With the formation of the National Institution for Transforming India (NITI) Aayog on January 1, 2015, as a premier think tank, the planning process witnessed a seminal change. The wrapping up of the 12th Five Year Plan 2012-17 marks the shift with the onset of the Three Year Action Agenda (TYAA) FY18-20 articulated by NITI Aayog. It will be further reinforced with the Fifteen Year Vision and Seven Year Strategy paper that are in making at NITI Aayog. Growth aspirations are built around inclusive participation on the premise of ‘Sabka Saath, Sabka Vikas’ (participation of all and development of all).The three sets of policy papers, 15 years, 7 years and 3 years, will be the reinforced pillars of development to pursue accelerated growth agenda in the years to come.
The comprehensive TYAA triggers a coordinated action of not only all ministries/departments at the Centre, but also a meaningful and constructive participation of the 29 states and 7 Union territories. The outlined agenda needs suitable actionable strategies at micro points to realise the contemplated outcomes. The economy is on a firm-footing with a sustained GDP growth of 7%-plus in the last three years. Inflation is hovering below the targeted levels. Interest rates are driving southwards. Exchange rate is competitive. Current account deficit is cruising towards historic lows. The economy is well poised for 8%-plus growth in the near term. Fiscal deficit has been cut from 4.5% of GDP in 2013-14 to 3.5% in 2016-17, while revenue deficit has been reduced from 3.2% to 2.1% of GDP over the same period. In order to continue fiscal prudence, fiscal deficit is set to reach its eventual target of 3% of GDP anchored under the Fiscal Responsibility and Budget Management (FRBM) framework by 2018-19, while revenue deficit is expected to fall to 0.9% of GDP by 2019-20.
In order to continue fiscal prudence, fiscal deficit is set to reach its eventual target of 3% of GDP anchored under the Fiscal Responsibility and Budget Management (FRBM) framework by 2018-19, while revenue deficit is expected to fall to 0.9% of GDP by 2019-20. Doubling of farmers’ income by 2022 is based on a combination of efforts to increase farm productivity and provide a concrete framework of remunerative pricing of agriculture output. Efforts include use of more land for farming by adopting better methods of contract farming, connecting hinterland with roads and digital connectivity, and reform of Agricultural Produce Market Committees to enhance reach of markets for farmers. A planned diversification of farming into high-value commodities such as horticulture, dairying, poultry, piggery, small ruminant husbandry, fisheries and forestry will be the path of growth.
Consistently reduced landholding is cause for concern. According to the 2010-11 Agricultural Census, 47% landholdings had become less than half a hectare in size. These holdings are too small to support all conceivable needs of a farming family. Hence, instead of farming, they seek alternative sources of income. To avoid such drift, a modern land-leasing law will be introduced so that it balances and protects the rights of the tenant and landowners, and works as a potential solution. The advancement of technology, entry of artificial intelligence and use of robots in manufacturing and services sector has creates fears of job losses. Jobless growth has been engaging the attention of policy-makers. Despite best efforts, the unemployment rate ranges between 5-8%. If the demographic dividend is to be harnessed, creating well-paid jobs has to be the priority. According to the NSSO Employment-Unemployment Survey (2011), 49% workforce was employed in agriculture, but the sector contributed only 17% to India’s GDP at current prices. Also, in 2010-11, firms with less than 20 workers employed 72% of India’s manufacturing workforce but contributed only 12% of manufacturing output.
Services sector is no different. According to the 2006-07 NSSO survey of services firms, the 650 largest enterprises accounted for 38% of services output but only employed 2% of services workers. Put another way, the remaining services firms employed 98% of the workforce but produced only 62% of the output. Such a trend leads to job shrinkage. Engaging well-paid low- and semi-skilled workers is essential to increase employment opportunities. All agencies should work together to improve manufacturing sector and ‘Make in India’ needs to be aggressively pursued.
Acceleration of growth is contemplated by identifying potential growth areas. Putting them into action in various sectors of the economy is essential. These potential focus areas include infrastructure, digital connectivity, PPPs, energy, science and technology, creation of an effective innovation ecosystem, among others.
The development of transport and connectivity infrastructure, including roadways, railways, shipping and ports, inland waterways and civil aviation, etc, should receive abundant attention across geographies. Continuation of digital connectivity will assume greater significance and shall be an important driver of economic growth. In order to leverage efficiencies of digital, it is essential to develop a physical digital infrastructure network that is accessible to all. It should also create a host of software-driven services including government services that can be provided digitally. Information, communications and technology will continue to be the backbone of the development of the country.
While TYAA has set the tone for growth, it is essential to work out specific strategies to develop entrepreneurial culture across unit levels. Monitoring progress is equally important. In the process, those seeking jobs should become employers of tomorrow. As part of ‘ease of doing business’, entrepreneurs should be encouraged to set up units under MSME. If growth agenda is to be pursued in the next three years, MSME sector must be provided sufficient bank loans, skilled and semi-skilled workforce. The sector consists of 36 million MSME units, and employs over 80 million people. Though MSME units produce more than 6,000 products, their employing potential is still very low. It contributes about 8% to GDP besides 45%
It contributes about 8% to GDP besides 45% to the total manufacturing output and 40% to exports from the country. In fact, the MSME sector has the potential to spread industrial growth across the country and can be a major partner in the process of inclusive growth. Agriculture, agro processing and manufacturing will continue to be the mainstay of the economy. Taking cue from the TYAA of NITI Aayog, all economic intermediaries will have to rise above their current levels and provide their best to derive the full benefit of the action agenda.
By K Srinivasa Rao