Table of Contents
Pyeong Chang 2018
The manufacturing muddle
The Budget has raised customs duties significantly; Chinese/other imports
Inverted duty structure –(IDS)- is a situation where import duty on finished goods is low
compared to the import duty on raw materials that are used in the production.
IDS- Which has adversely impacted manufacturing for decades
It is no surprise that the share of manufacturing in GDP and employment has not risen since 1991.
We have ceded(स ौंप दिया) ground to China as the ‘factory of Asia and the world’, a process that must be reversed urgently if we are to realise the ‘Make in India’ dream.
Goods and services tax (GST), especially the IGST or Integrated GST component, has begun
to erode the advantage that the IDS was giving to foreign exporters in Indian markets
China had, thanks to a strategic industrial policy it followed for two decades, stolen a march
on India in labour-intensive manufacturing exports.
But India’s policy structure failed to utilise its labour advantage to grow labour-intensive
manufacturing exports.
China reduced the absolute numbers and percentage of the poor in population by absorbing
surplus labour in manufacturing, India’s poverty reduction was much slower.
A major reason: while China’s agricultural and rural income growth was much higher as it sustained consumer demand, it also generated industrial jobs much faster.
Most labour-intensive manufacturing sectors which account for over half of total manufacturing employment in India (60 million in 2011-12 to 2015-16)
Duties have also been raised-Some have seen this as a return to pre-1991 ‘protectionism’
The youthful labour force, between 15 and 29 years, saw a very sharp increase of 40 million, from 147 million to 187 million between 2011-12 and 2015- 16
Fall in agricultural jobs
Workforce in agriculture has been falling steadily, from 60% in 1999-2000 to 49% in 2011-12, but the fall has slowed sharply after 2011-12, when the pace of non-agricultural job growth slowed along with GDP growth.
More worrying is that why
Looking ahead
The GST, especially its inter-State component, has resulted in a neutralisation of the IDS,
It has also, as the Economic Survey 2018 has rightly claimed, led to a formalisation of some informal •firms, and hence workers (by registration in the Employees’ Provident Fund Organisation)
Resolution of the twin balance sheet problems (of companies being over-leveraged and banks unable to lend due to mounting non-performing assets), together with Insolvency and Bankruptcy Code, should now open the •floodgates for new manufacturing investment
More manufacturing policy initiatives, such as an early announcement of an Industrial
Policy by the Department of Industrial Policy and Promotion, must be sustained over 2018
Prelims Focus Facts-News Analysis
Page-1- ‘Likely misuse no ground to strike down Aadhaar’
The mere possibility of misuse cannot be a ground for striking down the Aadhaar Act,
Justice D.Y. Chandrachud orally observed during a Constitution Bench hearing on the
validity of the unique identity scheme
Page-1- LeT militant escapes from hospital
Two policemen killed as associates open •re; the three later •ed the scene on motorcycle
111 killed in 822 communal incidents last year: Minister
Bhutan, Nepal, Bangladesh to be part of India’s tiger census
In a •rst, all countries will jointly estimate big cat numbers
Haryana to set up ‘Kisan Kalyan Pradhikaran’
In an attempt to increase farm productivity and farmers’ income
Agni 1 test-•fired o• the Odisha coast
shortrange nuclear capable ballistic missile Agni-1 with a strike range of over 700 km
from a test range o•the Odisha coast, Defence
Palestine asks Modi to mediate
By 2025, India should have 20-25% EVs: Tata Motors CEO