Do Saal Modi Sarkar: Hits & Misses

Gursharan Dhanjal
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Modi government is set to complete almost half of its five-year tenure. The government celebrated its second anniversary on 26 May 2016. Modi swept into power in 2014 on two major promisesóresurrecting the ailing economy and weeding out corruption. The Congress-led UPA government was mired in a series of corruption scandals. Modi has managed to keep off such controversies. Gursharan Dhanjal peeks into Modi's journey thus far

Outlining his government’s achievements, Prime Minister Narendra Modi recently said: “We have achieved major gains in macro-economic stability. A durable reduction in inflation, steady fiscal consolidation, a comfortable balance of payments position and build-up of foreign exchange reserves are the highlights.”

On 12 March 2016, at a conference organised jointly by the Ministry of Finance and the International Monetary Fund (IMF) in New Delhi, he added: “In a difficult external environment and despite a second successive year of weak rainfall, we have increased our growth rate to 7.6 per cent, the highest among major economies in the world.” On the economic front, as the Prime Minister claims, there is improvement on all the major macro-economic indicators. When the new government took charge, the GDP growth was low, inflation was high, industrial production was going down and business and investor confidence was dampened. Today, India is the world’s fastest growing economy and the most dynamic among the big emerging markets. With Gross Domestic Product (GDP) expansion to 7.5 per cent in 2015, India outpaced China for the first time in at least 15 years, according to the World Bank data. China’s economic growth slowed to 6.9 per cent in 2015. Most economists and analysts today term India as a rare bright spot in the current global economic turmoil.

“India stands at a crucial moment in its history—with an unprecedented opportunity for transformation. Important reforms are underway. Think, for example, of ‘Make in India’ and ‘Digital India’. With promise of more reforms to come, India’s star shines bright,” IMF Managing Director Christine Lagarde said recently.

Finance Minister Arun Jaitley said, acceleration in growth in the past two-years is even more significant as the country had suffered monsoon shortfall during both these years. During the last three years of UPA government average GDP growth stood at 6.3 per cent.

Modi government has introduced a series of programmes to accelerate growth and modernise the Asia’s third largest economy. Make in India is aimed to boost manufacturing; Digital India seeks to transform India into a connected economy by offering onestop shop for government services; Swachh Bharat mission aims to make India clean; while Jan Dhan scheme is targeted at financial inclusion. With an objective to transform the urban landscape the government has introduced the schemes like Smart Cities, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All.

Urban Development Minister M Venkaiah Naidu summarises the major initiatives taken by the government as MISIDICI, where MI stands for Make in India; SI for Skill India; DI for Digital India and CI for Clean India (Swachh Bharat). Naidu said these initiatives are transformational in nature and aimed at improving the living standards of the people at the bottom of the pyramid.

“Reform does not mean something very big. Some of us do not understand what is reform… Changes everywhere, empowering every Indian to live with dignity, ensure social security, that is the purpose of the reform,” Naidu, who is also Parliamentary Affairs Minister, said at the 43rd Skoch Summit at New Delhi.

Most of these schemes are transformational in nature and its real impact would be seen only in medium to long-term. However, critics say the government is injecting too much jumlebaazi (catchphrase or world paly) in the form of such schemes. This is creating hype and raising unrealistic expectations. Discourse on black money has given further rise to skepticism on such schemes.

Black Money

Addressing a rally on 7 November 2013, in the run-up to the general elections, Modi, the then Chief Minister of Gujarat and BJP prime ministerial candidate, had said every poor people could get Rs.15- 20 lakh, if black money stashed in foreign banks is brought back to the country. Clarifying the statement, Bharatiya Janata Party (BJP) President Amit Shah said, it was just a political jumla (idiomatic expression or catch phrase) made during the election campaign.

Opposition leaders often use this to target Modi and question his intent on other promises and schemes.

The debate today on black money is misplaced. Modi’s statement that every poor citizen could get Rs.15-20 lakh must be alluding to the alleged amount of unaccounted money. This could be termed as a simplification of the numbers rather than calling it a promise. For example, to simplify the country’s debt burden, it is often put in the form of per capita debt burden. Per capita debt burden rose to Rs.44,095 in 2014-15 from Rs.41,129 in 2013-14. Does it mean that every citizen is going to pay Rs.44,095 to somebody? Of course, not! Similarly, whatever the money the government manages to recover, it will have to be spent and invested by the government. Therefore, it is irrelevant to focus the debate on Rs.15 lakh to be deposited in the bank accounts of every citizen!

Modi government has taken several initiatives to unearth black money and curb corruption. Setting up a Special Investigation Team (SIT) to look into the black money issue was amongst the first lot of decisions. To provide a one-time compliance window to declare assets held abroad and pay due taxes and penalty on the value of assets declared, a new law is enacted in July 2015 named The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The defaulters who declare the amount under the law were liable to pay tax at the rate of 30 per cent and a like amount of 30 per cent by way of penalty on the value of assets declared, by 31 December 2015. The amount received by way of tax and penalty upto 31 December 2015 is Rs.2,428.4 crore, according to data released by the Finance Ministry.

In the General Budget 2016- 17, Finance Minister Arun Jaitley proposed a limited period compliance window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions. This includes paying tax at 30 per cent and surcharge at 7.5 per cent and penalty at 7.5 per cent, which is a total of 45 per cent of the undisclosed income. Other steps taken by the government on black money include strengthening and streamlining the information collection and enforcement mechanism through extensive use of information technology; joining the global efforts to combat crossborder tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis facilitating exchange of information regarding persons hiding their money in offshore financial centres and tax havens; renegotiation of Double Taxation Avoidance Agreements with several countries; proactively engaging with foreign governments for exchange of information under the provisions of DTAAs/TIEAs/ Multilateral Convention; exploring non-government sources to obtain information regarding undisclosed foreign assets; and, effectively utilising the information received from treaty partners to combat tax evasion and avoidance.

The government promptly set up a Special Investigation Team under the chairmanship of Justice (retired) M B Shah to thoroughly investigate the list appeared in media report termed as “Panama Papers”. The report named nearly 500 prominent Indians who have allegedly stashed money in tax haven, Panama.

No doubt, black money has generated huge amount of political debate and created curiosity and anger among the masses. On both fronts, the government will have to act swiftly and decisively. The first one is about recovering the illicit amount and second, probably the more important, to make the system robust to prevent such practice in future.

Economic Growth

India’s economic growth is projected to accelerate to 7.6 per cent in the financial year 2015-16 from 7.2 per cent recorded in the previous fiscal, as per the advance estimates of the national income released by the Central Statistics Office (CSO).

