Manufacturing India: Interim Budget 2014

It was interesting to hear Chidambaram as usual, even in the din created by some MPs. His emphasis on manufacturing sector was impressive. In the main body of the interim budget 2014 speech that may be his last, Chidambaram said,

“Manufacturing is the Achilles’ heel of the Indian economy. The deceleration in investment in manufacturing is particularly worrying. Consequently, there is no uptick yet in manufacturing. The National Manufacturing Policy has set the goal of increasing the share of manufacturing in GDP to 25 percent and to create 100 million jobs over a decade. Eight National Investment and Manufacturing Zones (NIMZ) have been announced along the Delhi-Mumbai Industrial Corridor and nine projects have been approved by the DMIC Trust. Five NIMZs outside DMIC have also been given in-principle approval. Three more corridors connecting Chennai and Bengaluru, Bengaluru and Mumbai, and Amritsar and Kolkata are under different stages of preparatory work. Additional capacities are being installed in major manufacturing industries such as steel, cement, refinery, power and electronics. Several measures have been taken to promote micro, small and medium enterprises including notifying a public procurement policy, establishing technology centres and common facility centres, and launching the Khadi mark.”

And then Chidambaram proposed another new fund for the pat subject of the time:

“Ministry of MSME will create the ‘India Inclusive Innovation Fund’ to promote grassroot innovations with social returns to support enterprises in the MSME sector. I propose to make an initial contribution of `100 crore to the corpus of the Fund.”

And naturally, the country requires skilled persons to run the enterprises:

“I had promised an ambitious programme to skill millions of young men and women and had tasked the National Skill Development Corporation to implement the programme. The National Skill Certification and Monetary Reward Scheme was launched in August 2013 and has been widely hailed as a success. At last count, 24 Sector Skill Councils, 442 Training Partners and 17 Assessment Agencies had joined the programme. 204 job roles have been finalised. 168,043 youth had enrolled and 77,710 have completed their training. Hon’ble Members will recall that I had set apart Rs.1,000 crore for the scheme. The whole of that amount will be transferred to the NSD Trust and I propose to transfer another sum of Rs.1,000 crore next year to enable the Trust to scale up the programme of NSDC rapidly.”

“India’s economy, in terms of the size of its GDP, is the 11th largest in the world. There are great things in store. There is a well-argued view that in the next three decades India’s nominal GDP will take the country to the third rank after the US and China.”

Chidambaram then comes out with his prescription for attaining what he predicts. Manufacturing and skill development get its place in ten point prescriptions or commandments. The country would have been benefited if Chidambaram would have come out with such a guideline or road map for his government at the beginning of its wasted ten years in 2004, in his first budget speech.

“We therefore owe a responsibility not only to ourselves but to the whole world to keep our economy in robust health.

The UPA Government has a clear line of sight to the goals that we have set for ourselves. I have broken down the steps toward those goals into tasks that must be undertaken by the Government of the day. I crave your leave to identify ten such tasks:

vi. Manufacturing: We must focus on manufacturing and especially on manufacturing for export. I propose that all taxes, Central and State, that go into an exported product should be waived or rebated. I also propose that there should be a minimum tariff protection so that there is an incentive to manufacture goods in India rather than import them into India.

ix. Skill Development: Skill development must rank alongside secondary education, university education, total sanitation and universal health care in the priorities of the Government.

Manufacturing in India needs a much focused attention and close follow up. I wish it gets changed with the next government and it goes for manufacturing in right earnest.

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