A critical piece of the growth strategy is putting an end to bureaucratic paralysis, improving the ease of doing business, instituting reforms in labour and land acquisition laws
GN Bureau | January 18, 2018
Manufacturing will remain the dark horse for the Indian economy, especially as labour-intensive industries shift from China, writes Sukhgeet Kaur, director, project appraisal and management division, Niti Aayog in an official blog titled Reform and Disruption is key to growth.
“Public-Private partnerships should speed up the development and adoption of advanced techniques such as robotics, big data, 3D printing, analytics, additive manufacturing, automation, electronic system, design and IOTs and to train workers in these skills,” she emphasises in the blog.
It has been observed that automation, rather than destroying jobs, refines them and in many ways reduces costs and boosts demand. Automation and artificial intelligence reallocates jobs, it does not displace them. Workers would switch from routine unskilled jobs to non-routine skilled jobs to stay ahead of automation. The transition is likely to be difficult as automation disrupts labour markets requiring workers to learn new skills quickly, she mentions.
She said that an increased social investment would make the loss of industrial employment generation less damaging during the transition period. Social programs that bolster the purchasing power of poor families are likely to be important. Broad-based agricultural growth will provide a basis for labour intensive manufacturing, with some economists recommending a second green revolution for eastern India.
However, any program towards universal transfer such as the Universal Basic Income (UBI) with huge fiscal costs may potentially displace expenditure on other targeted poverty reduction programs. Universal cash transfers would become more affordable and effective with better targeting. One way of implementing UBI is to link transfers with Aadhaar (biometric ID) seeded bank accounts of intended beneficiaries.
She mentions that manufacturing has been a driver of economic growth and aggregate economic performance. The development trajectory of advanced economies, even East Asian countries has involved manufacturing based industrialization. Share of manufacturing output and employment first rises, reaches a peak and then declines. However, there has been a weakening of this trend termed as ‘premature deindustrialization’ by Dani Rodrik (2015), with countries becoming service economies without completing the full cycle. Aborted industrialization appears to be occurring much earlier in emerging economies. Arvind Subramanium (2015) describes it as ‘non industrialization’ in Indian economy’s case.
She went on to say that India’s reform trajectory marked by bold initiatives such as Make in India, Startup India, Skill India, Digital India, Atal Innovation, Housing for All, Smart Cities and industrial corridors coupled with its large domestic market could make it the preferred destination for both domestic and foreign firms.
The recent jump of 30 positions in India’s Ease of Doing Business rank is testimony to the fact that continued, credible and consistent reforms will unleash India’s potential. Businesses and foreign enterprises would relocate in the pursuit of cheap labour and better business ecosystems. Low labour costs business models may not be enough, innovation would be key to maintaining and expanding market share. These initiatives need to be aligned with the natural comparative advantages of the Indian economy. New laws such as Bankruptcy Law, Financial Code, Labour Codes etc. are unbundling the complexities.
"A critical piece of the growth strategy is putting an end to bureaucratic paralysis, improving the ease of doing business, instituting reforms in labour and land acquisition laws, improving infrastructure and aiding formalization of the economy. Flexibility in probation periods & permanent contracts, modernization of industrial relations, simplification of bureaucratic requirements for small & medium enterprises (with high employment rates & big share in industrial production), promotion of labour-force training, reduction in corruption and legal uncertainty would make formalisation more attractive."
This would boost formal manufacturing which exhibits unconditional convergence. These virtues are shared by skill-intensive services. Reforms would also enable service sectors to grow at a fast pace, create quality employment and attract investment. Construction is likely to be a critical source of employment due to India’s antecedent infrastructure deficiencies for some time, she writes further.
An underground rapper who grew up on Mumbai streets, Divine spins his music around his environment and poverty. His breakout single, ‘Meri Gully Mein’, along with fellow rapper Naezy caught Bollywood’s attention. The Hindi film ‘Gully Boy’ is inspired by their lives and gr
Anil Swarup, an IAS officer of Uttar Pradesh cadre who retired in 2018, is a model bureaucrat who retained his optimism right till the end of service and exemplified dedication and commitment. His excitement at the opportunities that a job in the IAS provided is evident on every page of his new book publis
The question of reform of the civil services has been debated extensively at all levels at least over the last five to six decades after independence. Indeed, it was soon perceived that the Indian Administrative Service (IAS) may not be well equipped to deal with the problems of an emerging developing coun
Shouting vengeance at all and sundry while wriggling out of holes of our own making seems to be our very special national characteristic. Some recent instances are illustrative of this attribute. A number of business tycoons with thousands of crores of unresolved debts have fled abroad with the government
The Central Bureau of Investigation (CBI) came into existence, based on a Resolution of the home ministry, dated April 1, 1963 – a sheer coincidence that it also happens to be April Fool’s day. Over the past few months, we have seen the CBI live up to its founding day with great zeal, being i
Gujarat was passing through a turbulent phase in the 1980s. The decade began middle class agitations against new reservation policies, and the caste friction turned communal under the watch of chief minister Madhavsinh Solanki, alienating majority of urban population on both counts. The ground was ripe for