Critics say the buoyancy in the economy is largely due to a change in the account method and it is not reflected at the ground. The government has introduced a new series of measuring national accounts with base year 2011-12. The old series had 2004-05 as the base year. Apart from the base year, the methodology for calculating the GDP has changed. The new accounting system is based on Gross Value Added (GVA) as against the old methodology of calculating the GDP based on economic output. Under the new system GDP = GVA + taxes on products – subsidies on products.

The figures have dramatically changed under the new series. Under the new method, the GDP growth for the fiscal 2013-14 is pegged at 6.9 per cent, while under the old series it was estimated at 4.7 per cent. For the financial year 2012-13, the GDP growth figure is revised upwards at 5.1 per cent under the new series from 4.5 per cent estimated under the old series. Clearly, the change in the base year has significant impact on the figures. The other important factor contributing to the growth is a sharp drop in crude oil prices. This has helped curbed inflation and thus made the growth numbers better.

But, is it just the change in accounting methods and good luck with oil and other commodity prices that have helped look growth figures better? The Prime Minister disagrees. He said such ideas are floated to belittle the government’s achievements. He said, “The fact is that India’s economic success is the hard-won result of prudence, sound policy and effective management.”No doubt, low oil price has helped the Indian economy and a change in the base year has a significant impact on the numbers. At the same time, the government’s efforts have also played a significant role. Even if we factor in the base year, the GDP growth figure has improved significantly in the past four years from 5.1 per cent in 2012- 13 to 7.6 per cent in 2015-16.

GDP growth in 2015-16 is led by a significant improvement in manufacturing sector. Manufacturing sector growth is expected to surge to 9.5 per cent in fiscal 2015-16 from 5.5 per cent in 2014-15. Some experts have questioned this figure saying higher growth is shown mainly due to the change in methodology.

However, Minister of State for Commerce and Industry Nirmala Sitharaman said manufacturing activities in the country was actually picking up and questioning the numbers was not a healthy trend. “I think in this country, there can be a lot of discussion about the methodology, the process of getting the numbers and there is no harm in discussing. But of course, ultimately if there is no doubt after the due discussions, we have to settle somewhere and start believing rather than keep the discussions going on,” Sitharaman said. “At the end of the day, you are not able to sit and work on numbers because you question everything,” she added.

Farm sector growth continues to remain sluggish due to shortfall in monsoon rainfall. Agriculture sector growth is pegged at 1.1 per cent in the financial year ended March 2016 despite 23 per cent shortfall in monsoon rainfall. The farm sector had posted a negative growth of 0.2 per cent in 2014-15. Services sector growth remains strong. The sectors which are likely to register growth rate of over 7 per cent in 2015-16 are financial, real estate and professional services, trade, hotels, transport, communication and services related to broadcasting, as well as manufacturing.

The country’s GDP has touched $2 trillion mark. Real GDP at constant (2011-12) prices in the year 2015-16 is likely to attain a level of Rs.113.51 lakh crore ($2 trillion), as against the First Revised Estimate of GDP for the year 2014-15 of Rs.105.52 lakh crore.

The per capita income in real terms (at 2011-12 prices) during 2015-16 is likely to increase to Rs.77,431 as compared to Rs.72,889 for the year 2014-15. The growth rate in per capita income is estimated at 6.2 per cent during 2015-16, as against 5.8 per cent in the previous year, according to the CSO data.

According to the IMF, India’s GDP expanded by 7.3 per cent in 2015- 16 and projected to grow by 7.5 per cent in 2016-17. The IMF has put the 2014-15 growth figure at 7.3 per cent. India’s growth rate is more than double the global average. The world economy grew by 3.4 per cent in 2016 and is projected to grow by 3.6 per cent in 2017.

As per the World Bank data (Global Economic Prospect report) India’s GDP is expected to expand by 7.8 per cent in 2016 and 7.9 per cent in the next two years. This makes India the fastest growing major economy in the world. In all these years India will outpace China.

Inflation

Uncontrollable rise in general price level or high inflation, was a big issue during the UPA regime. It is seen as a major factor behind the humiliating defeat of the Congress-led alliance. Modi has succeeded in stabilising the price level.

Retail inflation based on the Consumer Price Index (CPI), which was in double-digit during most part of the UPA-II government, has stabilised in the range of 5-6 per cent.

Now the government has adopted a monetary policy framework to focus on flexible inflation targeting. This brings Reserve Bank of India (RBI) at par with the central banks of the advanced economies like the US Federal Reserve and the European Central Bank. The Ministry of Finance signed a historic agreement with RBI in February 2015, under which the central bank will have to maintain retail inflation in the range of 2-6 per cent. As per the terms of the agreement signed by RBI Governor Raghuram Rajan and Finance Secretary Rajiv Mehrishi on 20 February 2015, the RBI will have to give an explanation to the government if retail inflation rises above 6 per cent for three consecutive quarters for the financial year 2015-16 and all subsequent years or less than 2 per cent for three consecutive quarters in 2016-17 and all subsequent years.

If the RBI fails to meet the target it shall set out in a report to the Central Government: (i) the reasons for its failure to achieve the target; (ii) remedial action proposed to be taken by the Reserve Bank; and, (iii) an estimate of the time-period within which the target would be achieved pursuant to timely implementation of proposed remedial actions, according to the agreement on ‘Monetary Policy Framework between the Government of India and the RBI.’

Further, the framework had set a target to bring down the retail inflation to 6 per cent by January 2016. The target for financial year 2016-17 and all subsequent years shall be 4 per cent with a band of +/- 2 per cent.

The retail inflation is well within the target. The CPI-based inflation has declined sharply since the new government came into power. In May 2014, when Modi took charge retail inflation was recorded at 8.28 per cent. It fell to a record low of 3.78 per cent in July 2015. Although, it rose in the subsequent months, it mostly remained in the range of 5-6 per cent. It was recorded at 5.18 per cent in February 2016.

Decline in the Wholesale Price Index (WPI) inflation is even sharper. The WPI inflation, which was over 6 per cent in 2013-14, declined consistently on the back of a sharp fall in global commodities prices. It is in the negative territory since November 2014. The WPI inflation was recorded at minus 0.91 per cent in February 2016, remaining in the negative zone for the 16th straight month.

Ease-of-Doing Business

India’s rank in the World Bank’s Ease of Doing Business improved by 12 spot to 130 in around one year of Modi government rule. The latest annual report, which had 1 June 2015 as cutoff date for data collection, placed India at 130th position, a significant improvement from previous year when it was placed at 142nd position. The 2015 ranking report was released on 28 October 2015.

