November 28, 2022
Good morning. In today’s either/view, we discuss whether the ‘Make in India’ initiative has been a success. We also look at the UNESCO awards for Telangana, among other news.
📰 FEATURE STORY
Make In India – Has It Worked?
With India being in the running for the position of the third largest economy in the world, we must take a look at the government’s most ambitious initiative – Make in India. Launched by the government in 2014, the Make in India initiative aims to transform the country into a global design and manufacturing hub. This programme will also play a crucial role in achieving India’s chances of becoming a $5 trillion economy by FY27.
While it boasts progress on paper, has the initiative made the leaps and bounds that the government claims it has?
Context
Make in India came as a timely response to the financial turmoil brought on by the collapse of the BRIC bubble. After the emerging markets bubble burst, investors from all over the world debated the risks that India would have to deal with, and its populace believed that the nation was on the verge of a serious economic crisis.
However, the Make in India programme, which was introduced in the midst of this economic unrest, proved to be a means of encouraging investment and attracted a number of partners and stakeholders. The nation’s economic transformation programme was made accessible to citizens and foreign investors, and as was predicted, thousands of businesses from around the world backed the initiative.
The idea of “Make in India” is not new. The nation has a long history of factory production. However, this project had the lofty objective of turning India into a centre of global manufacturing. Targets and policies were set in order to accomplish this goal.
The three main goals were to (a) increase the growth rate of the manufacturing sector to 12–14% per annum in order to increase the sector’s share in the economy; (b) add 100 million new manufacturing jobs to the workforce by 2022, and (c) ensure that the manufacturing sector’s contribution to GDP rises from its current 16% to 25% by 2022 (revised to 2025). The goal of the programme was to create an environment that encouraged investment, modernise and improve the infrastructure, and open up new markets to foreign capital.
VIEW: Make in India has been a success
India is “poised to become the factory to the world,” with manufacturing’s contribution to GDP rising from 15.6% at present to 21% by 2031, thanks to the Make in India initiative, ₹11.97 lakh crore in Production Linked Incentive Schemes (PLIs), and corporate tax reductions. The export of manufactured products was between ₹17-19 lakh crore from FY 14-15 to FY 17-18. A rapid increase in exports of goods occurred in FY 18–19, with a total export value of ₹23.07 lakh crore, representing a growth of 17.95% YoY (year-over-year).
Petroleum products presently represent the largest export in the previous fiscal year, accounting for almost 21% of total turnover, totalling more than ₹6.5 lakh crore. The largest contributor to India’s overall exports was pearls, followed by gems, both of which account for around 8.5% of the total. Iron, steel and pharmaceuticals account for 6.5% and 6% of total export revenue.
Exports from India experienced the largest growth in EU nations following the Coronavirus pandemic, which is an indication that these nations now view India as a reliable partner. With a revenue of more than ₹6.40 lakh crores, the export of goods to EU nations has reached its highest turnover ever. This represents an increase of more than 60% from the previous financial year.
COUNTERVIEW: Make in India has failed
The economy’s investment has grown slowly during the past five years. This is especially true when we look at manufacturing-related capital investments. A measure of total investment, the private sector’s gross fixed capital formation fell from 31.3% of GDP in 2013–14 to 28.6% of GDP in 2017–18 (Economic Survey 2018-19). It’s interesting to note that over this time, the private sector’s share decreased from 24.2% to 21.5%, while the public sector’s portion stayed largely the same. The reduction in the economy’s savings rate is a contributing factor to this issue.
In terms of output growth, we find that from April 2012 to November 2019, the manufacturing-specific monthly index of industrial production only on two occasions recorded double-digit growth rates. In fact, figures indicate that it was 3% or less and occasionally even negative for the majority of the months. Negative growth inevitably signals sector contraction. So it is obvious that we are waiting for growth.
‘Make in India’ failed; why? There are three primary reasons. First, it outlined growth rates that were too ambitious for the industrial sector to reach. A growth rate of 12–14% per year is significantly higher than what the industrial sector can handle. India has historically not succeeded in doing so, therefore, expecting to develop the necessary skills for such a quantum leap may be a gross overestimation of the government’s ability to carry it out. Second, too many industries were included in the project. A loss of policy focus resulted from this. Additionally, it was perceived as a policy with no comprehension of the comparative advantages of the home sector. Third, the initiative was badly timed, given the instability of the global economy and the rise of trade protectionism.
