One of the key factors holding India back in the last few years is the subdued private investment in the economy.
India is a country blessed with natural resources and abundant labour. Keeping this in view, the Modi government in 2014 launched ‘Make in India (MII)’ initiative. It has been five years since then, but targets still look like distant dreams as the programme faces many hurdles.
The ‘Make in India’ programme aims to convert India into a global market hub by raising the share of manufacturing in GDP to 25 per cent and creating 100 million jobs, by 2022. However, even in 2018, the share of manufacturing in GVA (gross value added) has remained at around 16.83 per cent of the total GVA, show data of Ministry of Statistics and Programme Implementation.
Private investment missing
One of the key factors holding India back in the last few years is the subdued private investment in the economy. The data from the Centre for Monitoring Indian Economy (CMIE) show that during 2017-18, announcement of new investment projects declined by 38.4 per cent, and 11 million people lost their jobs in 2018. Moreover, while the total FDI in the country during 2016-17 increased to $36.32 billion, the FDI in manufacturing sector remained sluggish at $11.97 billion, noted RBI.
The World Bank’s ‘Ease of doing business Report’ noted an improvement in India’s ranking. However, it still lags behind when it comes to enforcing contracts, registering property and paying taxes.
Making it easier to do business
The Modi government in its recent budget 2019 revised the system of importing duty-free capital goods to give boost to its ‘Make in India (MII) programme. Further, inputs for manufacture and export have been introduced, along with introduction of single point of approval, under section 65 of the Customs Act. Moreover, a stable and business-friendly GST structure is likely to help attract investments.
Pointing out towards the need for an active participation by the private sector, Madan Sabnavis, Chief Economist, CARE Ratings said: “At the end of the day the product or service needs to be bought, for which there has to be demand and the government can only provide limited demand from its budget”. The private sector is needed create jobs, income, spending power, better capacity utilization rates and so on, he said.
He has also earlier suggested the government to maintain its focus on infrastructure development and resolve the NPA issue with utmost priority.