Strategy for New India @ 75 PDF

 Strategy for New India @ 75 November 2018 Preface I ndia is on the cusp of a major transformation. Change has been in the making over the last four years. The economy is finally moving out of the negative legacies of the past, specially the reckless credit expansion. Ind...

 Strategy for New India @ 75 November 2018 Preface I ndia is on the cusp of a major transformation. Change has been in the making over the last four years. The economy is finally moving out of the negative legacies of the past, specially the reckless credit expansion. India has regained its position as the fastest growing large economy in the world. This is highly commendable. However, to meet the rising aspirations of our young population, India needs to achieve and sustain a high rate of GDP growth for the next three decades. There will be several milestones in this long and arduous journey. The first of these milestones will be in 2022 when India celebrates the 75th anniversary of its independence. The government’s goal is for India to be a USD 4.0 trillion economy when we celebrate the platinum jubilee of our independence. Moreover, the Prime Minister has given his clarion call for establishing a New India by 2022. The ‘Strategy for New India @ 75’ captures three key messages from the Prime Minister. First, development must become a mass movement, in which every Indian recognizes her role and also experiences the tangible benefits accruing to her in the form of better ease of living. Collective effort and resolve will ensure that we achieve a New India by 2022 just like independence was achieved within five years of Mahatma Gandhi giving his call of Quit India in 1942. The direct implication of ensuring rapid growth with inclusion is that policymaking will have to be rooted in Indian ground realities and emphasize the welfare of all in both design and implementation. Second, development strategy should help achieve broad-based economic growth to ensure balanced development across all regions and states and across sectors. This implies embracing new technologies fostering innovation and upskilling. We will have to focus on the necessary modernization of our agriculture and mainstreaming of regions such as the North East, hilly states and the 115 Aspirational Districts. The direct outcome of this will be improved regional and inter-personal equity and elimination of dualism that has so far characterised our economy. We will put in place an economy that is predominantly formal, rule-driven and facilitates investment and innovation. Third, the strategy when implemented, will bridge the gap between public and private sector performance. The Prime Minister has focused on putting in place a ‘development state’ in place of the ‘soft state’ that this government had inherited. In this context, the government has focused on the efficient delivery of public services, rooting out corruption and black economy, formalizing the economy and expanding the tax base, improving the ease of doing business, nursing the stressed commercial banking sector back to a healthy state, and stopping leakages through direct benefit transfers and widespread use of the JAM trinity. iii  Strategy for New India @ 75 Efficient, transparent and accountable governance has come to be recognized as this government’s USP. This will ensure that India will not only achieve its ambitious goals for 2022, but also go on to become one of the two largest economies in the world by 2047, when we celebrate the centenary of our independence. ‘Strategy for New India @ 75’ has identified 41 different areas that require either a sharper focus on implementing the flagship schemes already in place or a new design and initiative to achieve India’s true potential. Each chapter summarizes the current status of the sector, takes full cognizance of the progress made thus far and spells out the objectives. It then identifies the binding constraints and proposes measures to address these constraints. It is our hope that this new approach will provide an inventory of readily implementable measures for the government departments and agencies both in the central and state governments. The focus of the strategy is to further improve the policy environment in which private investors and other stakeholders can contribute their fullest towards achieving the goals set out for New India 2022. We have followed a deeply participative approach in preparing the strategy. The process started with a series of consultations with all possible stakeholders. Each area vertical in NITI Aayog had in depth consultations with all three groups of stakeholders, viz., business persons, academics including scientists, and government officials. This was followed by consultations held by NITI Aayog with seven sets of stakeholders that included scientists and innovators, farmers, civil society organizations, think tanks, labour representatives and trade unions, as well as industry representatives (Lists at Annex 1 and 2). Each chapter draft was sent to the respective line ministry for their inputs, suggestions and comments. The completed draft document was circulated to all the States and Union Territories. As many as 23 States and 4 Union Territories sent detailed and well considered comments and suggestions. These have helped in improving the draft by reflecting state specific features in various chapters. This exercise has further strengthened NITI Aayog’s efforts at cooperative federalism. It will also encourage us to collaborate with the states to develop state specific development blueprints. With these extensive consultations and inputs, the strategy reflects ground realities and a collective consensus on addressing the challenges and achieving the goals for a New India. The attempt is to present a set of ideas that can provide the basis for a constructive public-private-personal partnership and promote centre-state cooperation. We hope that the document will also help to build the trust required among all stakeholders for making development into a mass movement. I would like to thank NITI Aayog members Dr. V. K. Saraswat, Dr. Ramesh Chand and Dr. Vinod K. Paul for their leadership and invaluable inputs at every stage of the process. This document would not have been possible iv without the contribution of NITI Aayog CEO, Amitabh Kant and senior officials of NITI Aayog. I would like to thank Additional Secretaries Yaduvendra Mathur and R. P. Gupta; Senior Advisers Sunita Sanghi and Srikara Naik; Advisers Alok Kumar, Anil Srivastava, Anna Roy, Ashok K. Jain, J. P. Mishra, Jitendra Kumar, Maninder Kaur Dwivedi, Praveen Mahto, Ravinder Goyal, S. S. Ganapathy, U. K. Sharma, Vikram Singh Gaur, Yogesh Suri; Senior Consultants C. Muralikrishna Kumar, Rakesh Ranjan and Sujeet Samaddar and Officer on Special Duty Sanyukta Samaddar. This task would not have been completed without the help of a dedicated team of experts attached to the Vice Chairman’s office, led by Ramgopal Agarwala and Dhiraj Nayyar. The team consisted of Urvashi Prasad, Ranveer Nagaich, Devashish Dhar, Atisha Kumar, Chinmaya Goyal, Vaibhav Kapoor and Ajit Pai. Tara Nair provided crucial editing inputs. Preparing the strategy is only the first step towards India’s economic transformation. The foresighted framers of our celebrated Constitution have set the enormous challenge of simultaneously completing India’s triple transition