According to Finance Minister Arun Jaitley, India’s ranking should improve further significantly as several of the initiatives taken by the government are not factored in the report.

“India’s position should have moved significantly higher. I understand that all steps have not been factored in since the World Bank criteria has a cut-off date and it also waits for announcements to translate into action before they can be factored,” Jaitley said while reacting on the World Bank report. “Quicker decision-making, faster policy changes, eliminating corruption at the top and smoother clearances have played a significant role,” he said. The government has simplified and rationalised the existing rules and increased the use of information technology to make governance more efficient and effective. Ministries and state governments have been advised to simplify and rationalise the regulatory environment through business process re-engineering and use of information technology. Other measures include integration of 20 services on e-biz portal to function as single window portal for obtaining government clearances, integration of the process of incorporation of the company and application for Director’s Identification Number (DIN), removal of requirements of minimum paid-up capital and common seal of companies, simplification of the procedure for Industrial License (IL) and Industrial Entrepreneur’s Memorandum (IEM), excluding a number of parts/ components from the purview of Industrial Licensing and issue of security manual for license defence industry to obviate the requirement of affidavit from applicant.

FDI policy has been further liberalised. Up to 49 per cent FDI is now allowed in defence sector. For Railway infrastructure it is raised up to 100 per cent and for insurance and pension it is increased up to 49 per cent. The investment limit requiring prior permission from Foreign Investment Promotion Board (FIPB)/ Cabinet Committee of Economic Affairs has been increased from Rs.1,200 crore to Rs.3,000 crore. The definition of investment by Non Resident Indians (NRIs), Person of Indian Origin (PIOs) and Overseas Citizen of India (OCIs) in FDI policy has been revised. Further, except for defence and private sector banking for which specific conditions apply, composite caps on foreign investment have been recently allowed so that uniformity and simplicity are brought in across the sectors in FDI policy for attracting foreign investment.

India is the most favourable place for investment, according to a survey conducted by Ernst & Young among 505 CEOs globally. Almost 32 per cent of the executives said India was their favoured market for investment. China came as a distant second with 15 per cent of the executives favouring it. “There is no doubt that interest in India has increased. Investors increasingly see the potential and understand the fundamentals,” Ernst & Young said in the survey report.

Make in India

With a view to make India a global manufacturing hub, the government has launched Make in India initiative. It is aimed at creating a conducive environment for investment, development of modern and efficient infrastructure, opening up new sectors for foreign investments and forging a partnership between government and industry through a positive mindset. The Make in India initiative is based on four pillars, which have been identified to give boost to entrepreneurship in India, not only in manufacturing but also other sectors. The four pillars are: (i) New Processes; (ii) New Infrastructure; (iii) New Sectors; and, (iv) New Mindset.

Share of manufacturing in India’s GDP continues to remain low despite promises and initiatives by the successive governments. Manmohan Singh-led UPA government had introduced National Manufacturing Policy in 2011 with a target to boost the share of manufacturing in the country’s GDP to 25 per cent and create 100 million jobs over a decade. however, there was hardly any progress on the ground. In fact, the share of manufacturing in India’s GDP has remained stagnant at around 15 per cent for more than 30 years. A change in methodology for calculation of GDP by the central Statistics office makes the figure looks a little better. however, even under the new methodology the share of manufacturing in the GDP has declined in the recent years. Share of manufacturing GVA to GDP at current prices declined from 18.1 per cent in 2011-12 to 17.9 per cent in 2012-13. It dropped further to 17.3 per cent in 2013-14 and 17.2 per cent in 2014-15.

Make in India programme has helped boost manufacturing sector growth in 2015-16. The initiative has led to a significant increase in foreign investment. Foreign Direct Investment (FDI) inflow rose by 29 per cent during the period october 2014 to December 2015 (first 15 months of introduction of Make in India) compared to the 15 months period prior to the launch of Make in India. FDI equity inflow surged by 36 during this period, according to data available with the Ministry of commerce and Industry.

Net FDI inflow into India rose to a record high of $3 billion in January 2016 on the back of Make in India initiative. FDI inflow in January 2016 more than financed the current account deficit (cAD) for the first time in over 10 years. Giving a thumbs up to the initiative credit ratings agency Moody’s said: “These trends are credit positive, as they lower India’s susceptibility to external shocks at a time when capital flows to emerging markets are volatile.”

Apart from boosting manufacturing, Make in India initiative is also aimed at promoting entrepreneurship in the country. The initiative is further aimed at creating a conducive environment for investment, modern and efficient infrastructure, opening up new sectors for foreign investment and forging a partnership between government and industry.

The following 25 sectors have been identified under Make in India initiative: (i) Auto components, (ii) Automobiles, (iii) Aviation, (iv) Biotechnology, (v) chemicals, (vi) construction, (vii) Defence Manufacturing, (viii) Electrical Machinery, (ix) Electronic System Design and Manufacturing, (x) Food Processing, (xi) IT and BPM, (xii) Leather, (xiii) Media and Entertainment, (xiv) Mining, (xv) oil and Gas, (xvi) Pharmaceuticals, (xvii) Ports, (xviii) Railways, (xix) Roads and highways, (xx) Renewable Energy, (xxi) Space, (xxii) Textiles, (xxiii) Thermal Power, (xxiv) Tourism and hospitality, (xxv) Wellness.

Rationalisation of Subsidy

majority of the government subsidies in India. Irrational subsidies, mostly appropriated by the rich, have become a big burden on the Indian economy. Modi government has implemented several initiatives to better target subsidies and rationalise them. Direct Benefit Transfer (DBT) and ‘JAM Trinity’ of Jan Dhan bank accounts, Aadhaar and Mobile numbers, have helped in transfer of subsidies to the intended beneficiaries and thus plugged leakages. over 20 per cent of India’s population received a cash transfer from the government in the financial year 2014-15. JAM was involved in distributing benefits across a range of government programmes— from education and labour schemes (scholarships and MGNREGS) to subsidies and pensions (NSAP).

In late 2014, Modi government launched Pahal scheme under which LPG subsidies are transferred directly into customers’ bank accounts. This scheme was first introduced by the UPA government, but was suspended. Modi government modified and reintroduced the scheme, which has played a significant role in rationalisation of fuel subsidy.

According to the Economic Survey 2015-16, over 151 million beneficiaries receive LPG subsidies via DBT and Rs.29,000 crore have been transferred to beneficiary accounts.

