RANDOM ACCESS. Getting ‘Make in India’ right

Prime Minister Narendra Modi’s call to ‘Make in India’ has caught the imagination of Indian and foreign investors alike. His grand vision of turning India into a global manufacturing hub, along with the promise to ease red tape, develop key infrastructure and ease clearances and other factors which have kept India at the bottom end of the global ‘ease of doing business’ rankings, have served to rekindle hope that the promise that India showed in the early years of the millennium will still be fulfilled.

The ‘Make in India’ campaign is, in fact, outstanding marketing. Look at the achievements: there is already near-total national consensus that manufacturing growth is the way to go for a better future. Those muttering about climate change and environmental impact are already dubbed negativist Cassandras.

There is also consensus that for this growth to happen, there has to be substantial investment infrastructure. The whole tortured hand-wringing over ‘inclusive’ growth, and social sector spending witnessed during the latter part of the UPA regime has already been forgotten.

So much so, economists are already pleading with the Modi administration to not water down the National Rural Employment Generation Scheme — arguably the most successful of the various wealth transfer schemes any government has attempted over the years, one which has played a significant part in the secular growth in rural incomes witnessed over the past decade and one of the real drivers of the India growth story. It’s back to (though not overtly articulated) Reaganomics — let growth happen, the trickle-down will take care of the rest.

There is also the belief that this administration will deliver on its promise to cut red tape, somehow rein in an activist judiciary, control its taxmen and overall, reduce the intrusive presence of government in business. Never mind that there has so far been little concrete action on any of these fronts.

This is actually a good thing. Expectations always drive outcomes. Set expectations to positive and you are going to get positive outcomes. So I don’t really have any problems with the idea of ‘Make in India’ or the sales job that has been done with it. By all means, let us roll out the red carpet for investors, give them the incentives and the infrastructure needed to make their investments succeed and grow.

But what are we, as a country, getting out of this? What are the desired outcomes of this campaign? This is where greater clarity is required from the Government. What is needed is a clearer prioritisation of goals. Are we looking for more foreign investment, which will help cut our current account deficit? Are we aiming to ratchet up our GDP growth a few notches? Or are we looking for more jobs for the millions who are joining the workforce every year?

This is where the signals get more confusing. Speaking to the diaspora in Madison Square Garden, Modi appeared to indicate that growth was the primary objective. “If you want human resources and low-cost production”, come to India, he urged in America. The objective was clear — reproduce the China story in India, make India a manufacturing hub, and transform the face of the country from a predominantly rural one to a predominantly urban one, with a 100 new ‘smart cities’. The idea was to push the share of manufacturing in India’s national output from the current 15 per cent to around 25 per cent.

Back home, at the investors’ meet in Indore, the message was different. India needs to create jobs, he stressed. In fact, he said, creating job opportunities for youth was the “biggest goal” of the Government. “We have to create maximum jobs. This is a nation of the youth. The agriculture, industry and service sectors have to get equal importance,” he told his Indore audience, which included some of India’s biggest industrialists.

So what do we want? Growth or jobs? Manufacturing or agriculture or services? Of course, one could argue that we want all of them. We want more high-paid manufacturing jobs. We want to make more of the stuff that we pay to import now, here. We want agriculture to grow. And we want services to grow.

And one could also argue, with some justification, that these wants are achievable. After all, over the past two decades in particular, our services sector has exploded, our manufacturing sector has grown, and so has agriculture. If it ain’t broke, why fix it?

Because it is breaking down. Before it came into power, the BJP successfully made a meal out of the UPA’s two-tenure track record of “jobless growth”. The spectacular surge in growth seen during the golden period of post-reform India saw near double digit growth, without a corresponding upsurge in jobs. In fact, millions of jobs were lost, in sectors as diverse as plantation to textiles, as the economy shifted its demand-supply topography.

India’s wide, horizontal base of small and medium scale enterprises, which is the actual backbone of industrialisation in India, has been decimated by reforms. Unable to compete with cheap imports, unable to attract the capital to invest to enable it to compete, and unable to attract the talent to scale up its quality and innovation. What is their place in ‘Make in India’?

The ‘Make in India’ website offers an attractive buffet of investment opportunities. From automobiles to biotechnology to renewable energy to yoga and wellness, it showcases investment opportunities and highlights the growth prospects in these sectors.

Most of them have the potential for attracting large investment in high-technology areas. But how many of these sectors will result in the kind of scaling up of jobs that Modi hopes for, and indeed, the country needs?

The ‘Make in India’ idea is fine and it has got off to a dream start. But now, the Government needs to prioritise, and set the right goals. Growth or jobs? We need to pick.