across social, political and economic fields. India is one of the very few countries that have taken on this historical challenge of completing the three transitions together. Having successfully taken forward the social and political transitions, India is now within sight of completing its economic transition as well. This will see per capita incomes rising from about USD 1,900 in 2017-18 to around USD 3,000 in 2022-23. As outlined in this Strategy Document, successfully completing our economic transition will enable us to achieve freedom from squalor, illiteracy, corruption, poverty, malnutrition and poor connectivity for the common Indian. By 2022, New India will provide a solid foundation for clean, inclusive, sustained and sustainable growth for the next three decades. The ‘Strategy for New India @ 75’ reflects our preparedness to make this transition. Its recommendations are practical and detailed to facilitate time-bound implementation. All levels of government must work together to achieve the vision of New India. Working together as ‘Team India’ will ensure prosperity for all while protecting our environment and promoting the emergence of an innovative eco-system, propelling India to the front ranks of the global economy. Dr. Rajiv Kumar Vice Chairman NITI Aayog v Table of Contents Introduction 1 Drivers 1. Growth 7 2. Employment and Labour Reforms 12 3. Technology and Innovation 16 4. Industry 20 5. Doubling Farmers’ Income (I): Modernizing Agriculture 25 6. Doubling Farmers’ Income (II): Policy & Governance 30 7. Doubling Farmers’ Income (III): Value Chain & Rural Infrastructure 36 8. Financial Inclusion 41 9. Housing for All 45 10. Travel, Tourism and Hospitality 49 11. Minerals 54 Infrastructure 12. Energy 61 13. Surface Transport 66 14. Railways 70 15. Civil Aviation 75 16. Ports, Shipping and Inland Waterways 80 17. Logistics 85 18. Digital Connectivity 88 19. Smart Cities for Urban Transformation 92 20. Swachh Bharat Mission 96 21. Water Resources 100 22. Sustainable Environment 104 Inclusion 23. School Education 111 vii  Strategy for New India @ 75 Table of Contents 24. Higher Education 116 25. Teacher Education and Training 121 26. Skill Development 124 27. Public Health Management and Action 129 28. Comprehensive Primary Health Care 133 29. Human Resources for Health 137 30. Universal Health Coverage 142 31. Nutrition 146 32. Gender 150 33. Senior Citizens, Persons with Disability and Transgender Persons 155 34. Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Other Tribal Groups and Minorities 161 Governance 35. Balanced Regional Development: Transforming Aspirational Districts 169 36. The North-East Region 173 37. Legal, Judicial and Police Reforms 178 38. Civil Services Reforms 183 39. Modernizing City Governance for Urban Transformation 187 40. Optimizing the Use of Land Resources 191 41. Data Led Governance and Policy Making 195 Annex 1 199 Annex 2 205 viii List of Figures 1.1 India’s real GDP growth 8 2.1 Share of workforce employed in agriculture 13 3.1 Steps taken to promote science, technology and innovation in India 16 4.1 Manufacturing as a share of GDP, 2011-12 to 2017-18 21 6.1 Price spread between farm harvest prices and retail prices for select agricultural commodities, 2015-16 31 7.1 Additional markets required by 2022-23 36 8.1 Distribution of household savings across physical and financial assets 42 8.2 Growth in unified payment interface (UPI) usage 42 9.1 Multi-pronged approach to resolving constraints in the ‘Housing for All’ scheme 46 10.1 Contribution of travel and tourism in India, 2016 49 11.1 India’s share in world production, 2015 55 12.1 Strategies for improving the energy sector in India 63 13.1 Total number of registered vehicles in India 66 14.1 Growth of Indian Railways,1950-51 to 2013-14 71 15.1 Passenger traffic by scheduled carriers, 2007-08 to 2016-17 75 15.2 Freight Transported by air, 2007-08 to 2016-17 76 16.1 Operating cost comparison in transporting cargo through various modes 81 16.2 Pillars of the Sagarmala programme 81 18.1 Increase in internet users and online penetration in India 88 19.1 Four paradigms to leverage Smart Cities Mission 93 20.1 Improvement in Swachh Bharat Mission (Gramin) coverage 97 21.1 Status on average annual water availability 100 22.1 Strategies for achieving sustainable environment 105 23.1 Gross and net enrolment ratios for elementary, secondary and senior secondary 111 ix Strategy for New India @ 75 List of Figures 23.2 Learning outcomes from ASER survey 2016 for rural areas 112 24.1 Gross Enrolment Ratio in higher education, 2016-17 117 24.2 UGC’s graded autonomy regulations for universities 118 26.1 Workforce that has undergone formal skill training 125 27.1 Preventable risk factors are the biggest contributors to the disease burden, 2016 130 28.1 Additional services to be provided under the New India primary care system 134 28.2 Revamped primary health system for New India 135 29.1 Shortfall of specialists in government health centres compared to the requirement based on existing infrastructure 138 29.2 Sanctioned posts of specialists vacant 138 30.1 Pillars of universal health coverage 143 31.1 Key nutritional indicators in India 146 32.1 Progress with respect to gender-related indicators 150 32.2 Female labour force participation 151 32.3 Examples of indicators that could be used for developing the gender-based index and ranking states 153 33.1 School attendance of children with disabilities between 5-19 years 156 33.2 Literacy status of PwDs 157 33.3 Allocation and expenditure pertaining to the Department of Empowerment of Persons with Disabilities 157 34.1 Workforce participation rate 164 34.2 Out of school children by religious group 165 35.1 Illustration of how the ADP converges stakeholders’ efforts in the prevention of stunting 171 36.1 Per capita NSDP for north-east states, 2015-16 173 36.2 Per capita NSDP for north-east states, 2004-05 174 x List of Figures 36.3 Timeline of government initiatives for the development of north-east region 175 39.1 Key strategies to improve urban governance by 2022-23 188 40.1 Land use across different uses in India, 1990-91 to 2013-14 191 41.1 Framework for achieving transparent governance 197 List of Tables 7.1 Gaps in cold-chain development 37 23.1 Profile of public schools with low enrolment 114 34.1 Incidence of poverty across social groups 161 34.2 Literacy rate among social groups 162 34.3 Literacy Rate among minority communities 164 35.1 Core dimensions of ADP and their weightage 171 xi Introduction O n August 15, 2022, independent India will turn 75. In the lifespan of nations, India is still young. The best is surely yet to come. India’s youthful and aspirational population deserves a rapid transformation of the economy, which can deliver double-digit growth, jobs and prosperity to all. A strong foundation has been laid in the last four years. While there is every room for confidence, there is none for complacency. A surge of energy, untiring effort and an unshakeable resolve on the part of the government, private sector and every individual citizen can achieve this transformation in the next five years. Seventy years ago, similar energy, effort and resolve from all Indians freed the country from colonial rule within five years of the launch of the Quit India movement in 1942. Then, like now, foundations had been laid but a committed acceleration of effort was