During the last few decades, India has experienced a growth in its GDP by its service sector. However, it is a matter of grave concern that this service sector led growth has largely been jobless, thus leading to the creation of large segments of unemployed population. In fact, India is believed to have a demographic divided, wherein the majority of the population falls in the working age group, which in itself is a double edged sword. Hence, taking account of the situation the government and the policymakers have now started revisiting the Indian growth story, and addressing its flaws.
Indian Growth Pattern: At a Glance
During the first few years after independence, agriculture contributed to more than 50 per cent of India’s GDP. Services contributed to about 30 percent and industry less than 20 per cent of the GDP. Further, the contribution of agriculture started declining while that of service increased steeply with the share reaching nearly 60% of GDP in the recent years. India has charted this growth path, jumping directly from the agriculture sector to the service sector. This trend for the industrial sector is a matter of grave concern because industry and manufacturing form the basis of the real growth of the economy both in terms of production of goods and employing the labor force of the country. In fact, the manufacturing sector in India is still affected by a number of problems such as the land acquisition, rehabilitation, multiple laws and endless paperwork, and multiple of complex process of clearances etc. As reported by the Economic Survey 2014—15, the manufacturing sector has one of the highest numbers of stalled projects, among them the majorities of stalled projects are in steel, cement, garments and processed food. More than 200 manufacturing projects are stalled due to the lack of funds, demand and unfavorable market conditions.
Make in India: Towards Creating a Self-Sustained Economy
Launched in September 2014, ‘Make in India’ is an initiative to convert India into a global manufacturing hub. With an objective of attracting new investment and promoting manufacturing, the program addresses the problem areas in manufacturing sector by means of different channels of intervention. It focuses on promoting green and advanced manufacturing and helps the companies to be part the global value chain. It is likely to put India on the global manufacturing map and in turn facilitate the inflow of new technology and capital, while at the same time creating lakhs of jobs. The program primarily emphasizes on 25 sectors with focus on job creation and skill development.
Some of the major interventions included the E Biz portal enabling 24×7 applications of industrial license making the process seamless. The process of getting environmental clearance has been made online. Also, the policy has granted approval to National Investment and Manufacturing Zones, wherein the provision for single window clearance will be provided.
Some Important Preconditions-
- India now must improve upon its intellectual property rights (IPRs) policies. They should be implemented in such as way that they do not deter technology oriented domestic investments from foreign investments.
- The Indian education system must be made skill oriented. As of now merely 10 percent of the labor force has gained some technical skill, of which only one-fourth has received formal technical education system.
- Urgent need of the hour is to reduce the plethora of regulations. As the manufacturing sector in India still continues to suffer from infrastructure bottlenecks, environmental clearance and unfriendly tax regime.
- The labor reforms and skill development would be of great significance for the success of the “Making in India” campaign.
- The infrastructural facilities should be improved and the special economic zones should also be encouraged.
- Better investment should be made in the research and developed of indigenous technology.
- Over and above all, India must ensure not only better, but effective governance free from corruption.
It is no doubt that Make in India is a good concept and a laudable step by the government, but everything depends upon the effective implementation of the government policies at the ground level. India now requires a comprehensive policy to infuse confidence among the investors. At the same time the spontaneous reaction of China in the form of “Made in China” indicate that India has to face though compaction from the dragon and in this regard what we need is an effective time bound roadmap in order to revamp the government machineries and infrastructural bottlenecks in order to become self reliant economic power
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