(Edited Image Courtesy: DIPP)

 

 

‘Make In India’ (MII) campaign may be rocking. But manufacturing is hobbling. It is struggling to move towards MII’s daunting target of enhancing manufacturing’s share in gross domestic product (GDP) to 25% in 2020 from 16% in 2014.

If such negativity is despised, then one can perceive MII initiative at best as working in the ‘business as usual’ scenario. This is the conclusion anyone would arrive at. And for that, one has to piece together information dished out by Government in bits and pieces. This is because there is no report card on MII in public domain. 

The manufacturing’s share in GDP has inched from 16.3% in 2014-15 (year in which MII launch) to 16.7% in 2017-18. It was 16.8% in preceding two years. If the inertia persists, the share might rise to 17% by 2020.

As for jobs creation, the other day Government told Parliament that it does not collect data on employment generated under MII. 

Mind you, this flagship initiative of Modi Government is anchored to National Manufacturing Policy (NMP) that was notified by UPA Government in November 2011. NMP envisages creation of at least 100 million jobs in the course of attaining 25% share of GDP by 2022.

This 25% target was actually agreed in 2009 by State Industry ministers. NDA Government advanced the timeline by two years to 2020 under MII, which was unveiled in September 2014.

Under NMP, 16 National Investment and Manufacturing Zones (NIMZs) have been conceived. Of these, three have got central Government’s final clearance. Not one has, however, been completed. If even one was partly complete, Prime Minister, Narendra Modi, would have certainly unveiled it.

 (Image Courtesy: Dedicated Freight Corridor Corporation of India)

 

When United States Government Accountability Office (GAO) issues a report to tighten enforcement of Buy America Act (BAA) of 1933, it is time to turn eyes on Government procurements (GPs) across the nations.

They are akin to Aladdin’s Magic Lamp containing elixir for free & fair global trade.  On the other hand, if a Government’s right to spend is considered as a no-go terrain for globalists, then complete opening up of GPs to imports can be viewed as allowing anyone entry into one’s bedroom. 

GPs, coupled with offsets, impact fiscal space at both ends – tax revenue inflows and expenditure efficiency. Offsets, the popular variant of counter-trade, are invariably invoked by developing countries in big-ticket import in defence and aero-space sectors.

Offsets facilitate transfer of technology and local development of components in the importing country. The arms and aircraft exporters are required be to purchase such components under offset contracts.     

GP plus offsets (GP+OS) perhaps constitute the most pervasive and tolerable form of protectionism. No wonder such protectionism didn’t get mention in the recently held G20 Summit declaration.

Moreover, global hue and cry over rise in tariff and the usual non-tariff barriers has overshadowed the growth of GP+OS. Major institutions should undertake comprehensive studies at both the national and global levels to assess the impact of GP+OS on national GDP, jobs market and global trade.

Do preferential purchases from local businesses outweigh disadvantages in the form of expenditure inefficiency? Do GP+OS facilitate good growth of excise/VAT & income tax (non-customs revenue) by shifting potential business from foreign suppliers of goods and services to local ones? Are they worth their value as they create or protect jobs?  

 (Image Courtesy: dbtbharat.gov.in

 

Aadhaar-based direct benefit transfer (DBT) has hit avalanche of challenges posed by food and fertilizers subsidies. These dole-outs account for the lion’s share of explicit subsidies given by the Union Government.  

Though Cash Transfer of Food Subsidy (CTFS) Rules were notified in August 2015, not one State has discontinued physical delivery of subsidized grain through ration shops. Jharkhand aborted its pilot CTFS in Nagri Block of Ranchi district six months after its launch in October 2017.  Cash transfer was strongly opposed by majority of the beneficiaries. A few lakh beneficiaries, however, continue to be served through CTFS in three Union Territories. 

CFTS can work only when the delivery of food grains across the country is smooth and timely. The Government also has to ensure that open market prices are fair and competitive, a herculean task in an economy of continental dimensions.

Any price volatility in different regions due to supply glitches or market manipulations would make beneficiaries realize the gross inadequacy of cash transferred. Hence the poor masses continue to prefer subsidy in kind as that ensures access to fixed price of coarse grain, wheat and rice. 

They have patience to stand in long queues for grain, which is not always of specified quality.

No one knows whether and when CTFS would be rolled out across the country. Prime Minister Narendra Modi, who loves to speak about Aadhaar-based DBT, remains silent on this issue. 

Mr. Modi also maintains stony silence on turning pseudo-DBT for fertilizers into real DBT under which subsidy goes straight in beneficiaries’ bank accounts. His silence on long-delayed inclusion of urea under nutrient-based subsidy (NBS) scheme for fertilizers is equally deafening.