necessary. The Prime Minister’s call for Sankalp Se Siddhi is a clarion call for a radical transformation for a New India by 2022-23. The government has to be in the vanguard of the transformation of the Indian economy. However, the government’s role must be defined correctly. This Strategy document attempts to do this. The document is being framed in a context where a re-imagination of governance is taking place. We need a ‘development state’ that focuses sharply on the difficult and accountable delivery of key public goods and services. There is an ongoing effort to achieve an optimum level of public-private partnership. Policies have been put in place for more efficient delivery of public goods and services such as health, education, power, urban water supply and connectivity. In this context, a deliberate effort is being made to cut red tape and end burdensome over- regulation for promoting entrepreneurship and private investment. Also, in an effort to align the ‘Strategy for New India @ 75’ with India’s commitment to the United Nations’ Sustainable Development Goals, each chapter is mapped to the relevant goals. India is currently putting in place a ‘development state’ guided by the philosophy of Sabka Saath, Sabka Vikas. The purpose of this document, ‘Strategy for New India @ 75’, is to define clear objectives for 2022-23 in a diverse range of 41 areas that recognize the progress already made; and challenges that remain; identify binding constraints in specific sectors; and suggest the way forward for achieving the stated objectives. The Strategy document has disaggregated the 41 sectors under four sections: drivers, infrastructure, inclusion and governance. The first section on drivers focuses on the engines of economic performance – in macroeconomic terms with chapters on growth and employment. The section also discusses strategies for the doubling of farmers’ incomes; boosting Make in India; upgrading the science, technology and innovation eco-system; and promoting sunrise sectors like fintech and tourism. An annual rate of growth of 9 per cent 1  Strategy for New India @ 75 by 2022-23 is essential for generating sufficient jobs and achieving prosperity for all. Four key steps, among others have been spelled out for achieving this GDP growth rate. These are: a. Increase the investment rate as measured by gross fixed capital formation (GFCF) from present 29 per cent to 36 per cent of GDP by 2022. About half of this increase must come from public investment which is slated to increase from 4 per cent to 7 per cent of GDP. Government savings have to move into positive territory. This sharp increase in investment-to-GDP ratio will require significantly higher resource mobilization efforts as elaborated in the chapter on Growth. b. In agriculture, emphasis must shift to converting farmers to ‘agripreneurs’ by further expanding e-National Agriculture Markets (e-NAMs) and replacing the Agricultural Produce Marketing Committee (APMC) Act with the Agricultural Produce and Livestock Marketing (APLM) Act. The creation of a unified national market, a freer export regime and abolition of the Essential Commodities Act are essential for boosting agricultural growth. c. A strong push would be given to ‘Zero Budget Natural Farming’ (ZBNF) techniques that reduce costs, improve land quality and increase farmers’ incomes. This is a tested method for putting environment carbon back into the land. Therefore, ZBNF allows India to significantly contribute to reducing the global carbon footprint. d. To ensure maximum employment creation, codification of labour laws must be completed and a massive effort must be made to upscale apprenticeships. The second section on infrastructure deals with the physical foundations of growth. A lot of progress has been made across all infrastructure sectors. This is crucial to enhancing the competitiveness of Indian business as also ensuring the citizens’ ease of living. Three key steps, among others, are: a. Expediting the establishment of the Rail Development Authority (RDA), which is already approved. RDA will advise or make informed decisions on an integrated, transparent and dynamic pricing mechanism for the railways. Investment in railways will be ramped up, including by monetising existing railway assets. b. The share of freight transported by coastal shipping and inland waterways will be doubled. Initially, viability gap funding will be provided until the infrastructure is fully developed. An IT-enabled platform would be developed for integrating different modes of transport and promoting multi-modal and digitised mobility. c. With the completion of the Bharat Net programme in 2019, all 2.5 lakh gram panchayats will be digitally connected. In the next phase the last mile connectivity to the individual villages will be completed. The aim will be to deliver all government services at the state, district, and gram panchayat level digitally by 2022-23, thereby eliminating the digital divide. 2 The section on inclusion deals with the urgent task of investing in the capabilities of all of India’s citizens. The three themes in this section revolve around the various dimensions of health, education and mainstreaming of traditionally marginalized sections of the population. While there are multiple dimensions and pathways contained in the chapters in this section, four key steps, among others, are: a. Successfully implementing the Ayushman Bharat programme including the establishment of 150,000 health and wellness centres across the country, and rolling out the Pradhan Mantri Jan Arogya Abhiyaan. b. Upgrading the quality of the school education system and skills, including the creation of a new innovation ecosystem at the ground level by establishing at least 10,000 Atal Tinkering Labs by 2020. c. As already done in rural areas, affordable housing in urban areas will be given a huge push to improve workers’ living conditions and ensure equity while providing a strong impetus to economic growth. d. Implementing strategies to achieve regional equity by focusing on the North-East region and successfully rolling out the Aspirational Districts Programme. The final section on governance delves deep into how the tasks/business of government can be streamlined and reformed to achieve better outcomes. It involves a sharp focus on ensuring accountability and a shift to performance-based evaluation. The government will revamp its data systems and analysis so that all policy interventions and decision-making are based on evidence and real-time data. This will yield efficient and targeted delivery of services and justice to those who need them the most. Three key steps, among others, are: a. Implementing the recommendations of the Second Administrative Reforms Commission as a prelude to appointing a successor for designing reforms in the changing context of emerging technologies and growing complexity of the economy. b. A new autonomous body, viz., the Arbitration Council of India, may be set up to grade arbitral institutions and accredit arbitrators to make the arbitration process cost effective and speedy, and to pre- empt the need for court intervention. c. The scope of Swachh Bharat Mission may be expanded to cover initiatives for landfills, plastic waste and municipal waste and generating wealth from waste. To achieve the goals of New India in 2022-23, it is important for the private sector, civil society and even individuals to draw up their own strategies to complement and supplement the steps the government intends to take. With the available tools of 21st century technology, it should be possible to truly create a mass movement for development. With the Sankalp of all Indians, India will have Siddhi. 