In order to prevent the misuse of fertiliser subsidies, the government has introduced a method called “neem-coating” of urea. The organic neem coating makes the fertiliser unsuitable for diversion.

Financial Inclusion

Pradhan Mantri Jan Dhan Yojana (PMJDY) is the flagship financial inclusion scheme of government. It is arguably the biggest-ever bank account opening drive in India. 21.93 crore accounts have been opened since launch of the scheme in August 2014. Total deposits in Jan Dhan accounts stood at Rs.38,047.65 crore as on 25 May 2016.

The scheme was launched on 28 August 2016 with a target to provide ‘universal access to banking facilities’ starting with “Basic Saving Bank Account” with an overdraft upto Rs.5,000 subject to satisfactory operation in the account for six months and RuPay Debit Card with inbuilt accident insurance cover of Rs.1 lakh and providing social security schemes, i.e., Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Atal Pension Yojana (APY).

It is one of the largest financial inclusion initiatives globally. Guinness World Record has recognised the achievements made under the scheme for “Most bank accounts opened in one week as part of the Financial Inclusion Campaign is 18,096,130 and was achieved by the Department of Financial Services, Government of India.”

The speed with which the bank accounts have been opened under the scheme is indeed commendable. But, has it given the required push to the financial inclusion? Merely opening an account does not mean financial inclusion. The other big concern against the scheme is that it would further deteriorate the financial health of public sector banks that are already under extreme pressure due to mounting non-performing assets (NPA). criticising the scheme, Former Prime Minister Manmohan Singh said the government had forced the banks to open accounts, which remained unutilised. “People are asking what will they do with bank accounts when they have nothing to keep in the bank,” Singh said alluding that forced account opening exercise would not serve much purpose.

As per data available with the PMJDY official website, as on 25 May 2016, out of the total 21.93 crore accounts opened under the scheme, 17.23 crore are by Public Sector Banks (PSBs). Regional Rural Banks (RRBs) have opened 3.88 crore accounts, while private banks have opened just 0.81 crore accounts. clearly, private banks have not shown enthusiasm for the scheme, which has been driven largely by the public sector banks. opening and maintaining an account requires some cost. It is clearly a burden for the banks if the accounts remain unutilised. In the first year, majority of the accounts were zerobalance accounts that indicate lack of activity. It is also referred is unutilised accounts. As on 31 March 2015, 58 per cent of the total 14.71 crore accounts opened under the scheme were zerobalance accounts. The situation has improved significantly in the past one year. Percentage of unutilised or zerobalance accounts fell to 25.66 per cent as on 25 May 2016. Interestingly, the percentage of unutilised accounts is higher in the case of private banks, while the RRBs have most active accounts in proportion to the total number of accounts opened. Almost 38 per cent of all the accounts opened by private banks remain inactive, while in the case of RRBs, it is 22.08 per cent, and public sector banks 25.90 per cent.

Digital India

Digital India initiative seeks to transform India into a digitally empowered society and knowledge economy. The other critical aspect of the initiative is to strengthen and expand digital infrastructure.

By 2019, the target is to provide broadband connectivity in all 2.5 lakh Gram Panchayats, Wi-Fi in schools and universities and public Wi-Fi hotspots.

Digital India initiative was formally launched by Prime Minister Modi in July 2015. It has created a buzz among the industry leaders. On the launch day itself India Inc. pledged investments worth Rs.4.5 lakh crore that would help create 18 lakh jobs. “I dream of a Digital India, where High-speed Digital Highways unite the Nation; 1.2 billion connected Indians drive innovation; technology ensures the citizen-government interface is incorruptible,” Modi had said while launching the programme.

Communications and IT Minister Ravi Shankar Prasad claims that Digital India initiative would create $1 trillion business opportunity across IT and IT-enabled services, telecom and electronics manufacturing. Digital India is a flagship programme and Prasad hopes that Modi government would be known for creating digital infrastructure. “If the Atal Bihari Vajpayee government is remembered for laying down national highways, the Narendra Modi government will be known to have laid the digital highway of the country,” the minister said.

Expanding infrastructure is critically important to bridge the gap between digital “haves” and “have-nots”. Though India is the global leader in information technology with 56 per cent share in global IT outsourcing, a majority of its population lacks the basic communication and IT infrastructure. Broadband and Internet connectivity is one of the poorest in the world. The country is heavily dependent on imports to meet electronics demand.

The Digital India initiative has started showing its impact on electronics manufacturing. The country has received investment proposals in electronics manufacturing worth Rs.1,20,294 crore. Most of these came after Modi came into power. Before the Modi government it stood at Rs.11,800 crore only. In 2014-15, total mobile phone units manufactured in India stood at 5.4 crore. It more than doubled to 11 crore in 2015-16. Sixteen new mobile manufacturing units were set up during the financial year ended 31 March 2016.

Smart Cities

Globally cities have played a critical role in economic growth and development. Majority of Indians still live in the villages. With faster economic expansion urbanisation is increasing and bound to increase faster in the coming years as people move to cities for jobs and better living standards. Realising the challenge, Modi government introduced Smart cities initiative that seeks to transform India’s urban landscape. 98 cities from across the country have been identified through a competition to be developed as Smart Sities. The target is to develop 100 cities. Uttar Pradesh and Jammu & kashmir have to pick up one each soon to touch 100 cities mark.

out of these, 20 cities from 11 states are to be developed in the first phase. Bhubaneswar tops the list. out of the 20 cities that are two be developed in the first phase, three are from Madhya Pradesh, two each from Andhra Pradesh, karnataka, Tamil Nadu, Gujarat, Maharashtra and Rajasthan and one each from Punjab, Assam, Delhi, kerala and odisha. These will launch the project by 25 June 2016 that marks one year of the launch of Smart city Mission by Prime Minister Modi.

These 20 cities and towns have proposed a total investment of Rs.50,802 crore over five years with all the cities proposing Public-Private- Partnership as a major vehicle of resource mobilisation. This is for the fist time in India or probably the world that investments in urban sector are being made based on competition.

The basic idea is to make the city a better place for living. The emphasis is on creating state-of-the-art facilities like automatic traffic lights, sprawling solar panels dotting neat dwellings, clean green campuses, digitalised working and round the clock vigil through close circuit cameras. It is a Mission Mode Project and the initiative is called Smart Cities Mission. The Central government proposes to give financial support to the initiative to the extent of Rs.48,000 crore over five years. The chosen Smart City will be given Rs.100 crore per city per year over the next five years. The States/ UTs and Urban local bodies have to make an equal matching contribution. This in effect means that Central and state governments and ULBs will invest about Rs.1 lakh crore over the next five years for making 100 chosen cities smart.

