Leaving a legacy of jobless growth

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SummaryRigid labour laws and complex regulations were the clear job-destroyers during the UPA regime

Fresh investments by the manufacturing sector in India plummeted to all-time lows in the December 2013 quarter, data released in the first week of 2014 by the Centre for Monitoring Indian Economy (CMIE) showed. With just 69 new projects worth R59,615 crore announced, the manufacturing sector is languishing. Reacting to the data, the Prime Minister said, “I am concerned that we have not been as successful as we need to be in generating employment in the manufacturing sector. This is an aspect of performance which we are working hard to correct.”

The UPA-2 had a golden chance to develop the manufacturing sector, and help it emerge from the shadow of the services sector and seize more of the global manufacturing market. Rising domestic demand, together with US and European multinationals’ desire to diversify their production to low-cost plants in countries other than China, could have helped India’s manufacturing sector to grow rapidly to the $1 trillion mark, and in the process create up to 9 crore jobs in the country.

It is pretty difficult to fathom how the UPA, which was dealt a pretty good economic hand in 2004, could end up making a major mess of it by 2014. It is as if the UPA was bent on committing suicide by jumping from the basement! The government could have helped the manufacturing sector by dismantling barriers in markets for land, labour, infrastructure and some products such as base-metals, petroleum and power generation industries. The present government would have had significant political benefits from the huge number of jobs it could have created but has almost managed to miss the road to a third-term by turning onto a dead-end street. Recently, the Congress vice-president apparently roped in advertising and communication firms Dentsu and Burson-Marsteller to strategise the 2014 Lok Sabha polls campaign for a whopping R500 crore. If they had done their basic job well, they wouldn’t have needed a R500 crore PR exercise to make a U-turn and backtrack over the terrain of fictitious progress. The puzzling thing is that this is not the first time the UPA veered into an economic cul-de-sac.

It is said that only barbers learn on other people’s heads, but the UPA was not able to learn even from its own experience. Under the UPA, over seven years from 2004 to 2011, there were only 5.2 crore new jobs created. In contrast, during a shorter period of

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