Millennium Post

Missing 'Make In India'?

Issues of hard economic performance have taken a back seat

In pre-2014 Lok Sabha election, much was talked about Gujarat Model, which would likely to be replicated pan-India had BJP come to power. The buzzword was synergised into Make in India initiative in the election manifesto. The success of Gujarat Model stimulated Modi to deploy a new dimension in the manufacturing dynamism in the country, with an eye on making the country a manufacturing hub in the world and eventually increase employment opportunities.

Why are then Gujarat Model and Make in India initiative missing in the BJP campaign for 2019 election? Is it that Gujarat Model was rhetoric and could not be replicated in Pan India because of socio-economic diversity across the country and Make In India was losing stream during his 5 years stint at the Centre?

Even if the Gujarat Model was not stretchable across India, Modi's intention was to convey the philosophy of the governance seeded in the model. He wanted to assert the success of Gujarat, which was polarised on the philosophy of accountability, regular assessment, innovation, ease of doing business and reforms. His intention was to trickle down the philosophy to the votaries of development.

Doing away with multiple licenses to do business and creating a single window clearance were his aims to be replicated at the Centre. His antipathy to subsidies and farmers' doles and instead provide efficient governance were the signals of Gujarat Model. He said, "People don't need doles and preferential treatment; people need opportunities and an efficient government"

But, the defeats in assembly elections in Madhya Pradesh, Rajasthan, Chhattisgarh and lacklustre support of farmers in Gujarat forced him to revert to India's conventional philosophy of subsidy-led economy and social welfare outreach. His enormous efforts to bring a true state of federalism while raising the states' share, failed to cheer the voters. While the development in Gujarat without freebies worked well to up-surge his leadership, the same failed in pan-India.

Given the situation that freebie-less governance cannot raise the populist ante, which was epitomised by the Congress arrow of farmers' debt relief in the three state elections, BJP considered it sensible to remain silent on Gujarat model in the 2019 election campaign.

Similarly, BJP's absence of Make in India in the campaign perplexed many. This followed closely Modi's surreptitious silence on Make in India in Independence speech on August 14, 2018. While he was upbeat on the success of all other major schemes during his four years' stint in the government, "Make in India", which was his flagship project of development, was missed in his speech.

Pro-Modi political observers and economists were at a loss to make out any insights of the silence, made from the rampart of Red Fort. Having sunk in the quagmire of job creation, Modi seemed to have preferred to remain silent. Added to this, the recent NSSO survey exposed job failure. The survey unveiled a higher rate of unemployment during 2017-18 than in UPA period. The unemployment rate was 43 years' high at 6.1 per cent in 2017-18, compared to 2.2 per cent in 2011-12.

"Make in India" was the yardstick for "job" creation. It was hailed when Modi mandated one crore (10 million) jobs a year in his election campaign in 2014. But, it failed. The parameters, which could bolster the employment opportunities, were swamped by unsuccessful stories. Industrial Index of Production was lying low at 4 per cent a year during the Modi regime, despite high GDP growth of 7 per cent a year. Domestic investors were shy to invest in the country since the uncertainty prevailed, owing to demonetisation and controlled monetary policies. Eventually, the share of industry in GDP, which was targeted to 25 per cent in 2022 from 17 per cent in 2014, inched up by only one per cent to only 18 per cent in 2017-18 over a period of four years.

Slump in exports is another area which led to failure in job creation. Export linked job is a major job opportunity in informal sectors. About 30 per cent of India's exports is from labour-intensive industries. Export growth slumped due to global volatility. With exports slipping into negative growth during the Modi regime, job opportunities lost the heyday.

Against this backdrop, economic observers suggest for a new model of "Make in India". Time is ripe to make transformational change in manufacturing activities under the "Make in India" initiative. India is integrated into the global economy. With the advancement of technology embedded in modern industry concept and fast growth of FTAs and trade blocks, it is the time for India to be embedded into GVC model (global value chain) value-added manufacturing network across the border.

Given a wide disparity in between high cost and low-cost production in the world, firms in developed countries have established transnational manufacturing network across the borders, combining their high tech know-how – with lower wage labour in developing countries. Eventually, production has become increasingly fragmented across the borders. South East and East Asia became the major stakeholders in this new pattern of GVC production network.

India trails behind in this race. Despite much ado was made for a large working

population in the country, inadequately skilled labour, lacklustre export infrastructure, limitation of scale of production and difficulty in accessing cheap credit castigated the exports. These economic ills shadowed India's potential as manufacturing exporter and became detrimental for it to enter the GVC network for manufacturing.

(The views expressed are strictly personal)

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