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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