Reference Links:
- Stage is set for India’s decade – The Week
- Making ‘Make in India’ work – The Hindu Business Line
- Make in India: Tracking Success Beyond Sloganeering – News18
- Why ‘Make in India’ has failed – The Hindu
- Make in India – Bank Bazaar
- Make in India’ completes 8 years, annual FDI doubles to USD 83 billion – Ministry of Commerce & Industry
What is your opinion on this?
(Only subscribers can participate in polls)
a) Make in India has been a success.
b) Make in India has been a failure.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
The ‘Gujarat Development Model’ Is Proof That Trickle-Down Economics Is A Fantasy
For the Left:
Annamalai Wages An Uphill Battle To Build BJP In Tamil Nadu And He Is Staying The Course
🇮🇳 STATE OF THE STATES
Incentives for investors (Uttar Pradesh) – With the UP Global Investors Summit (GIS) scheduled in February, the state launched an online incentives management system under the Nivesh Mitra Portal to sanction and process incentives through a centralised system. The government has set a ₹10 lakh crore investment goal with incentives. The portal will understand the business trend, and the incentives under the concerned department will be applied.
Why it matters: The state has become an investment destination with more than ₹3 lakh crores in the past four-and-a-half years. Chief Minister Yogi Adityanath has initiated his Reform, Perform, Transform vision with big names like Microsoft, Samsung, and Adani making investments in the state.
UNESCO awards (Telangana) – Two conservation projects in the state have been awarded the 2022 UNESCO Asia-Pacific Awards for Cultural Heritage Conservation. It recognises the conservation efforts of individuals. The Domakonda Fort project won the Award of Merit. The stepwells of Golconda won the Award of Distinction. The conservation work was based on research of the original engineering and done with attention to detail and using traditional materials and techniques.
Why it matters: There were more than 280 entries from 11 countries in contention. Since 2000, the programme has recognised private individuals and organisations in restoring and conserving heritage structures. Conservation architect Anuradha Naik was appointed for the projects, and local craftsmen were trained to use locally sourced materials.
Fixing power load (Odisha) – A faculty member of the Sambalpur University Institute of Information Technology (SUIIT) developed software to help the TP Western Odisha Distribution Limited (TPWODL) to reduce power cuts and fluctuations. 34-year-old Sibarama Panigrahi created a load forecasting software to get power load trend data for the region. It allows TPWODL to know how much power is needed daily. Usually, physical and statistical based-models would be used.
Why it matters: With the new modelling software, TPWODL will know whether there’s excess power demand so it can buy electricity accordingly. The region is also an industrial hub with rural and urban consumers, where load forecasting has been challenging. Many structures in the region are constantly upgraded and changed. With that comes a change in power consumption. Officials can now maintain a balance between power consumption and supply.
Low number of women candidates (Gujarat) – Ahead of next month’s Assembly polls, the number of women candidates is only 139 out of more than 1,600. The BJP and Congress have offered tickets to only a few women, but it’s more than the 2017 election. Both parties also have more Dalit and tribal women running. 56 of the 139 are running as independents. The AAP has given tickets to 6, and three are contesting on ST-reserved seats.
Why it matters: Congress candidate Ami Ravat said representation would increase when the 33% reservation bill for women is passed in parliament. The bill hasn’t been accepted by the BJP. The BJP’s state women wing head Dipikaben Sarvada said the party had given women key posts, including President. In 2017, there were 126 women out of 1,828 candidates. Per the results, the state sent 13 to the Assembly.
Inspection of health units (Arunachal Pradesh) – The Gauhati High Court has ordered an inspection of the state’s basic healthcare facilities within two months. The court was hearing a PIL linked to 21 others on the lack of basic amenities in health units and hospitals. The court said the inspection team should share the travel plans with the petitioner so she also can visit.
Why it matters: In April, the court asked the healthcare department to suggest names for inspecting the health units and hospitals. The department formed a team of inspectors. The court stated if the petitioner visits the sites, she will give her own independent report to the court apart from the one by the inspection team.
🔢 KEY NUMBER
$9.12 billion – US shoppers spent a record $9.12 billion this Black Friday, despite inflation pressures. Online spending increased by 2.3% as consumers waited for discounts on products ranging from smartphones to toys.