{"id":5777,"date":"2020-01-21T15:13:56","date_gmt":"2020-01-21T09:43:56","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=5777"},"modified":"2020-01-21T15:13:56","modified_gmt":"2020-01-21T09:43:56","slug":"make-in-india-program-shortcomings","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/make-in-india-program-shortcomings\/","title":{"rendered":"Make in India program: Shortcomings"},"content":{"rendered":"<p><strong>Relevance: Mains: G.S paper II: Polity: Schemes and policies<\/strong><\/p>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/Makee.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5779\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/Makee.png\" alt=\"\" width=\"628\" height=\"283\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/Makee.png 628w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/Makee-150x68.png 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/Makee-300x135.png 300w\" sizes=\"auto, (max-width: 628px) 100vw, 628px\" \/><\/a><\/p>\n<p><strong>Context:<\/strong><\/p>\n<ul>\n<li>On September 25, 2014, the Indian government announced the \u2018Make in India\u2019 initiative to encourage manufacturing in India and galvanize the economy with dedicated investments in manufacturing and services.<\/li>\n<\/ul>\n<p><strong>Background:<\/strong><\/p>\n<ul>\n<li>In 2015, India emerged as the top destination for foreign direct investment, surpassing the U.S. and China.<br \/>\n\u2022 In line with the national programme, States too launched their own initiatives.<br \/>\n\u2022 Five years later, as we brace for another Union Budget, it would be appropriate to take stock of the much-hyped initiative as the economy in general, and the manufacturing sector in particular, is on a slippery slope.<br \/>\n\u2022 The \u2018Make in India\u2019 idea is not new.<br \/>\n\u2022 Factory production has a long history in the country.<br \/>\n\u2022 This initiative, however, set an ambitious goal of making India a global manufacturing hub.<br \/>\n\u2022 To achieve this goal, targets were identified and policies outlined.<\/li>\n<\/ul>\n<p><strong>Objectives of the Make in India program:<br \/>\n\u2022 The three major objectives were:<br \/>\n\u2022 (a) to increase the manufacturing sector\u2019s growth rate to 12-14% per annum in order to increase the sector\u2019s share in the economy;<br \/>\n\u2022 (b) to create 100 million additional manufacturing jobs in the economy by 2022; and<br \/>\n\u2022 (c) to ensure that the manufacturing sector\u2019s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%.<\/strong><\/p>\n<figure id=\"attachment_5778\" aria-describedby=\"caption-attachment-5778\" style=\"width: 810px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-5778\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke-1024x768.jpg\" alt=\"\" width=\"810\" height=\"608\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke.jpg 1024w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke-150x113.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke-300x225.jpg 300w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke-768x576.jpg 768w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/01\/MAke-880x660.jpg 880w\" sizes=\"auto, (max-width: 810px) 100vw, 810px\" \/><\/a><figcaption id=\"caption-attachment-5778\" class=\"wp-caption-text\"><span style=\"font-size: 20px;\">The major objective behind this programmes is to focus upon the heavy industries , public enterprises which generating employment in India. The programme is launched to facilitate investment. To Foster innovation. To enhance skill development. To protect intlectual property. To build best in class manufacturing infrastructure.<\/span><\/figcaption><\/figure>\n<p><strong>Designed to fail?<\/strong><\/p>\n<ul>\n<li>Given that big-ticket projects for grand initiatives such as \u2018Make in India\u2019 have long gestation periods and lag effects, assessments of such initiatives can be premature.<br \/>\n\u2022 Also, governments often use the excuse of inheriting an economy riddled with macroeconomic problems, and demand more time to set things right.<br \/>\n\u2022 This is an argument that the current government invokes frequently.<br \/>\n\u2022 However, five years is a reasonable time period to assess the direction and magnitude of outcomes.<br \/>\n\u2022 As the policy changes were intended to usher growth in three key variables of the manufacturing sector \u2014 investments, output, and employment growth \u2014 an examination of these will help us gauge the success of the policy.<\/li>\n<\/ul>\n<p><strong>Economic slowdown:<\/strong><\/p>\n<ul>\n<li>The last five years witnessed slow growth of investment in the economy. This is more so when we consider capital investments in the manufacturing sector.