What Has ‘Make In India’ Made?

(c) ndtv.com

On reviewing the four year period of the ruling government in India, the Bharatiya Janata Party ( BJP), we are faced with the question -what has it done to boost job creation? It was four years ago when the ‘Make in India’ campaign was initiated by Prime Minister Narendra Modi on September 2014. Its aim was to transform India into a global manufacturing hub. This would be done by increasing the share of manufacturing in the country’s GDP( Gross Domestic Product) to 25% by 2025 and creating 10 crore (100 million) new jobs by 2022. This was a response to India’s economic crises which escalated during 2013- the hyped emerging markets led to a fall in growth rate , which was at its lowest levels in a decade. India was at the brink of economic failure. According to the BJP’s manifesto in 2014, it said,” Under the broader economic revival, BJP will accord high priority to job creation and opportunities for entrepreneurship.”

Yet, according to the recent data published by the Centre for Monitoring Indian Economy, (CMIE), the unemployment rate doubled between July 2017 and April 2018. It also states that the number of jobs in the country in the last financial year 2017-2018 fell from 40 crores and 67 lakhs (406.7 million) to 40 crores and 60 lakhs (406 million). The rate of unemployment increased from 3.8% (2011-12) to 5% (2015-16).

Manufacturing, production, productivity growth, and technological advancement lie at the root of any economic growth, if it is to grow soundly . The case of India is however different: India’s economic progression from agrarian to manufacturing to service-led growth has not been in such an order. India jumped from agriculture directly to service-driven economy without creating a solid manufacturing base for sustained growth and large scale jobs creation. The result: India is unable to create millions of low skilled jobs in manufacturing and industry, while employment is created in high skilled areas. American economist and Nobel Prize winner, Paul Krugman, calls this, ‘The missing middle’. Thus, the ‘Make in India’ initiative comes into the picture as a potential game changer to this trend.

A large country can only become rich if it manufactures the goods that its people demand and consume, produce the services required by its people and also export a considerable amount of such goods and services. Mr. Modi’s scheme was therefore to call upon the world’s manufacturing companies to “come and make in India”. Mr.Modi vowed that India would train apprentices by the tens of crores (hundreds of millions) in services that increase manufacturing, reduce bureaucracy and improve infrastructure, thereby paving the way for foreign investors.

(c)https://www.asiapacific.ca/blog/what-has-make-india-made-india

However, in reality, the story is not quite the same. According to the People Matters website, The country’s GDP growth rate dipped from 9.2% in the third quarter of 2016 to 5.7% in the third quarter of 2017.Economists attribute this mainly to the government’s demonetization drive and poor implementation of the Goods and Service Tax ( GST).From July 2014 to December 2016, in the eight major sectors. i.e., manufacturing, trade, construction, education, health, information technology (IT) , transportation, and accommodation and restaurants, only 6 lakh and 41 thousand jobs were created .This is against the 40 lakh and 75 thousand people who join India’s work force annually, as claimed by IndiaSpend. The Free Press Journal article stated that, ‘India is unable to create millions of low skilled jobs in manufacturing and industry, while employment is getting concentrated in the highly skilled IT and financial services and in low productivity agriculture’ . Paul Krugman said, “India probably needs to move more into manufacturing; service exports, not necessarily the service sector as a whole, disproportionately employs highly educated, high skilled people; you need to create jobs for hundreds of millions of people who are going to need jobs that do not require those skills; manufacturing is a natural place to employ people.” He further elaborated, “The answer to the employment requirement of the developing nations ( like India ) with a large rural population lies in investing in rural areas and partly, in migration.”

The Hindustan Times also stated that, “India’s unemployment rate has registered a slight increase since the BJP government began its term in May 2014, despite the government’s professed emphasis on job creation.” The DNA newspaper had quoted the Prime Minister in November 2013 in an article as he said, “If BJP comes to power, it will provide 1 crore jobs which the UPA (United Progressive Alliance) government could not do despite announcing it before the last Lok Sabha polls.”

Yet, the 2016-17 Economic survey based on data from the Labour Ministry stated, “Employment growth has been sluggish”. Furthermore, the survey pointed to a shift in the pattern of employment from permanent jobs to casual and contract employment. ‘The increasingly, ‘Temporary ‘ nature of work, it said, ‘has “Adverse effects ” on the level of wages, stability of employment and employee’s social security’. The number of beneficiaries of the ‘ Prime Minister’s Employment Generation Programme (PMEGP) – which aims to generate employment in rural and urban areas by starting new micro enterprises and small projects, has fallen 24% from 428,000 in 2012-13 to 323,362 in 2015-16, according to government data.

(c) The New York Post

Despite the availability of cheaper labour, resources and raw materials in India, it still depends on other countries to supply its needs and demands. For example, according to Quartz India, in their article, ‘Seven reasons why Chinese-made Hindu Gods rule Indian markets, India increasingly imports mass-produced idols of Hindu deities from China- by the millions since 2000.

Questions arise as to why India cannot manufacture their own figurines or electronic gadgets and how do the Chinese producers exceed sales of local manufacturers, considering transportation cost and tariff of 10%? -One reason could be because most manufacturing in India is done on a small scale when compared to counterparts in China and other major economies .A report by Mckensey, also notes that, “workers in India’s manufacturing sector are almost four to five times less productive, on average, than their counterparts in Thailand and China., respectively; this problem rests with management and regulations, not labour alone.” Another reason could be because India ranks as the 76th out of 176 countries in the Transparency International’s Corruption Perception Index 2016.

When we look at the non-availability of jobs, a recent study conducted by Aspiring Minds (2017) indicated that 97% of engineers want jobs in software engineering but due to shortage of jobs, they opt for PhD programmes, because of the regular stipend received. This is also true for students from other streams. According to the Labour Report (2015), 1.6 crore (160 million) individuals enrol in higher education because of lack of jobs. Therefore, the government should refrain from cutting research grants and reducing PhD seats. Studies made by Jean Dreze and Ritika Kheera , also suggests that unemployment has been the cause of an increase in robbery and thefts, especially with migrants.

(c) Entrepreneur India (Government and Startup)

On a positive side, the Modi government has succeeded in some areas, notably India jumping up 30 places in the World Bank’s Ease of doing Business ,cutting red tape in bureaucracy, attracting the highest Foreign Direct Investment (FDI) flow of US$ 60 Billion, rise of manufacturing industrial activity by 29 % and bringing business and consumers towards a common goal of nation building. However ,according to reports and economists, manufacturing and India’s economic output has been disrupted in the wake of demonetization and the launch of goods and service tax (GST). Also, experts believe that the lack of skills is a major hindrance in creating employment. According to the National Institute of Public Finance and Policy, only about 2% of Indian workers have qualified for certificates documenting their mastery of professional skills compared with about 70% of workers in Europe and 80-90% in East Asian countries like Japan and South Korea. Hence the problem is not only employment but employability of work force.

“Make in India” programme has had a patchy and subdued impact in the economy. There is still a long way for India to experience the same kind of economic transformation that has swept China. Real unemployment is still a major issue in Indian economy and the programme has a lot of catching up to do. Better implementation plans on how to divert the massive available work force into manufacturing and large scale production should be the focus of economic plans, in order to balance employment opportunities with meeting the demands of goods in the country.

 

Author: Karen Lyndem

Karen Lyndem is a Staff Writer. She has a B.A in English and a Masters of Social Work from St. Edmund’s College, Shillong.

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