3 DRIVERS 1. Growth Objectives manufacturing. Complex land and labour laws have also played a notable part in this outcome. There Steadily accelerate the gross domestic product is a need to increase the pace of generating good (GDP) growth rate to achieve a target of about quality jobs to cater to the growing workforce, their 8 per cent during 2018-23 (note that this target rising aspirations and to absorb out-migration of has been set to catalyse policy action and labour from agriculture. does not represent a forecast). This will raise the economy’s size in real terms from USD 2.7 The positive news is that high growth rate has been trillion in 2017-18 to nearly USD 4 trillion by achieved with strong macroeconomic fundamentals 2022-23. Besides having rapid growth, which including low and stable rates of inflation and reaches 9-10 per cent by 2022-23, it is also a falling fiscal deficit. However, along with necessary to ensure that growth is inclusive, macroeconomic stability, the sufficient condition for sustained, clean and formalized. escalating growth is to continue with the structural reforms that address the binding constraints for a The investment rate should be raised from 29 more robust supply-side response. per cent to 36 per cent of GDP which has been achieved in the past, by 2022-23. Constraints Exports of goods and services combined should Overall, growth can be accelerated by a number be increased from USD 478 billion in 2017-18 of measures across different policy areas, which to USD 800 billion by 2022-23. have been detailed in different chapters of this strategy for 2022-23. This chapter focuses on the Current Situation macroeconomic drivers of growth. Economic growth in India has been broadly on an accelerating path. It is likely to be the fastest Way Forward growing major economy in the world in the 1. Raising investment rates to 36 per cent by medium-term. 2022-23 The share of manufacturing in India’s GDP is low To raise the rate of investment (gross fixed relative to the average in low and middle-income capital formation as a share of GDP) from about countries. It has not increased in any significant 29 per cent in 2017-18 to about 36 per cent measure in the quarter century after economic of GDP by 2022-23, a slew of measures will liberalization began in 1991. Within manufacturing, be required to boost both private and public growth has often been highest in sectors that are investment. relatively capital intensive, such as automobiles and pharmaceuticals. This stems from India’s inability to capitalize fully on its inherent labour and skill cost advantages to develop large-scale labour intensive 7  Strategy for New India @ 75 Figure 1.1: India’s real GDP growth 10% 9% Real GDP Growth (%) 8% 7% 6% 5% 4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Source: Ministry of Statistics and Programme Implementation India’s tax-GDP ratio of around 17 per cent needs to be increased to at least 7 per cent of is half the average of OECD countries (35 GDP by 2022-23 through greater orientation per cent) and is low even when compared to of expenditure towards productive assets, and other emerging economies like Brazil (34 per minimizing the effective revenue deficit. cent), South Africa (27 per cent) and China States could also undertake greater mobilization (22 per cent). To enhance public investment, of own taxes such as property tax, and taking India should aim to increase its tax-GDP specific steps to improve administration of GST ratio to at least 22 per cent of GDP by 2022- to increase tax collections. 23. Demonetization and GST will contribute positively to this critical effort. In addition, Two areas in which higher public investment efforts need to be made to rationalize direct will easily be absorbed are housing and taxes for both corporate tax and personal infrastructure. Investment in housing, income tax. Simultaneously, there is a need to especially in urban areas, will create very large ease the tax compliance burden and eliminate multiplier effects in the economy. Investment direct interface between taxpayers and tax in physical infrastructure will address long- officials using technology. standing deficiencies faced by the economy. Sector-specific measures are mentioned in In 2016-17, the share of government (central corresponding chapters. and state combined) capital expenditure in total budget expenditure was 16.2 per cent,1 The government has taken significant measures and government’s contribution to fixed capital to attract foreign direct investment by easing formation was close to 4 per cent of GDP. This caps on the extent of permissible stake holding 8  and the norms of approval. By 2022-23, the improve the availability of credit for the private government may consider further liberalizing sector in the financial markets. FDI norms across sectors. Domestic savings But even as lowering of debt and limiting fiscal can be complemented by attracting foreign deficit are important, the government should investment in bonds and government securities. be flexible in its approach towards setting Regulatory limits can be relaxed for rupee annual targets based on prevailing economic denominated debt. conditions. This approach is enshrined in The government should continue to exit central the existing Fiscal Responsibility and Budget public sector enterprises (CPSEs) that are not Management (FRBM) architecture that has built strategic in nature. Inefficient CPSEs surviving in flexibility in the form of adequately defined on government support distort entire sectors “escape and buoyancy” clauses. Targets should as they operate without any real budget take cognizance of the stage of the business constraints. The government’s exit will attract cycle and fiscal deficit and borrowing targets private investment and contribute to the should not be set in isolation. exchequer, enabling higher public investment. The effective revenue deficit should be For larger CPSEs, the goal should be to create brought down as rapidly as possible. Capital widely held companies by offloading stake to expenditure incurred for the health and the public to create entities where no single education sectors, which in effect builds promoter has control. This will both improve human capital, should be excluded from management efficiency and allow government estimates of revenue expenditure. This will to monetize its holdings with substantial increase government savings. contribution to public finances. One of the major institutional reforms of recent Private investment needs be encouraged in years has been to statutely mandate the RBI infrastructure through a renewed public-private to maintain “... price stability while keeping in partnership (PPP) mechanism on the lines mind the objective of growth”. Inflation needs suggested by the Kelkar Committee. to be contained within the stated target range 2. Macroeconomic stability through prudent of 2 per cent to 6 per cent. Inflation targeting fiscal and monetary policies provides a reasonably flexible policy framework which is in line with global best practices