Relevance: GS-3: Indian Economy and issues relating to Planning, Mobilisation of Resources, Growth, Development and Employment.

Key Phrases: Five trillion dollar economy, Make in India, Make for the world, Ease of doing business, Indian enterprise, PM Gati Shakti, Manufacturing sector, New Emerging World Order.

Context:

• India has emerged as one of the world’s fastest-growing major economies and is expected to be among the top 3 in the next 2 decades.
• With a $3.2 trillion economy, India aims to achieve a $5 trillion economy within this decade.

INDIA’S JOURNEY SO FAR AND THE CHALLENGES AHEAD:

• India was left a poor nation by the colonial British Rule.
• Post-independence, several Public Sector Enterprises were established, especially in the Heavy Industries sector, which were termed by Prime Minister Jawaharlal as “Temples of modern India”.
• Economic liberalisation in 1991 unshackled the entrepreneurial spirits of Indian enterprise and allowed the Private sector to play a pivotal role in a free market economy.
• The initiative to liberalise the economy brought the services sector into focus which currently contributes more than half of India’s Gross Domestic Product (GDP) and attracts 55% of Foreign Direct Investment.
• But the manufacturing sector has to be the primary growth engine to fulfil the aspirations of a new India so the government gave the call for “Make in India, Make for the world”.
• Specific initiatives like Skill India, Digital India and Startup India, to name a few, have helped propel India’s rapid growth. These initiatives have spurred entrepreneurial energies.
• India now has over 100 unicorns with a total valuation of $332.7 billion and these are widely recognized as important engines of growth and job creation.

Key challenges for Indian enterprises:

• Ease of doing business climate:
  • In 2021-22, manufacturing constituted 17.4% of our GDP, up slightly from 15.3% two decades ago. By comparison, Vietnam’s manufacturing sector more than doubled its share of GDP in the same period.
  • Each industrial project needs contiguous land parcels and timely environmental and regulatory clearances, which remain challenges.
• Cost of doing business:
  • The cost of doing business in India is still high, with various regulatory and bureaucratic procedures that ultimately hurt India’s image and chances of becoming a preferred global manufacturing destination.
  • A single-window clearance system is the need of the hour.
• Productivity matrix:
  • According to McKinsey data, India lags far behind in productivity even though it has cheap labour.
  • Manufacturing productivity in Indonesia is twice India’s, while in China and South Korea it is four times higher, though they have costlier labour.
  • If India is to compete globally, it needs to fix its productivity issues. Incremental gains cannot be expected at the global level with the baggage of old mindsets and a ‘chaltahai’ (anything goes) attitude.
• Upskill workforce:
  • India must upskill its workforce for it to be an attractive destination for global manufacturers.
  • This is the only way India will move up the value chain to more value-added categories.
  • Indian firms must work on scale and quality if they are to break into the big league of global supply chains.
• Support and encouragement:
  • Indian enterprises should be given support and encouragement to expand their operations on a global scale in India.
  • If existing entrepreneurs with investments on the ground are happy, then prospective investors will be encouraged to look at India as a favourable manufacturing destination.
• Consistency of State policies:
  • Consistency of State policies is fundamental to investor confidence.
  • Court judgements cancelling 2G licences and Coal block allocations have caused irreversible setbacks to both the economy and investor sentiment, resulting in huge losses of money and time.
  • Many Steel and Power plants became insolvent due to a lack of coal and millions lost their livelihood.
  • The single most important reason for the recent power crisis and shortage of coal was the de-allocation of Coal blocks.
  • Since 2014, the government has made commendable progress in regular auctions of Coal blocks for commercial use, and this will ensure India’s Coal shortage would be a matter of history in the next 4-5 years.

Government efforts:

• The government has shown both intent and will to carry out pro-industry and pro-people reforms.
• The government has acknowledged the contribution and role of the Private sector as an important engine of growth and employment.
• 32,000 unnecessary compliances had been removed by the government for the ease of doing business.
• India has earmarked $1.5 trillion for the National Infrastructure Pipeline Project.
• The PM Gati Shakti project was established to bring 16 Ministries (including Railways and Roadways) together for national infrastructure connectivity projects.
• India has already achieved its annual export target of more than $600 billion and is aiming for an ambitious $800 billion worth of goods and services exports in the FY2022-23.

Conclusion:

• Indian businesses can hold their own in the fiercely competitive world of global business.
• The rise of a self-reliant India on the global stage is imminent.
• India’s bold targets of economic growth need robust infrastructure support. The Centre’s broader focus is on significant infrastructure and logistics projects for India to leapfrog into a new era of growth.
• India’s time has come to take its rightful place in the global order, and it will be led by an Indian enterprise and the role of India’s Private sector is as crucial as the Public sector.

Source: Live-Mint

Mains Question:

Q. India’s time has come to take its rightful place in the global order, and it will be led by an Indian enterprise. Discuss.