Insights into Editorial: Thinking outside the manufacturing box

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Insights into Editorial: Thinking outside the manufacturing box


champions of change program.

Background:

 ‘Champions of Change’ programme was organised by Niti aayog to achive the vision of ” Make in India”. The Prime Minister along with his Cabinet Ministers and Secretaries interacted with over 200 CEOs seeking their inputs for expediting growth and promoting job creation. The meeting focussed on reviewing the relationship between public and private sectors in the country at present.

The CEOs were expected to come up with short presentations to the Prime Minister on action points which will be incorporated in the 15-Year Vision Document being prepared by the NITI Aayog.

They will focussed on six themes

  • New India by 2022,
  • Doubling Farmer’s Incomes,
  • Creating Cities of Tomorrow,
  • Taking Forward Make in India,
  • Reforming Financial sector and
  • Building World- Class Infrastructure.

 

Introduction:

If we believe India’s economic growth numbers are for real, the economy over the last three years has seen incredible economic growth and macroeconomic expansion. Trade exports have risen, volume of foreign direct investment has increased, inflation levels have stabilised and the rupee has strengthened. If we carefully observe some of the key patterns in our employment data, we see the Indian economy perpetuating itself into a long-term phase of joblessness.

In India, growth over the last few decades surfaced from a service sector-led expansion, where both employment and wages saw a rise. While service sector-led growth contributed greatly to soaring GDP levels, it still employs less than 30% of the total Indian population. The source of most employment for Indian people still lies in the agriculture sector, which employs almost 45% of the Indian population (with a 15% contribution to GDP). 

 

The reality of jobless growth

India is doing fairly well on the growth front: the overall economy is growing at 7.1%, while the services sector, which accounts for over 53% of the gross value added, is clocking 9% growth, the highest in the world in the services sector among major economies, according to the Economic Survey. The trouble is, this is not translating into an adequate number of jobs.

Even Labour Minister admitted as much recently. He said: “The current growth is a jobless growth. Many European and Asian countries, including India, are facing it. Growth is being reported but it is not reflecting in employment generation.”

  • Just 1.35 lakh jobs in three years according to the Centre for Equity Studies’s India Exclusion Report 2016 — pale in comparison to those being added to the workforce. It is no wonder that the Prime Minister is constantly urging India Inc. to rise to the challenge.

 

What the actual problem is:

In order to be globally competitive, any large-scale manufacturing — in India or elsewhere — is now increasingly automated, with more robots than people. The only way to stay competitive is greater investment in technology and automation.

In other words, fewer jobs. What, then, is the solution?

 

Creating a circular economy

Maybe it’s time to revisit Mahatma Gandhi’s idea of a circular economy.

  • Increasingly, the world is coming to an understanding that the manufacturing-led “take, make, dispose” model is simply unsustainable from both an economic and ecological point of view.
  • As the focus necessarily shifts to a more circular, “take, make, refurbish, repair, reuse” model, the manufacturing sector could look at how it can create jobs around the products it makes, rather than find ways to create more jobs making those products.
  • Every car makes creates dozens of jobs down the line — from drivers to mechanics to spare parts and fuel shops to even car cleaning. A single mega factory can manufacture all the denim needed for all the jeans worn by young people in the world — but it would still take millions to convert cloth to clothes, to sell them, to repair zips and buttons, and eventually, when they are worn, to recycle them.

 

Way forward

The Government is banking on the manufacturing sector to solve the jobs problem.

  • The sector can do so, but only if it thinks out of the manufacturing box. Maybe that’s the real challenge we should be looking at.
  • It is time our young CEOs turned their attention to how the products and services they deliver can create jobs outside the factory — and come up with innovative solutions and skills programmes to make that happen.
  • India may not become the ‘making’ capital of the world — but it can become the ‘remaking’ and ‘reusing’ capital.