and Sustained high growth requires macroeconomic can respond appropriately to supply shocks. stability, which is being achieved through a combination of prudent fiscal and monetary Policy should be directed to minimize volatility policies. in the nominal exchange rate. The government has targeted a gradual 3. Efficient financial intermediation lowering of the government debt-to-GDP ratio. Efficient functioning of the financial markets is It will help reduce the relatively high interest crucial to maintain high growth in the economy. cost burden on the government budget, bring There is a need to deepen financial markets the size of India’s government debt closer to with easier availability of capital, greater use that of other emerging market economies, and 9  Strategy for New India @ 75 of financial markets to channel savings and Improve connectivity by accelerating the an improved risk-assessment framework for completion of announced infrastructure lending to avoid a situation of large-scale non- projects. Enhancing physical connectivity will performing assets in the banking sector. help reduce delivery times and improve global connectivity and the reach of our exporters. By Governance reforms in public sector banks require, 2022-23, we should complete projects that are apart from the establishment of independent and already underway such as the Delhi-Mumbai commercially driven bank boards, performance Industrial Corridor (DMIC) and Dedicated Freight assessment of executives and increased flexibility Corridors. in human resources policy. Work with states to ease labour and land The Gujarat International Finance and Tech regulations. In particular, we should introduce City (GIFT) should be leveraged to push the flexibility in labour provisions across sectors. All envelope on financial sector liberalization. It state governments should speedily implement is an opportunity to onshore trading in rupees fixed term employment (FTE) that has now been and other derivatives, which currently happens extended to cover all sectors. outside India for regulatory reasons. If GIFT succeeds, liberalization can be extended to the The government has recently established rest of the country. a dedicated fund of INR 5,000 crore for enhancing 12 “Champion Services Sectors”. Enable alternative (to banks) sources of credit Among others, these include IT & ITeS, tourism, for India’s long-term investment needs. medical value travel and audio visual services. The bond market needs deepening through Given the significant role of services exports in liberalization of regulations and continued fiscal maintaining India’s balance of payments, the consolidation. government should continue to focus on these 4. Focus on exports and manufacturing sectors. India needs to remain globally competitive, Strengthen the governance and technical particularly in the production and exports of capabilities of Export Promotion Councils manufactured, including processed agricultural, (EPCs) by subjecting them to a well-defined, goods. The following reforms would help in performance-based evaluation. Performance improving the competitiveness: evaluations of EPCs could be based on o A focused effort on making the logistics increasing the share of Indian exports in sector more efficient is needed. product markets covered by these EPCs. Those EPCs unable to achieve mutually agreed upon o Power tariff structures may be rationalized targets for increasing market shares could be to ensure global competitiveness of Indian closed down or re-structured. industries. Explore closer economic integration within o Import tariffs that seek to promote South Asia and the emerging economies of indigenous industry should come with South East Asia particularly Cambodia, Laos, measures to raise productivity which will Myanmar and Vietnam, using the existing provide the ability to compete globally. Bangladesh, Bhutan, India, Nepal (BBIN) and 10  the Bay of Bengal Initiative for Multi-Sectoral the growth targets by implementing the Technical and Economic Co-operation (BIMSTEC) development strategy outlined in this document frameworks. can generate sufficient jobs for new entrants into the labour force, as well as those migrating o Building the physical infrastructure and out of agriculture. A large part of jobs would putting in place measures to facilitate hopefully be generated in labour-intensive seamless cross-border movement of manufacturing sectors, construction and goods in the North-East region would services. In addition, the employability of labour help accelerate integration and promote needs to be enhanced by improving health, exports. education and skilling outcomes and a massive 5. Employment generation expansion of the apprenticeship scheme. The necessary condition for employment generation is economic growth. Achieving ________________________________________ 1 Source: RBI. 11  Strategy for New India @ 75 2. Employment and Labour Reforms Objectives growth. By some estimates, the Indian economy will need to generate nearly 70 lakh jobs annually Complete codification of central labour laws to absorb the net addition to the workforce. Taking into four codes by 2019. into account the shift of labour force from low Increase female labour force participation to at productivity employment, 80-90 lakhs new jobs will least 30 per cent by 2022-23. be needed in the coming years. Disseminate publicly available data, collected Micro and small-sized firms as well as informal through rigorous household and enterprise sector firms dominate the employment landscape surveys and innovative use of administrative in India. As per the National Sample Survey (NSS) data on a quarterly basis by 2022-23. 73rd round, for the period 2015-16, there were Encourage increased formalization of the labour 6.34 crore unincorporated non-agricultural micro, force by reforming labour laws, easing of small and medium enterprises (MSMEs) in the industrial relations and ensuring of fair wages, country engaged in different economic activities working conditions and social security through providing employment to 11.10 crore workers. A significant productivity improvements in the large majority of these firms are in the unorganized economy. sector. By some estimates, India’s informal sector employs approximately 85 per cent of all workers.3 Current Situation India also exhibits a low and declining female To capitalize on its demographic dividend, India labour force participation rate. The female labour must create well-paying, high productivity jobs. Of force participation rate in India was 23.7 per cent in India’s total workforce of about 52 crore, agriculture 2011-124 compared to 61 per cent in China, 56 per employed nearly 49 per cent while contributing cent in the United States.5 only 15 per cent of the GVA. Comprehensive Recognizing the high cost of compliance with modernization of agriculture and allied sectors are existing labour regulations and the complexity needed urgently. In contrast, only about 29 per cent generated by various labour laws at the central of China’s workforce was employed in agriculture and state levels, the central government has (Figure 2.1).1 Industry and services accounted recently introduced policies to make compliance for 13.7 and 37.5 per cent of employment while easier and more effective. They are also simplifying making up for 23 per cent and 62 per cent of GVA, and