COMMENT: Drawing on his experience as chief minister of Gujarat, Prime Minister Narendra Modi is focused on expanding the manufacturing sector’s share of the economy in order to boost employment for India’s young population.
To this end, the government launched its flagship ‘Make in India’ program on September 25, 2014, and it has identified 25 “thrust sectors” to be given special attention.
But it has yet to outline concrete measures for promoting investment in these areas.
Nonetheless, the government’s sharp policy focus on expanding manufacturing capacities is a positive signal.
Overall, the government has taken a number of incremental steps toward realising Modi’s objective to raise India in the World Bank’s Ease of Doing Business rankings by as many as 50 places by the end of his first term.
This obviates the need to submit separate forms to different offices.
Investor confidence, however, remains low, as the growth of credit offtake from commercial banks has dipped below four percent. In part, this is due to continued slack in both domestic and international demand.
The biggest culprit for investment weakness is the unpredictable and overtly anti–private sector stance of the Income Tax Department, whose questionable behavior the finance minister has inexplicably allowed to continue.
In sum, while on-the-ground realities may have remained virtually unchanged, there is plenty of work in progress.
For the manufacturing sector, the first year of the Modi government represents a task that is well begun but not yet half done. – By Rajiv Kumar, a senior fellow at the Center for Policy Research in New Delhi for Hindustan Times