On criteria for selection of the city, Urban Development Minister M Venkaiah Naidu said: “what mattered is not where a city stands now but where it likes to go and how it proposes to go, based on a vision drawn from the inherent strengths of a city and backed by a credible action plan.”

The government on 24 May 2016 announced the names of 13 more cities to be developed as smart cities, taking the total count to 33. Lucknow in Uttar Pradesh topped a fast-track competition conducted for 23 cities by the central government. The other selected cities are Warangal in Telangana, Dharmashala, Chandigarh, Raipur, New Town Kolkata, Bhagalpur, Panaji, Port Blair, Imphal, Ranchi, Agartala and Faridabad. “Cities that participated in the competition improved the quality of (their original) Smart City plans by over 25 per cent to become eligible for selection,” said Naidu. The 13 cities have proposed an investment of Rs.30,229 crore.

Swachh Bharat

Within a few months after coming into power, Modi government launched a nationwide cleanliness drive under the initiative called Swachh Bharat Mission. The Mission was formally launched on 2 October 2014, to coincide with the birth anniversary of Mahatma Gandhi. The objective is to make India “clean” by 2 October 2019, the 150th birth anniversary of the Father of the Nation, Mahatma Gandhi.

According to Naidu, Swachh Bharat Mission is the mother of all new Missions launched by Modi government. “Swachh Bharat initiative is different from others in the sense that this targets the minds of the people while others seek to meet the needs already felt in the minds of the people. To put it differently, while other initiatives are largely demand driven, Swachh Bharat Mission aims at creating

demand for sanitary services and infrastructure. A Clean India is the most profound statement that the county can make to the world, which is keenly watching us in the context of various initiatives launched during the last over one year,” Naidu said.

Following are the main objectives of the Mission:
(i) Eliminate open defecation
(ii) C onversion of insanitary toilets to pour flush toilets
(iii) Eradication of manual scavenging
(iv) 100 per cent collection and scientific processing/disposal reuse/recycle of Municipal Solid Waste
(v) To bring about a behavioural change in people regarding healthy sanitation practices
(vi) Generate awareness among the citizens about sanitation and its linkages with public health
(vii) Strengthening of urban local bodies to design, execute and operate systems
(viii) To create enabling environment for private sector participation in Capital Expenditure and Operation & Maintenance (O&M) costs

The Mission is estimated to cost Rs.62,009 crore, out of which the Central Government’s contribution amounts to Rs.14,623 crore. The funding pattern between the Central Government and the State Government/Urban Local Bodies (ULBs) is 75:25. For North Eastern and special category states, it stands at 90:10.

Cleanliness drive undertaken by the government is not new. Up until 1999, the government used to run cleanliness drive under Rural Sanitation Programme. It was a centrally sponsored scheme implemented in partnership with state governments. In 1999, Atal Bihari Vajpayee government introduced a new programme called Total Sanitation Campaign. In 2012, Manmohan Singh-led government introduced Nirmal Bharat Abhiyan. Modi government restructured Nirmal Bharat Abhiyan into Swachh Bharat Mission in September 2014. The new initiative comprises of two sub-Missions—Swachh Bharat Mission (Gramin) and Swachh Bharat Mission (Urban).

What distinguishes Swachh Bharat Mission from earlier initiatives is that the new scheme is comprehensive and have specific targets to make the country clean in a time-bound manner.

As per Census 2011, only 32.70 per cent of rural households had access to toilets. The National Sample Survey Organisation (NSSO) data is little better. According to NSSO 2013 estimates, 40.6 per cent of rural households have access to toilets. Clearly, majority of the population lack basic sanitation facilities and are forced to defecate in the open. Under the Swachh Bharat Mission an action plan has been drawn up to make India Open Defecation Free (ODF) by 2019, to keep villages clean through construction of individual, cluster & community toilets and through solid and liquid waste management with active participation of Gram Panchayats.

In the General Budget 2016-17, Rs.9,000 crore has been allocated for the Swachh Bharat Mission. This underscores the government’s commitment to the initiative. “Swachh Bharat Mission is India’s biggest drive to improve sanitation and cleanliness, especially in rural India. This subject was very close to the heart of the Father of the Nation. For the first time since independence, the Parliament held a comprehensive debate on sanitation. This has become a topic of discussion in almost every home,” Jaitley said in his budget speech. “We have introduced ranking of urban areas in sanitation which has resulted in constructive competition among towns and cities.

Radical reforms needed to ensure 24x7 power supply

As Chief Minister of Gujarat, Narendra Modi transformed power sector in the state. He not only ensured 24x7 power supply to all, but also kept the tariffs at moderate level. This became possible because of massive reforms in distribution system that eliminated theft and wastage of power and also increase in generation capacity. When Modi took charge as Chief Minister of Gujarat, the state faced huge power deficit. Within a decade, the state transformed into a power surplus state. Peak hour power deficit in Gujarat stood at 25 per cent in 2004. This has come down to zero. Transformation in power sector has been the key aspect of the “Gujarat Model of Development.”

Now Narendra Modi, as Prime Minister, has promised to replicate the success story of Gujarat at the national level. The government has set a target to ensure uninterrupted supply of power to all by 2019. To replicate the success story of Gujarat, the government must aggressively push forward the reforms in the sector.

Distribution

The weakest link in India’s power sector value chain is distribution. Power distribution companies (DISCOMs) across the country are facing huge financial crunch. They have accumulated Rs.3.8 lakh crore losses and have debt outstanding of Rs.4.3 lakh crore as on March 2015.

With a view to improve the financial health of the power distribution companies, the government has introduced a scheme called Ujwal DISCOM Assurance Yojana or UDAY. The idea is to provide a sustainable permanent solution to the problem, which is ailing the industry for years.

“It is a bottom-up approach, not a top-down approach. The states will be assisted and hand-held to bring down the cost of power by improving their distribution, transmission and sub transmission network, reducing the cost of power through coal rationalisation and also bringing down the interest cost substantially,” said Piyush Goyal, Union Minister of State (IC) for Power, Coal and Renewable Energy. The Minister also claimed that the debt-restructuring plan for DISCOMs would eventually lead to a saving of Rs.1.8 lakh crore annually.

The scheme seeks to improve the health of DISCOMs through four-pronged initiatives—improving operational efficiencies, reducing power costs, decreasing interest cost of DISCOMs and enforcing financial discipline on DISCOMs through alignment with state finances.

