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FRIDAY, 29 MARCH 2013

Today's Editorial

29 March 2013

Today's Editorial 29 March 2013

Strategy to tackle poverty

Source: by Malvinder M Singh: The Tribune

India has witnessed rapid economic growth at 8.5 per cent (CAGR, 2004-05 to 2011-12) and is poised to be among the top two economies of the world by 2050. However, this alone cannot ensure a good quality of life to all its citizens. We need to focus on inclusive growth. The idea of inclusive growth is well reflected in the governments agenda and plans. The focus on inclusive growth which was a key priority for the 11th Five Year Plan continues in the approach of the 12th Five Year Plan also, which lays down faster, more inclusive and sustainable growth as its key objective.

In a country like ours, where 32.7 per cent of the Indian population still lives under $1.25 per day, with 43 per cent of children being underweight and 48 per cent of children stunted, inclusive growth is the best ideology. Absence of inclusive growth often leads to social unrest and revolutions and there are many examples globally. In the long run we cannot have pockets of prosperity amidst widespread poverty and deprivation. For the country to be a truly developed nation, all its citizens have to be a part of the Indian growth story. Therefore, the agenda of inclusive growth is not just a social responsibility but a precondition if we have to survive as a civilized nation.

So, what should be the action plan? The answer lies in reviving the agriculture sector and focusing on manufacturing sector and skill development.

Agriculture is a critical sector for sustained economic growth and food security for our billion-plus population. More than half of the population depends on this sector for its livelihood either directly or indirectly. With the north accounting for 31.7 per cent of the national agricultural GDP, the sector gains even more prominence for the region. The agricultural sector can be given a big push by necessary policy interventions such as strengthening agricultural infrastructure, facilitating the supply chain network, strengthening contract farming, crop diversification, thrust to the food processing sector, creating common agriculture markets and seamless integration of agricultural value chain from the farm to the fork.

Another aspect of inclusivity is employment and livelihood opportunities for the masses. It is estimated that in 2020, around 65 per cent of the population will be in the working age group. The employment opportunities in the agriculture sector have already reached a saturation level. Moreover, the services sector requires highly skilled manpower. So, the onus lies on the manufacturing sector to provide additional employment opportunities and livelihood avenues.

The Indian manufacturing sector is going through a tough phase owing to global slowdown, high interest rates, lack of skilled manpower, infrastructure bottlenecks, etc. Presently, the share of the countrys manufacturing sector in GDP is only 15 per cent as compared with Chinas share at 34 per cent and Thailands at 40 per cent. However, this low share is not commensurate with the size and potential of the country. It will be difficult for the country to achieve inclusive growth unless we increase the share and growth of the manufacturing sector in the economy.

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Understanding the importance of manufacturing in the context of inclusive and economic growth, the Government of India has framed the National Manufacturing Policy. The CII has worked closely with the Department of Industrial Policy and Promotion (DIPP) in drafting the discussion paper and also the policy. The CII believes that the policy would be immensely helpful in addressing the major concerns of the manufacturing sector and we are also working closely with the government in the implementation of the policy.

The target of the National Manufacturing Policy is to increase the share of manufacturing sector in GDP to 25 per cent by 2025, thereby creating 100 million new employment opportunities. This will require the manufacturing sector to grow at 12-14 per cent per annum. However, this rapid growth should not be at the cost of the environment. So, focus should be on green manufacturing and employing sustainable production practices towards the sustainable growth of the manufacturing sector.

The north can greatly benefit from the National Manufacturing Policy and is best suited to emerge as a hub of manufacturing activity. However, North India being landlocked has been unable to fully tap the potential of its manufacturing sector. The high transportation costs added to the cost of finished goo ds impacting the manufacturing competitiveness of the region. The proposed mega infrastructure projects such as the Delhi-Mumbai Industrial Corridor, Eastern and Western Dedicated Freight Corridors will prove to be the game changers for the region. About 50 per cent of the Western and 65.7 per cent of the Eastern corridor will transverse through the region. These projects have the potential to enhance the manufacturing and industrial activity in the region and enhance connectivity to the eastern and western ports of the country, giving fillip to the regions manufacturing sector. This in turn will help in the creation of more employment opportunities and boosting the regions economic and inclusive growth.

The other aspect is how to effectively leverage our human capital. According to an estimate, by 2020, the average person in India will be only 29 years compared with 37 in China and the US, 45 in West Europe and 48 in Japan providing India with a huge demographic dividend advantage which is expected to continue till 2040. We thus have a window of three decades of immense opportunity. To achieve this requires equipping the youths with appropriate industry-linked skill sets and make them employable, necessary to make manufacturing more competitive and thereby promoting inclusivity in growth. However, only 2 per cent of the existing workforce in India has skill training against 96 per cent in South Korea, 75 per cent in Germany, 80 per cent in Japan and 68 per cent in the United Kingdom as per the 11th Five Year Plan.

In this respect, corporates can fill the gaps in training and skill development through the internship programmes specific to their industry and partnering with ITIs in identifying skill deficits in various sectors and providing employment opportunities. This will serve a dual purpose of plugging the skill deficit in the manufacturing sector and also fulfilling the corporate social responsibility.

The CII has taken the mandate of catalysing industrys involvement in Indias social development agenda and of bringing the social objectives, including skill development, into every corporate boardroom.
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