Industrial Reforms

ARCHIVES

Search 30th December 2017 http://www.newsonair.com/Main_Audio_Bulletins_Search.aspx

TOPIC: General Studies

• Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
• Inclusive growth and issues arising from it.

In news: Recently, the new estimates recorded a spike in GDP which is a good sign for revival of economy. In second quarter, the GDP was 6.3% compared to 5.7% in first quarter. Revival of economy talks about industrial growth which can bring the country back on growth trajectory and give fillip to job creation in the country. Some of the important areas for industrial reforms are-

Manufacturing boom

Manufacturing- India’s industry has gone through several phases and lot of evolution has happened. Beginning with industrialisaton, India experienced license raj, then liberalization and now global competitiveness.

In global competitiveness period, GDP plays a crucial role. Also, FDI and the FII play a vital role in improving the GDP. This can happen when there is boost to industry and job creation, and it catapults industry to such a regime wherein India becomes the manufacturing hub for the world.

In manufacturing sector, many mobile companies, luxurious brands, automobile brands are in process of opening manufacturing industries in India. Thus, the manufacturing sector has the potential to reach upto 1 trillion US dollar by 2025.  

11 out of 23 industry groups from manufacturing sub-index witnessed growth. Industries such as pharmaceuticals, medicinal, chemicals and botanicals has gone up by 26.4%.

The registration of patents and enforcements of patent right holders within the economy is an important indicator within the economy for the increased research and development within various industries.

The purchasing managing index has gone up to 52.6 in November 2017 from 50.3 in October. This shows the buying behavior of the industry. The index will thrive on 3 Ds- democracy, demography and demand as these are improving, it is improving the index.

Infrastructure Revival

There is lot of impetus on developing industrial corridors and smart cities wherein it will have smart infrastructure, resulting in more organized places thereby improving the quality of life.

The industrial corridors will further assist in integrating, monitoring and assisting in the conducive environment in the industrial development. This will promote advance practices in manufacturing and service sector. So government should aim at holistic development of nation by providing requisite and affordable infrastructure for the masses.

Thus, industrial corridors and freight corridors development for the movement of people, goods and services are critical for economic growth.

Real estate industry

2017 is watershed year for real-estate industry- RERA was rolled out. Though demonetization has impacted but the affordable housing scheme has recovered from the slump and prices have been increased in cities. The uplift of real estate industry will increase the demand for employment in construction, technology and services industry.

Embracing the digital revolution

There is lot of importance of capital goods for generation of income for any business. Unless there is no strong base of service industry, technology industry which is laced with new technological endeavors, the growth will not be sustainable. With new concepts like artificial intelligence, IOT, 3D printing, robotisation, it is going to be a game changer for this industry.

New entrants in market

The electric vehicle is going to be game changer in automobile industry. The current fuel engine consists of 2200parts whereas the electric vehicles has 8-10 parts in the engine. So there is going to be total turnaround in manufacturing strategies of automobile companies.   

There will be focus on renewable energy which will convert solar energy to electric energy. It will be one of the cheapest source of energy. In terms of employment opportunity, new employment generation will happen as entire assembly line will be scrapped which currently contains around 20-30 different types of modules whereas electric modules will have only 2-3 modules in assembly line.  

Way forward

Indian economy is on the rise after a brief setback period. Some of the other measures to spurt growth in economy are- reduction of income tax rate to 25% for MSMEs having turnover of 50 crores, MAT credit carry forward extended to 15 years from 10 years, abolishment of FIPB. In these sectors, government has launched Phased Manufacture Programe PMP which is aimed at giving domestic push to pharmaceutical, biotechnology and chemical industry as such.

Labour and land reforms

There are labour laws broadly divided into 4 categories- wages, industrial relations, social security and occupational safety and working conditions. Once the codification of labour laws happen, it will remove multiplicity of definitions and authority and do ease of compliances without compromising on wage security and social security of the workers. Compliance cost has gone down because of ease of doing business. Once the labour laws are rationalized, the global markets are going to come more to India.

Conclusion

Time is to reap the benefit of the demographic dividend. There will have to be enough jobs generated for gainfully absorbing an additional 12 million people each year to the workforce over the next 10 years. The manufacturing industry as a whole will play crucial role in generating jobs, bringing up the MSME sector and infrastructure development.

Connecting the dots:

• The critical sectors of the economy are looking forward to an upward trajectory. Examine the reasons behind the same and