rationalizing the large and often overlapping respectively.2 A significant number of workers, currently employed in agriculture, will move out in search of jobs in other areas. This will be in addition to the new entrants to the labour force as a result of population 12  Figure 2.1: Share of workforce employed in agriculture 50% 49% Share of Workforce Employed in 45% 40% 35% Agriculture (%) 29% 30% 25% 20% 14.50% 15% 10% 4.60% 5% 0% India China Brazil South Africa Source: NSSO; World Bank number of labour laws. These measures include to credit and addressing sector specific constraints. moving licensing and compliance processes The government also made the EPFO premium online, simplifying procedures and permitting portable so that workers can change jobs without self-certification in larger number of areas. One of fear of losing their provident fund benefits. the government’s key initiatives is to rationalize 38 The government has recently made publicly central labour laws into four codes, namely wages, available the data on employment collected by the safety and working conditions, industrial relations, Employment Provident Fund Organization (EPFO), and social security and welfare. Of the four codes, Employees’ State Insurance Corporation (ESIC) the one on wages has been introduced in the Lok and National Pension Scheme (NPS). With MOSPI Sabha and is under examination. The other three collecting employment data through its enterprises codes are at the pre-legislative consultation stage and household surveys – particularly the Periodic and should be completed urgently. Labour Force Survey – and the focus on improving The government has put in place several schemes payroll data, the effort is to vastly improve to help generate employment. These include the availability of reliable employment data and release Mahatma Gandhi National Rural Employment it on a regular basis. Guarantee Scheme (MGNREGS), MUDRA Yojana, Prime Minister’s Employment Generation Constraints Programme and Pradhan Mantri Rojgar Protsahan Productivity across all sectors. A large Yojana. Additional initiatives aid job creation share of India’s workforce is employed in through providing skill development, easing access low productivity activities with low levels of 13  Strategy for New India @ 75 remuneration. This is especially true of the 2. Labour law reforms informal sector where wages can be one Complete the codification of labour laws at the twentieth of those in firms producing the same earliest. goods or services but in the formal sector.6 Simplify and modify labour laws applicable Protection and social security. A large number to the formal sector to introduce an optimum of workers that are engaged in the unorganized combination of flexibility and security. sector are not covered by labour regulations and social security. This dualistic nature of the Make the compliance of working conditions labour market in India may be a result of the regulations more effective and transparent. complex and large number of labour laws that The National Policy for Domestic Workers make compliance very costly. In 2016, there needs to be brought in at the earliest to were 44 labour laws under the statute of the recognize their rights and promote better central government. More than 100 laws fall working conditions. under the jurisdiction of state governments.7 3. Enhance female labour force participation The multiplicity and complexity of laws makes compliance and enforcement difficult. Ensure the implementation of and employers’ adherence to the recently passed Maternity Skills. According to the India Skill Report 2018, Benefit (Amendment) Act, 2017, and the only 47 per cent of those coming out of higher Sexual Harassment of Women at Work Place educational institutions are employable.8 (Prevention, Prohibition and Redressal) Act. It is Employment data. We currently lack timely also important to ensure implementation of these and periodic estimates of the work force. legislations in the informal sector. Further details This lack of data prevents us from rigorously may be found in the chapter on Gender. monitoring the employment situation and Ensure that skills training programmes and assessing the impact of various interventions to apprenticeships include women. create jobs. 4. Improve data collection on employment Way Forward Ensure that data collection for the Periodic 1. Enhance skills and apprenticeships Labour Force Survey (PFLS) of households The Labour Market Information System (LMIS) initiated in April 2017 is completed as per is important for identifying skill shortages, schedule and data disseminated by 2019. training needs and employment created. The Conduct an annual enterprise survey using the LMIS should be made functional urgently. goods and service tax network (GSTN) as the Ensure the wider use of apprenticeship sample frame. programmes by all enterprises. This may require Increase the use of administrative data viz. an enhancement of the stipend amount paid EPFO, ESIC and the NPS to track regularly the by the government for sharing the costs of state of employment while adjusting for the apprenticeships with employers. formalization of the workforce. 14 5. Ease industrial relations to encourage 7. Working conditions and social security formalization Enact a comprehensive occupational health and Increase severance pay, in line with global best safety legislation based on risk assessment, practices. employer-worker co-operation, and effective educational, remedial and sanctioning. Workers Overhaul the labour dispute resolution system housing on site will help to improve global to resolve disputes quickly, efficiently, fairly and competitiveness of Indian industry, along with at low cost. enhancing workers’ welfare. Strengthen labour courts/tribunals for timely Enhance occupational safety and health (OSH) dispute resolution and set a time frame for in the informal sector through capacity building different disputes. and targeted programmes. 6. Wages Ensure compulsory registration of all Make compliance with the national floor level establishments to ensure better monitoring of minimum wage mandatory. occupational safety as well as recreation and Expand the Minimum Wages Act, 1948, to sanitation facilities. cover all jobs. Enhance transparency in the labour inspection Enforce the payment of wages through cheque system by allowing online complaints and or Aadhaar-enabled payments for all. putting in place a standardized and clear mechanism. ________________________________________ 1 2017 OECD Economic Survey of India; NSSO. 2 Sectoral Contribution to GVA calculated using data from MOSPI’s Second Advance Estimates. Industry consists of manufacturing, mining and quarrying and electricity, gas, water supply& other utility services. The services sector consists of trade, hotels, transport, communication and services related to broadcasting; construction; financial, real estate and professional services; and public admin- istration, defence and other services. 3 OECD India Policy Brief, Education and Skills. Accessed May 15, 2018. https://www.oecd.org/policy-briefs/India-Improving-Quality-of-Education-and-Skills-Development.pdf. 4 NSSO 68th Round (2011-12). Female labour force participation rate calculated using usual principal status, covering both urban and rural areas. 5 World Development Indicators database, World Bank. Accessed May 16, 2018. 