে বিশ্বব্যাপী উত্পাদন কেন্দ্র তৈরি করতে পারে? প্রবন্ধ রচনা – WBCS পরীক্ষার জন্য।

Essay writing in W.B.C.S. exam is important because it is a reflection of your deepest thoughts and ideas.It should be known how to write a good essay and the important points must be remembered while writing an essay.Introduction should catch the attention of the reader. It can begin with a quotation, a question, an exclamatory mark. Each individual paragraph in the body must convey a single idea only. The ending should be lovely as well as balanced. Ending with a memorable quote or question or providing it an interesting twist would also be a excellent idea.This is not a part of W.B.C.S. Preliminary Exam.Following previous years question papers helps in understanding the types of essay’s that generally come in the W.B.C.S. Mains Exam.The first PM of India had referred the Industries of India as “temples of modern democracy” and it can hardly be refuted today. The industries of India were one of the major entities to protect the democracy of India, to check the growth of Neo-Imperialism that pervaded through the cold war and thereby helped sustain the economy and civil libertarian democracy which was left devastated and exploited at the dawn of independence.Continue Reading How can the new government make India a global manufacturing hub?Essay Composition -For W.B.C.S Examination.

The nature of growth of industries has seen transformation with the changing global scenario and domestic conditions traversing from a centralised economy to now a neo-liberal free trade economy.

Today, India boasts of 3^rd rank in world in GDP in PPP terms even ahead of Japan, a heavily industrialised nation and indeed the accolades has to be given to the economic growth and development  brought through our industries which otherwise would not have been possible.

However, there stands in front of us our dreams – a dream to make India a prosperous and vibrant country. A dream to reduce the gross inequality that exists today and dis-empowerment that exists today traversing  region, gender & economy. A dream to bring sustainable and inclusive growth and a dream to make India a global superpower and feel proud of our nation.

This dream forces us to introspect the past failures and reinvigorate our actions and policies that not only make India a GLOBAL MANUFACTURING HUB but also a Nation of Our dreams as envisaged in the Preamble of our constitution.

In this essay, we shall see a brief evolution of the growth of industries in India and the present scenario. We shall then go through the various problems that hinder the growth of India as a manufacturing nation. We shall analyse how certain policy measures have affected the right policy climate and confidence of the private sector which has curtailed  investments from both foreign and domestic avenues. We shall then suggest reforms and steps that needs to be brought in  to bring the right policy climate which is stable, predictable, enabling and irreversible and not only boosts investments in India but make India a favourable business venture  while also keeping in light of the fact that India is still a developing nation and the interests of the Nation has still to be protected in era of globalisation and free market economy.

Evolution of Industries in India

1900- 1950:

The Indigenous Industrial growth in India was in contestation with the British on-going Financial Capitalism. Thus the growth was highly resource starved, with lack of Indian heavy industries and dependency on foreign imports. It checked the growth of Indian ancillary industries bringing huge unemployment and regional imbalance.

The backwardness and dependency of Indian private industries was precisely the reason when in the BOMBAY PLAN-1946 , the industrial class accepted a State-Controlled mixed economy over private led in-order to boost rapid industrialisation  and also to pre-empt socialism by combining equity with growth.

1950-1990:

The Industrial Policy of 1956 had highlighted the need for a mixed economy and the need for heavy industries. The Nehru-Mahalanobis model of growth  boosted the growth of heavy enterprises in India and India witnessed the growth of steel plants, huge dams, manufacturing units – automobiles, ports, airports etc. which was slowly but steadily transforming India.

However the prolonged continuation of Import-substitution-Industrialisation model, the growing ICOR(incremental capital output ratio) of industries in mid-1980s and the failure to make a timely shift to a liberalised economy which was rightly tapped by the south-east Asian nations, culminated in the economic crisis of 1991 and forced institutional changes in the economy that brought in liberalisation, privatisation and globalisation of the Indian economy.

The Present:

The situation of the economy as it exists today is that it stands on solid grounds with lots of positives to surge ahead.

POSITIVES:

India today is called as the Back-Office of the world with our IT sector dominating the world. There is huge skilled Labour resource and booming market for the world with the growing capacity of the people brought in through various enabling social legislations and the growth and development.

The proximity to both Africa and south-east Asia and strategic location of India in the Indian Ocean offers great business opportunity for the business community of the world. The growing partnerships and FTAs(free trade agreements) with ASEAN, SAARC provides added opportunity with the India’s growing interest in Regional Comprehensive Economic Partnership (RCEP) — a grouping led by the Association of South East Asian Nations (ASEAN) and is expected to pitch in with $644 billion.

There are more than 13 major ports and 200 small ports that can be effectively used as trans-shipment hub. The government today is much better prepared and motivated to boost investments in the country and it can be ascertained by the vigour that the government has displayed in the current budget-2014 that aims at resolving tax disputes, and bringing a stable policy climate for the industry.

