Atmanirbhar Bharat: Learning from the glitches of Make in India
Issue 17 | October 11, 2020
Lack of reforms prevented ‘Make in India’ from reaching its targeted potential and newer deficient reforms might dampen the hopes of Prime Minister Narendra Modi’s call for an ‘Atmanirbhar Bharat’ before it even begins materialising. ‘Make in India’ which is an alleged predecessor of ‘Atmanirbhar Bharat’, envisioned India to be a global manufacturing hub with an increased share in global imports and the nation’s GDP [ET]. However, the ambitious initiative has succumbed to policy paralysis, which might be a concern if policymakers continue to ignore the actual problems viz, policy decisions, implementation and contractual problems amongst others. Though developments such as the important defence deal of manufacturing AK-203 assault rifles or the plans of Apple and LG to manufacture locally can be attributed to ‘Make in India’, it has failed to live up to its expectations such as providing large scale employment opportunities or contributing effectively to the GDP, owing to a range of issues. Overgeneralization is not a novel predicament in the Indian scenario, however, an initiative of this scale requires the concerned policymakers to carefully assess the needs of diverse sectors, which was missing right from the advent of this initiative. Though the Indian market is well suited to attract investments in sectors such as green energy, defence, telecommunication and FinTech, the policy envisioned a generic approach and failed to narrow down the roadmap which would suit these sectors.
However, generalisation alone didn’t cause lapses for the initiative. Its lack of policy clarity coupled with unrealistic growth rates made matters worse. A major deficit in the policy was, it relied excessively on foreign capital and trends in foreign markets, thereby creating a scenario wherein economic activity was to be governed by trends in overseas territories, leaving the requirements and contingencies of the domestic market unanswered. Moreover, the infrastructural requirements for a manufacturing economy being way higher than India’s infrastructure, made investments scarce. Hence, though owing to a few reforms India kept on climbing places on the ease of doing business, the investments were insufficient to meet the targeted growth, which eventually led to the initiative’s downfall. This spirit has been renewed after the Prime Minister’s call for ‘Atmanirbhar Bharat’ which envisions a self-sufficient India while targeting to have a prominent role in the global economy. Though a novel program, experts are already sceptical owing to the similarities in policy glitches with its predecessor.
The current initiative differs in substance and spirit from ‘Make in India’ as it talks about self-sufficiency by increasing the borrowing capacity of states, thereby allowing them to have a greater share of capital to invest in key infrastructural areas. Though this has been a positive development, considering the previous lack of consideration for the existing infrastructural development, the policy fails to mention priority sectors which require more investments and leaves this at the disposal of the states. Reforms which have called for disinvestment of Public Sector Enterprises have stayed silent on the question of job security and the future of current employees which has jeopardised the campaign, as far as workers support is concerned. With a renewed focus on MSME, the policy so far fails to deal effectively with the problem of NPAs and is inclined towards providing extra support towards them rather than looking for ways to secure their investments.
While the considerable focus has been on strengthening the agricultural sector through ways such as crop loans and amending the terms of Kisan credit cards, the policy brief released by the Ministry of Finance has not allocated separate funds for modernisation of the sector, thereby leaving the same old problem of infrastructure modernisation unresolved. If we are to realise the PM’s ambitious goal of a self-reliant India, one must assess the situation at a grassroots level first. For long, India’s economic policy has been based on the recommendations of international bodies such as the IMF and the World Bank, which has not only subdued the local interests but has also led to frequent policy reforms and an indication of how unstable and incoherent our policies have been. The first logical step towards the current initiative should be to earmark specific industries which have the potential to sustain and flourish under Public-Private Partnership. Industries having skilled workforces such as automobile, telecommunications and defence should be given special preference for foreign investments, while policies should be devised for the betterment of sectors like energy, FinTech and agriculture. Hence, the ‘look west’ policy should not be interpreted in a way, to lead the policymakers in believing the grassroots situation is at par with the west. Furthermore, investments are highly unlikely if the infrastructural and labour quandaries are not resolved effectively, which is evident from the movement of companies from China to Japan and Vietnam, a place they consider technologically more favourable. Finally, the decade's old problem of ‘excessive bureaucracy’ should be answered if we want our economy to develop at the rate envisioned by the current policymakers, or it might well be the same old land of promises, without actual results.