The scheme is optional for all states. Although it is a good initiative to reform the sector, the bigger challenge is to get onboard the states, which are ruled by opposition parties. So far, only 10 states have joined the scheme. Unless all the states are taken onboard a comprehensive reform will be a difficult task.

Capacity Addition

There has been a record increase in power generation capacity in the last two years. Achievements have surpassed the targets. In the financial year 2014-15, against the target of 17,830.3 MW generation capacity of 22,566.30 MW was achieved. This was the highest ever, capacity addition in a single year (126.6 per cent of target), registering a growth of 26 per cent over the capacity addition in 2013-14.

For the Twelfth Five Year Plan period, a target of 88,537 MW, excluding 30,000 MW of Renewal Energy Source, was fixed for capacity addition. Against this, cumulative capacity addition of 84,990.7 MW has been achieved as on 31 March 2016.

Demand-Supply Gap

In India, the demand for electricity has always been more than the supply. If government figures are to be believed, this gap has narrowed in the past two years. The power shortage came down to 2.1 per cent in the financial year 2015-16, the lowest ever. This stood at 8.5 per cent in 2011-12. Peak shortage came down from 10.6 per cent in 2011-12 to 3.2 per cent in 2015-16. This is also the lowest, as per the data available with Power Ministry. On 29 December 2015, for the first time no congestion was observed in the power grid. On that day, single price of Rs.2.3 per kWh of electricity was recorded for the country, as per the data provided by the country’s major power exchange Indian Energy Exchange Limited (IEX).

Although, there is good growth in electricity generation, but low demandsupply gap also highlights weakness in the economy. State electricity boards are facing huge financial problems and thus lack the means to buy electricity from generation units. Moreover, industrial activities remain subdued which is largely responsible for low demand.

Rural Electrification

In his address to the nation on 15 August 2015, Prime Minister announced that all villages would be electrified within next 1000 days. There were 18,452 un-electrified villages in the country as on 1 April 2015. The target is to electrify all villages in the country by 1 May 2018. There are 597,464 census villages in India. The strategy for electrification of un-electrified villages in a mission mode consists of squeezed implementation schedule of 12 months with 12 Stage milestones for village electrification monitoring with defined timelines. Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) is a flagship scheme targeted at ensuring uninterrupted power supply in rural India. The scheme focuses on feeder separation (rural households and agricultural) and strengthening of subtransmission and distribution infrastructure including metering at all levels in rural areas. This will help in providing round the clock power to rural households and adequate power to agricultural consumers. The earlier scheme for rural electrification, viz, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) has been subsumed in the new scheme as its rural electrification component.

Way Forward

Power is a critical infrastructure. The country’s economic growth is heavily dependent on the performance of power sector. The success of most of the programmes like Make in India or Digital India depends on the availability and quality of power.

Power sector faces challenges on multiple fronts. This include delays in land acquisition, environment and forest issues, rehabilitation and resettlement issues, natural calamities, law and order problems, local issues, contractual problems, delay in material supply, geological uncertainties, extreme weather conditions, difficult terrain and poor accessibility, funds constraints, force majeure risk, interstate issues, Right of Way (ROW) problem for transmission lines etc. There have been some good reform initiatives in power sector. Ujwal DISCOM Assurance Yojana can potentially transform the distribution system and bring the much needed reform in the sector. However, the success will depend on how swiftly and seriously states implement the scheme. Assurance of coal linkages has brought life back to power generation units that were either idle without fuel for months or running much below their capacity.

 

Railways on transformation track

Indian Railways is often referred as the “lifeline of the nation.” It is one of the largest employer and plays a critical role in the economy. Highlighting the importance and his government’s commitment for Indian Railways, Prime Minister Narendra Modi once said: “Railways, perhaps along with Post Office system, are the only two institutions in India with a deep network, which if tapped judiciously, can create substantial improvements in the hinterland. Railways was always considered only as a mode of transport in our country, we want to see Railways as the backbone of India’s economic development.”

The size and scale is gigantic. The Indian Railways is the third largest rail network in the world with 66,000 route kilometer stretch covering more than 8,000 stations. It runs 12,000 trains to carry over 23 million passengers daily—equivalent to moving the entire population of Australia. It runs more than 7,000 freight trains per day carrying about 3 million tonnes of freight.

Quality of service delivery and capacity augmentation had suffered in the recent years due to lack of investments, either in customer service or safety. The NDA government that came into power in May 2014 gave high priority to the sector. A number of initiatives have been taken to expand the network and improve customer service and safety. Moreover, the government seeks to introduce new culture in Railways with the help of new technologies.

Railways Vision 2020

The new government has come out with Railways Vision 2020 to meet long-held desires of the common man. Such desires include reserved accommodation on trains being available on demand, time tabled freight trains with credible service commitments, high-end technology to significantly improve safety record, elimination of all unmanned level crossings, punctuality increased to almost 95 per cent, increased average speed of freight trains to 50 kmph and Mail/Express trains to 80 kmph, semi high speed trains running along the golden quadrilateral and zero direct discharge of human waste. The Railways Vision 2020 spelt out in Railway Budget 2016-17 seeks to provide a system free from capacity constraints, a system that is efficient and predictable, a system that is sparkling and pristine, where the people of the country feel at ease, where there is plenty of choice in every sphere of activity and the ease-of-doing business pervades the entire railway ecosystem.

Bullet Train

The first bullet train will run between Mumbai and Ahmedabad. It will be 508 km line and estimated to cost Rs.97,636 crore. The feasibility study of the project has been completed. A new entity called National High Speed Rail Corporation Limited was formed in February 2016 to implement the project. The project will be implemented through financial and technical assistance from Government of Japan. The assistance involves provision of Japanese Yen loan for nearly 81 per cent of total project cost at 0.1 per cent per annum interest for 50 years with 15 years moratorium and transfer of technologies of construction.

High Speed Trains

A number of steps have been taken in the past two years to increase the speed of trains. A separate Mobility Directorate has been set up whose primary job is to initiate measures for increasing the speed of trains. In Railway Budget 2016-17, a new category of train service for the reserved passengers ‘Tejas’ has been announced with the speed of 130 kmph and above.

“Mission Raftar” declared in the Railway Budget 2016-17 entails doubling of average speed of freight trains and increasing the average speed of superfast Mail/Express trains by 25 kmph in the next five years.

Nine corridors for raising the speed of passenger trains to 160/200 kmph have been identified. The details of these corridors are (i) Delhi-Agra, (ii) Delhi-Chandigarh, (iii) Delhi Kanpur, (iv) Nagpur-Bilaspur, (v) Chennai- Bengaluru-Mysore, (vi) Mumbai-Goa, (vii) Mumbai-Ahmedabad, (viii) Chennai- Hyderabad, and, (ix) Nagpur-Secunderabad.