6 Data from Annual Survey of Industries (ASI) and NSS, cited in the Annual Economic Survey, 2015-16 http://indiabudget.nic.in/es2015-16/echapvol1-10.pdf. Accessed May 15, 2018. 7 Ministry of Labour and Employment, India. http://labour.nic.in/about-ministry. Accessed May 15, 2018. 8 India Skill Report 2018. 15  Strategy for New India @ 75 3. Technology and Innovation Objectives TECHNOLOGY AND INNOVATION Current Situation India should be among the top 50 countries in Recognizing the crucial role of technology and inno- OBJECTIVE: the Global Innovation Index by 2022-23.1 vation in economic development, India’s policy mak- ers have taken several initiatives to promote science, By 2022-23: Five of our scientific research institutions should technology and innovation (see figure below). be amongst India the top 100 should in the the be among world. top 50 countries in the Global Innovation Index.i  Ten of our scientific research institutions shouldVarious be amongst schemesthe have top 100 beenin launched the world.to attract, India should aim to spend at least 2 per cent  India should aim to spend at least 2 per cent of gross domestic product (GDP) on R&D with of grossequal domestic product (GDP) on R&D with nurture and retain young researchers and women contributions from the public and private sector. equal contributions from the public and private scientists in the field of scientific research. Some sector. important achievements in the field of science and CURRENT SITUATION technology are enumerated below. Recognizing the crucial role of technology and innovation in economic development, India’s policy makers have taken several initiatives over the last decade and a half to promote science, technology and innovation (see figure below): Figure 1: Steps taken to promote science, technology and innovation in India Figure 3.1: Steps taken to promote science, technology and innovation in India 1971 Department of Science and Technology established. Promotes basic research via: Research funding schemes through Science and Engineering Research 2003 Board (SERB) and other Science and in-house programmes Technology 2016 Autonomous Institutions Policy brought Atal Innovation (AIs) under DST were set together Science Mission up and Technology launched 2000 2013 National Science, Innovation Technology and Foundation was Innovation (STI) set up to fund Policy formulated. grassroots innovations Various schemes have been launched to attract, 16 nurture and retain young researchers and women scientists in the field of scientific research. Some important achievements in the field of science and technology are enumerated below:  India has become a major destination for in the coming years. The government has outsourced R&D activities. We currently have set up the Atal Innovation Mission (AIM) more than 1,100 R&D centres set up by multi- to transform radically the innovation, national companies (MNCs) such as IBM, Google, entrepreneurship and start-up ecosystem of Microsoft, Intel, Lupin, Wockhardt, etc. These the country. R&D centres cover areas including information While India has improved in most areas of and communication technologies, biotechnology, technology, it is also necessary to recognize the and aerospace, automotive, chemicals and challenges that we need to overcome to become an materials technology. India’s relatively strong innovation led society. intellectual property regime will facilitate its emergemce as a major R&D centre. Constraints Indian scientists are at the forefront of some Low R&D expenditure, especially from the private global groundbreaking work. Recent contribu- sector, is a key challenge facing the innovation tions by Indian scientists to frontier research ecosystem in India. The latest R&D Statistics2 and technology have been encouraging. For released by the National Science and Technology example, 37 Indian scientists from nine Indian Management Information System (NSTMIS) of institutions played a key role in the discovery the Department of Science and Technology (DST) of gravitational waves that received the Physics show that while R&D expenditure in India tripled Nobel prize in 2017. Indian scientists also in the period from 2004-05 to 2014-15, its size contributed to the discovery of a neutron star as a percentage of GDP remained at 0.7 per cent. merger at Laser Interferometer Gravitational This is very low compared to the 2 per cent and Wave Observatory (LIGO), USA. 1.2 per cent spent by China (for 2015) and Brazil The development of Brahmos, advanced air (for 2014) respectively.3 Countries like Israel defence supersonic interceptor missiles, diverse spend as much as 4.3 per cent of their GDP on missiles and rocket systems, remotely piloted R&D. Furthermore, while the share of the private vehicles, light combat aircraft, etc., are brilliant sector in R&D investment in most technologically examples of India’s progress in strategic and advanced countries is as high as 65 per cent to defence technologies. 75 per cent, it is only about 30 per cent in India. India now ranks amongst a handful of nations The number of scientific R&D professionals that have credible capabilities in the field of in India at 218 per million population is space technology. The upgrading from SLV to distressingly low compared to China’s 1,113 ASLV and PSLV to GSLV, the first moon orbiter and USA’s 4,019. project Chandrayan-1, Mars Orbiter Mission The link between research, higher education and the recent simultaneous launch of 104 and industry is weak and nascent. It needs to satellites are India’s significant achievements. be strengthened and put on a firm platform. India is now the third largest country in Our education system has so far not focused on terms of the number of start-ups. This cultivating a scientific temperament at an early number is expected to rise exponentially age. Even at the later stages of an aspiring sci- 17  Strategy for New India @ 75 entist’s career, the lack of career opportunities proposed body will help in pursuing inter- in basic sciences leads to the diversion of po- ministerial, inter-disciplinary research besides tential researchers to other rewarding sectors. breaking silos among various scientific departments/agencies. “Lab to Land” time is too long. Renowned public funded institutions like the Council of Scientific The major weaknesses of public funded & Industrial Research (CSIR), Defence Research R&D and technology institutions like CSIR, and Development Organization (DRDO), Bhabha DRDO, BARC, ICMR and ISRO are their poor Atomic Research Centre (BARC), Indian Council marketing skills and information dissemination. of Medical Research (ICMR), Indian Council Some measures for enhancing technology of Agricultural Research (ICAR) Indian Space commercialization by public funded institutions Research Organisation (ISRO), Indira Gandhi are provided below: Centre for Atomic Research (IGCAR) etc., along with prominent universities across the country, o Value addition centres may be set up in have developed many frontline technologies. each of these institutions for (i) up-scaling However, the rate of transfer of these technologies, (ii) improving technologies technologies to industry and for societal benefits from Technology Readiness Level (TRL) 4 to is low. TRL 6/7, (iii) demonstrating industrial scale pilot production, (iv) coordinating with in- The adoption of indigenous innovations