The Forex-Reserve is more than $300 billion, the average growth in the 11^th FYP was 7.9% even after facing two economic crisis. The CAD(current account deficit) was as low as 1.7% of GDP while FD has substantially reduced to around 4.1 %.

The inflation as is witnessed currently is below 5.9 of CPI which is historic low. The growing infrastructure like roads, electricity, transport, shipment etc have just transformed the economy which is huge as compared to India even of 1990’s.

These factors coupled with huge demographic dividend, huge availability of raw materials are the prerequisite and essential conditions for any country to be a manufacturing hub and is readily available in India.

NEGATIVES:

However there are lots of drawbacks that have hindered the actual realisation of the potential that India is capable of. This can be enumerated by the fact that despite  substantive liberalisation since last 6 months the economy has not really caught up.

The Economic Survey Report shows :

• Substantial reduction in FII(financial institutional investors) in India in 2013. ($26,981 million to $4,822 million)
• The ease of Business doing in India is 134/189 countries in world in 2014.
• The statistics of the last year shows negative growth for mining sector (-1.4%) and manufacturing (-0.7%) in 2013.
• GDP share of manufacturing is still 15%.
• The Inflation was as high as 9% until recently.

This statistics do not augur well to drive investments and thereby boost manufacturing. It also brings forth the picture that there is no one factor inhibiting growth and investment and the situation requires a more detailed in depth understanding.

Let’s try to analyse the same one by one and recommend for changes.

ISSUES/BOTTLENECKS IN GROWTH AND MANUFACTURING

Institutional Drawbacks

• Bureaucratic RED-TAPISM.
• Over regulation and delays in procedural clearances of projects (ex. POSCO steel plant got its environmental clearance after 8 years to start construction in Odisha).
• No single window clearances for projects- the NeGP(national e-governance plan is yet to catch up in all departments).
• Various archaic legislations like LABOUR LAWS [Industrial disputes act ,1947; contract labour(regulation and abolition) Act,1970; trade Unions Act,1929) which has substantial repercussion on the efficiency of enterprises (only recently laws are being passed in Rajasthan after reform in labour laws)
• Land acquisition is still de-motivating even after the LARRA, 2013(land acquisition resettlement and rehabilitation act) making the land even more costlier than before .
• The FDI in India is still regulated in various sectors and comes with extreme safeguards. The FDI in MBR is classic example where India hardly received any investment despite making it 51%.
• There has been increasing demand for full convertibility of rupee which calls for more FDI and better rates.
• There is increasing number of regulatory bodies and control from plethora of organisation adding to the confusion and woes of investors. (SEBI, PFRDA, IRDA all work in financial sectors with interspersed jurisdiction).
• The issue of RBI to contain inflation as well as maintain growth and investment is facing criticism from all sectors with demand for a separate DMO (debt management office).
• The retrospective amendment of the Income Tax law,1961 in the Vodafone case has been one prime concern of business class and foreign investment seeking for a stable and clear policy guidelines (which are yet to be detailed in elaboration since the budget speech of FM).
• Lack of clear policy guidelines with ambiguity in various sectors .
• There is a lack of institutionalised mechanism of effective participation for policy making which includes the private sector as well as the civil society (it must be noted that USA has institutionalised lobbying to provide fair play to all concerned).

Infrastructural Bottlenecks

• Unavailability of Roads especially in rural areas are hindering penetration of industry to rural sector.
• Power is the major concern in India.

The Japanese delegation to India a week ago highlighted the need for power and infrastructure to motivate Japanese investment of committed $35 billion in india. It brings out the grim reality how investments are curtailed .

The software companies (Infosys) have started their own solar projects to meet their power needs, which is not possible for small start-ups.

• The need for a cheap means of transport and swifter travel is long felt.
• The National water ways are yet to be developed with only recently some action can be perceived. However the long gestation period involved in such projects is hardly motivating.
• NUCLEAR LIABILITY LAW, 2011 of India has been well detested by the foreign market and despite of the waiver granted for nuclear trade, the projects related to nuclear power plants have not picked up .
• The gas pricing policy though addresses but is yet to yield result.

CONCLUSION

The world is eagerly awaiting to witness the rise of the “ASIAN ELEPHANT” and it is time to prove them right. The vigour of the political class displayed by the new government to boost manufacturing and growth along with the favourable global conditions augurs extremely well for the rise of India. The favourable policy climate brought in by various legislations and the improving economy of USA and Europe has brought in new prospects for the Indian Manufacturing Industry.

IMF states India as a “bright spot” in a slow global economy.

However there is more to be done than said or spoken about. This favourable conditions has to be conditioned with the strengths of India which is its cheap labour, skilled resource and huge market coupled with dedicated and transparent administration. Good Governance has to be brought in through a networked approach of Government, private sector and the civil society that will facilitate and build trust and confidence essential with adequate checks and balances for any economy to grow and India is no exception.

It is only through dedicated and sustained efforts that India will attain “SWARAJ” in its true sense and be not only the global manufacturing hub but also the “light of the world”.

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