<br \/>\n\u2022 Gross fixed capital formation of the private sector, a measure of aggregate investment, declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-19).<br \/>\n\u2022 Interestingly, though the public sector\u2019s share remained more or less the same during this period, the private sector\u2019s share declined from 24.2% to 21.5%.<br \/>\n\u2022 Part of this problem can be attributed to the decline in the savings rate in the economy.<br \/>\n\u2022 Household savings have declined, while the private corporate sector\u2019s savings have increased.<br \/>\n\u2022 With regard to output growth, we find that the monthly index of industrial production pertaining to manufacturing has registered double-digit growth rates only on two occasions during the period April 2012 to November 2019.<br \/>\n\u2022 Data show that for a majority of the months, it was 3% or below and even negative for some months.<br \/>\n\u2022 Regarding employment growth, we have witnessed questions being raised over the government\u2019s delay in releasing data as well as its attempts to revise existing data collection mechanisms.<br \/>\n\u2022 The crux of the debate has been that employment, especially industrial employment, has not grown to keep pace with the rate of new entries into the labour market.<\/li>\n<\/ul>\n<p><strong>Policy casualness:<\/strong><\/p>\n<ul>\n<li>\u2018Make in India\u2019 is a good example of a continuous stream of \u2018scheme\u2019 announcements. The announcements had two major lacunae.<br \/>\n\u2022 The bulk of these schemes relied too much on foreign capital for investments and global markets for produce.<br \/>\n\u2022 This created an inbuilt uncertainty, as domestic production had to be planned according to the demand and supply conditions elsewhere.<br \/>\n\u2022 The policymakers neglected the third deficit in the economy, which is implementation.<br \/>\n\u2022 The economists worry mostly about budget and fiscal deficit, policy implementers need to take into account the implications of implementation deficit in their decisions.<br \/>\n\u2022 The result of such a policy oversight is evident in the large number of stalled projects in India.<br \/>\n\u2022 The spate of policy announcements without having the preparedness to implement them is \u2018policy casualness\u2019. \u2018<br \/>\n\u2022 Make in India\u2019 has been plagued by a large number of under-prepared initiatives.<\/li>\n<\/ul>\n<p><strong>Why did \u2018Make in India\u2019 fail?<\/strong><\/p>\n<ul>\n<li>It set out too ambitious growth rates for the manufacturing sector to achieve. An annual growth rate of 12-14% is well beyond the capacity of the industrial sector.<br \/>\n\u2022 The initiative brought in too many sectors into its fold. This led to a loss of policy focus.<br \/>\n\u2022 Further, it was seen as a policy devoid of any understanding of the comparative advantages of the domestic economy.<br \/>\n\u2022 It given the uncertainties of the global economy and ever-rising trade protectionism, the initiative was spectacularly ill-timed.<\/li>\n<\/ul>\n<p><strong>Way forward:<\/strong><\/p>\n<ul>\n<li>\u2018Make in India\u2019 is a policy initiative with inbuilt inconsistencies.<br \/>\n\u2022 The bundle of contradictions unfold when we examine the incongruity of \u2018swadeshi\u2019 products being made with foreign capital.<br \/>\n\u2022 This has led to a scenario where there is a quantum jump in the \u2018ease of doing business\u2019 ranking, but investments are still to arrive.<br \/>\n\u2022 The economy needs much more than policy window dressing for increasing manufacturing activity.<br \/>\n\u2022 The government must realise that industrialisation cannot be kick-started by a series of bills in Parliament and hosting investors\u2019 meets.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Mains: G.S paper II: Polity: Schemes and policies Context: On September 25, 2014, the Indian government announced the \u2018Make<\/p>\n","protected":false},"author":1,"featured_media":3247,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-5777","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5777","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=5777"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5777\/revisions"}],"predecessor-version":[{"id":5780,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5777\/revisions\/5780"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3247"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=5777"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=5777"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=5777"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}