Further, under the Quadrilateral network, 6 more corridors have been identified for feasibility studies for high-speed rail connectivity to the four major metros and growth centers of the country. These are Delhi-Mumbai, Mumbai-Chennai, Chennai-Kolkata, Kolkata-Delhi, Delhi-Chennai and Mumbai-Kolkata.

The first semi high-speed train “Gatimaan Express” capable of running at a maximum speed of 160 kmph started its operation between Hazrat Nizamuddin and Agra Cantt station on 5 April 2016. The train is now successfully running on this route. Powered by a 5,500 HP electric locomotive, the non-stop train has two Executive AC Chair Car and eight AC Chair Car coaches. The coaches to be used in Gatiman Express train are new LHB coaches with enhanced passenger amenities are turned out by RCF/Kapurthala. The coaches have been fitted with bio-toilets and are fit to run at 160 kmph.

e-Catering

e-Catering facilities have brought a revolutionary change in the way food is demanded and serviced in trains. Now passengers can order food of their choice from leading private caterers at designated 408 major railway contd... stations. This includes food prepared by women at home, which also helps in economic empowerment of women.

Initially, e-Catering service was train specific and made available in 1,350 trains, which did not have services of Pantry car or Train Side Vending. Instead of train specific, it was made station specific in September 2015. In the first phase it was made available at 45 major stations, now it has been extended to 408 major railway stations. Passengers travelling from these stations are now able to access e-Catering facilities for all trains passing through these stations. IRCTC facilitates booking of meals through a specified phone number/website/SMS/Mobile Apps etc. Passengers having mobile number are able to book meals under this scheme. CoD facility to passengers under this scheme has also been made available.In its endeavour to provide quality and hygienic food to the passengers, Indian Railways has developed and operationalised an institutionalised mechanism for monitoring of quality and hygiene of catering services through regular inspections at various levels. The passenger satisfaction levels are also regularly monitored through direct feedback and other means to address catering complaints. Indian Railways has decided to conduct Third Party Audit of catering services at periodic intervals by independent and reputed auditing agencies accredited by NABCB (National Accreditation Board for Certification Bodies). As per the guidelines issued in this regard, 16 Railway Zones have been divided into four groups with Northern, Eastern, Western and Southern Railways as the nodal Zonal Railway for each group. The nodal zonal Railways have been entrusted to empanel these accredited auditing agencies for the third party audit for their respective group of Railways.

Customer Interface

Common people have always been the focus of all the initiatives taken by the Indian Railways. The government has taken a series of measures to improve customer interface.

A Customer Complaint Management Cell (Social Media Cell) has been set up in Railway Board to receive complaints/suggestions/ assistance from passengers/rail users and public at large through Twitter handle of the Ministry, namely, @RailMinIndia. After analysing such tweets, the actionable ones are sent to Zones/Divisions through their respective twitter handles for speedy resolution.

In addition, a dedicated IVRS system has been set up to seek direct feedback from passengers. More than 1 lakh telephone calls are made every day to seek inputs from passengers. With all these measures, Indian Railways is able to give ‘Voice’ to the customer that is not only heard but also acted upon. These channels are used not only to seek feedback but to provide medical care, safety of passengers especially women and other aspects of human care and also help monitor the cleanliness of stations and trains. Today, there is no barrier between the common passenger and the Railways.

Cleanliness

Consequent to the launch of Swachh Bharat Abhiyan on 2 October 2014, Indian Railways also launched ‘Swachh Rail Swachh Bharat Abhiyan’ to achieve the vision of ‘Clean India’ by 2 October 2019, the 150th birth anniversary of Father of the Nation, Mahatma Gandhi. Under this mission, the Railways targets to build 17,000 bio-toilets in trains and additional toilets at 475 stations during the current financial year.

World’s first Bio-Vacuum toilet was developed by the Indian Railways and is being used in Dibrugarh Rajdhani Express. 74 more trains have been added under On-board Housekeeping Service and another 400 are to be covered soon, leading to a total number of almost 1,000 trains under the scheme.

Ministry of Railways has recently launched the ‘Clean my Coach’ service. As per the scheme, for any cleaning requirement in the coach, passenger sends a Short Message Service (SMS) on a specified mobile number, which is immediately acknowledged along with a code. A message is also sent by the server to the mobile number of On board Housekeeping Service (OBHS) staff travelling on the same train along with the details of the passenger such as coach number and the berth number. OBHS staff contacts the passengers and carries out the cleaning work as per the demand.

Safety

Safety is accorded the highest priority by Indian Railways and all possible steps are undertaken on a continual basis to prevent accidents and to enhance safety. These include timely replacement of over-aged assets, adoption of suitable technologies for upgradation and maintenance of track, rolling stock, signalling and interlocking systems, safety drives, greater emphasis on training of officials and inspections at regular intervals to monitor and educate staff for observance of safe practices.

Safety devices/systems being used to prevent accidents include complete track circuiting, provision of Block Proving Axle Counters (BPAC), Auxiliary Warning System (AWS), Colour Light LED Signals, Vigilance Control Device (VCD), usage of 60 kg rails and Pre-stressed Concrete Sleepers, long rail panels, better welding technology, progressive use of Linke Hofmann Busch (LHB) Coaches, Centre Buffer Couplers with Integral Coach Factory (ICF) Coaches, etc.

The measures have shown results. The number of accidents have declined by 20 per cent in 2015-16 when compared with the previous year.

Way ahead

The proposed measures include introduction of unreserved superfast Antyodaya Express Trains, introduction of Tejas train with the speed of 130 kmph and above with onboard entertainment and Wi-Fi facilities, unreserved Deen Dayalu coaches with portable water and higher number of mobile charging points and introduction of AC and non AC double decker trains on busy routes with the potential to increase carrying capacity by almost 40 per cent. Sale of tickets through hand held terminals; e-ticketing facility to foreign debit/credit cards; bar coded tickets, expansion of Vikalp—train-on-demand to provide choice of accommodation in specific trains to wait-listed passengers.

In order to provide long-term perspective to planning for augmenting the railway network, railways has decided to develop ‘National Rail Plan’ (NRP-2030) in consultation with all the stakeholders including state governments, public representatives and other relevant Central ministries. NRP-2030 will endeavour to harmonise and integrate the rail network with other modes of transport and create synergy for achieving seamless multimodal transportation network across the country. This will also achieve the vision of integrated planning and cost optimisation of the transportation network by laying the new railway lines and new highways together in tunnels and over mega-bridges.

Mission Seven for Tranformation of Indian Railways:
1. Mission 25 Tonne – To achieve this 10-20 per cent freight loading will be done through 25-tonne axle-load wagons in 2016-17.
2. Mission Zero Accident: It comprises of two sub missions:
• Elimination of unmanned level crossings
• TCAS (Train Collision Avoidance System)
3. Mission PACE (Procurement and Consumption Efficiency): Review of procurement and consumption of HSD to save Rs.1,500 crore in 2016-17.
4. Mission Raftaar: Doubling of average speeds of freight trains and increasing the average speed of superfast mail/express trains by 25 kmph in the next 5 years.
5. Mission Hundred: This mission will commission at least a hundred sidings in the next 2 years.
6. Mission beyond book-keeping: It will establish an accounting system where outcomes can be tracked to inputs.
7. Mission Capacity Utilisation: It proposes to prepare a blueprint for making full use of the new capacity that will be created through two Dedicated Freight Corridors between Delhi-Mumbai and Delhi-Kolkata scheduled to be commissioned by 2019.

 

Jobs Elude Indian Youth: Pose Big Challenge

Job creation seems to be the biggest challenge facing Modi government. There is a smart rebound in the economic growth. Other macroeconomic indicators have also improved. However, there is no visible improvement so far as job creation is concerned.

According to data available with the Labour Bureau, a unit of the Government of India, only 1.35 lakh new jobs were created in 2015 across eight major labour intensive sectors that include textiles, gems and jewelry, IT/ BPO and automobiles among others. Total job creation in these sectors in the year 2014 stood at 4.93 lakh. The performance on job creation front during the UPA government, even during the year when the economic growth was depressed, was comparatively better. In 2009, 12.56 lakh new jobs were created in these eight labour intensive sectors. It stood at 8.65 lakh in 2010; 9.3 lakh in 2011; 3.22 lakh in 2012; and, 4.19 lakh in 2013.

No doubt, even the numbers during the UPA government was pathetic. Some 12 million people join India’s workforce every year. Around 30 million students are pursuing higher education in India at any given point in time. With the rising population, the number of job seekers is set to increase further.

According to Asia-Pacific Human Development Report of the UNDP released in April 2016, India has witnessed jobless growth in the past over two decades. Working age population in the country increased by 300 million between 1991 and 2013, while the economy could absorb less than half of this population.

“By 2050, more than 280 million more people will enter the job market, for instance, a onethird increase above current levels, yet between 1991 and 2013, the economy absorbed less than half of new entrants to the labour market,” the UNDP report noted.

Unskilled workforce

India has the largest number of people in the employable age group (population between 15-60 years). Out of the over 1.25 billion population, 62 per cent are in the working age group of 15-60 years. 54 per cent are below 25 years of age. The country is facing a peculiar dichotomy: on the one hand, there are a large number of unemployed people; on the other, most of the businesses face shortage of skilled manpower.

Only 4.69 per cent of the Indian population has undergone formal skills training. This is very poor when compared with the global standards. In South Korea 96 per cent of the population has undergone formal skills training. In Japan it is 80 per cent; Germany 75 per cent; United Kingdom 68 per cent; and, United States 52 per cent.

Clearly, there is a huge skill gap. Bridging this gap is a mammoth task. The government has taken a number of initiatives to bridge the skills gap. Skilling is also critically important to ensure jobs to millions of unemployed people.

Skill India

The government has launched Skill India initiative with a target to provide skill training to 40.02 crore (400.2 million) people by 2022. The initiatives include National Skill Development Mission, National Policy for Skill Development and Entrepreneurship 2015, Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme and the Skill Loan scheme.

While launching the scheme on 16 July 2015, Prime Minister Narendra Modi had said employment generation and skill development are the top priorities for India. “If China is recognised as the ‘manufacturing factory’ of the world, India can become the ‘human resource capital’.”

PMKVY is an outcome and reward-based skill development scheme. Launched in July 2015, targets to provide trainings to 24 lakh persons. It included 14 lakh fresh entrants and 10 lakh through Recognition of Prior Learning (RPL).

In the Union Budget for 2016-17, Finance Minister Arun Jaitley proposed to scale up the scheme with a target to skill 1 crore youth over the next three years. More than 18 lakh youth have been enrolled under the scheme, of which over 10 lakh youth completed training by March 2016. “We want to bring entrepreneurship at the doorsteps of the youth through PMKVY. We have decided to set up 1,500 Multi Skill Training Institutes across the country. I am setting aside an amount of Rs.1,700 crore for these initiatives,” Jaitley had said.

New Policy

Modi government has revised the skill development initiatives of the UPA government making it more coherent and targeted. The Manmohan Singh-led UPA government unveiled National Policy on Skill Development in 2009. The policy was formulated by the Ministry of Labour & Employment. Modi government introduced the revised policy as National Policy for Skill Development and Entrepreneurship 2015. A separate Ministry of Skill Development and Entrepreneurship was created, which is responsible for implementation of the policy. According to an official statement, the vision of the new Policy is “to create an ecosystem of empowerment by Skilling on a large Scale at Speed with high Standards and to promote a culture of innovation based entrepreneurship which can generate wealth and employment so as to ensure Sustainable livelihoods for all citizens in the country”.

The new Policy has four thrust areas. It addresses key obstacles to skilling, including low aspirational value, lack of integration with formal education, lack of focus on outcomes, low quality of training infrastructure and trainers, etc. Further, the Policy seeks to align supply and demand for skills by bridging existing skill gaps, promoting industry engagement, operationalising a quality assurance framework, leverage technology and promoting greater opportunities for apprenticeship training.

Way Forward

The challenge is indeed enormous. It needs to be fought on multiple fronts. Job creation should be at the centre of the national development strategies. Only a substantial boost in manufacturing can create jobs in the country. Manufacturing base in India is very small, nowhere close to even the developing countries like China. Manufacturing contributes to only 15 per cent to GDP and around 11 per cent to employment in the country. Make in India is a step in the right direction, but its impact at the ground is yet to be seen.

Small and medium enterprises, that provide two-thirds of the current jobs in the sector, face many constraints. Majority of the jobs in the future would have to be provided by the SMEs only. Efforts have to be made to eliminate constraints facing the SMEs in the country. There is also a need for a structural transformation in the economy where the focus should on labour intensive activities.

(Gursharan Dhanjal can be reached at gsd@skoch.in)

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