by vestors to incubate entrepreneurs, (v) bridg- Indian industry is not very encouraging. ing the gap between industry and technolo- Frequent violation of Preferential Market Access gy development teams, (vi) enabling formal (PMA) is an issue leading to large-scale imports technology transfer, (vii) enabling commer- of foreign products and services. cialization and marketing and (viii) providing The public procurement system is heavily technology support during production. biased in favour of experienced and established o DST should create a National Technology products and technologies. This strongly Data Bank in coordination with all publicly discourages new and innovative technologies funded R&D institutions. This will provide a offered by start-ups, who do not get much- central database for technologies that are needed support from government procurement. ready for deployment or under development. There has been poor progress in the o Public funded research institutions development and deployment of affordable should consider shifting their focus to the technologies for rural areas, particularly in development and deployment of socially agriculture, agro-processing, micro irrigation, etc. relevant technologies in areas such as clean drinking water, sanitation, energy, The Way Forward affordable healthcare, organic farming, etc. An empowered body is needed to steer These technologies have large potential for holistically the management of science in the commercialization. country. Its scope will include science education Measures related to government procurement and scientific research as well as coordinating include the following: and guiding various science initiatives. The 18  o In all government procurements, rail transport. These, along with Atal Incubation international competitive bidding for both Centres (AICs) will also provide the platform products and services should be resorted for promoting frugal innovation. More such to only when Indian manufacturers are challenges will be launched in partnership with unable to supply products/services of ministries and support will be provided to these comparable international quality. This will ministries to adopt the resultant innovations. promote the Make in India initiative. AIM has set up over 1000 Atal Tinkering Labs o Quarterly workshops may be organised for (ATLs) around the country covering over 625 creating awareness among procurement districts. It is aimed to take this number to managers of various ministries/ at least 5,000 by 2019 and 10,000 by 2020. departments/state governments/CPSUs, Further expansion will be considered based on about the DIPP’s Public Procurement Order the outcomes of the first phase. 2017 (which aims to promote Make in To promote entrepreneurship and startups, AIM India products/services). is supporting AICs across the country including o To adopt innovative technologies, at Tier II/III locations. These include existing experts/scientific practitioners should be and new incubation centres. It is expected that mandatorily included on board/committees more than 100 world-class incubation centres related to government procurement. All will be up and running by 2020. RFP/RFQ documents should include a Foreign collaborators, consultants, visiting suitable clause in this regard. faculty, adjunct scientists, etc., need to be o In order to promote procurement of goods/ involved in pursuing R&D in the emerging areas services developed by Indian start-ups, of basic sciences such as nano-technology, preference in the technical evaluation could stem cell research, astronomy, genetics, next be provided to them. generation genomics, drug discovery, etc. DST, in collaboration with Indian Missions abroad, may To bring vibrancy to frugal innovations, a non- identify discipline wise foreign experts who can lapsable “District Innovation Fund” with a corpus collaborate with Indian scientists to take basic of about INR 2 crore in each district may be creat- research in these areas to the next level. ed and used to promote grass root innovations. The Higher Education Commission once set AIM has already launched Atal New India up may consider giving credits for innovation Challenges in partnership with five ministries and start-ups and also setting up online to create products from technologies and entrepreneurial development courses in colleges prototypes in areas of national importance and universities. such as solid waste management, water and wastewater management as well as road and ________________________________________ 1 Published by World Intellectual Property Organization jointly with Cornell University and INSEAD. 2 Source: http://www.nstmis-dst.org/Statistics-Glance-2017-18.pdf. Accessed April 20, 2018. 3 World Bank Statistics. 19  Strategy for New India @ 75 4. Industry Objectives enhance the ease of doing business. Following concerted efforts of the government, the World Double the current growth rate of the manufac- Bank ranked India 100th among 190 countries turing sector by 2022. in the Ease of Doing Business (EODB) in 2018. Promote in a planned manner the adoption of This was a jump of 34 positions since 2014. the latest technology advancements, referred to While these indices are useful for comparison, as ‘Industry 4.0’, that will have a defining role actual improvement in EODB will come only with in shaping the manufacturing sector in 2022. greater coordination between the centre and states. Current Situation The foreign direct investment (FDI) regime has been India is the fifth largest manufacturer in the world substantially liberalized, significantly improving with a gross value added (GVA) of INR 21,531.47 India’s rank in terms of annual FDI inflows from 14 billion in 2017-18 (2nd advance estimate for in 2010 to 9 in 2017. However, India receives only 2017-18 at 2011-12 prices). The sector registered 25 per cent of the FDI that China gets and only 10 a compound annual growth rate (CAGR) of around per cent of what the USA receives. FDI inflows into 7.7 per cent between 2012-13 and 2017-18.1 the manufacturing sector reached about 35 per cent The government has taken several initiatives to of total FDI.4 promote manufacturing. Among these are the Manufacturing as a percentage of the gross Make in India Action Plan aimed at increasing domestic product has remained at about 16 per the manufacturing sector’s contribution to 25 per cent. Improvement are evident in recent quarters, cent of GDP by 2020,2 the Start-up India initia- where manufacturing growth at 6.9 per cent and tive to promote entrepreneurship and nurture 8.1 per cent in Q2 and Q3 2017-18 (year-on-year innovation, and the Micro Units Development as compared to 2016-17) outpaced GDP growth. and Refinance Agency (MUDRA) and Stand-up Figure 4.1 shows the trend in manufacturing as a India to facilitate access to credit. It has also un- percentage of GVA from 2011-12 until 2017-18. dertaken massive recapitalisation of public sector banks3 to ease availability of credit to micro, Constraints small and medium enterprises (MSMEs). Besides, The main constraints on achieving the objectives set it has undertaken major infrastructure projects, for India’s industry in 2022-23 are the following: such as the setting up of industrial corridors, to boost manufacturing. The Department of Industrial Policy & Promotion (DIPP) has been engaging with states/UTs to 20  Figure 4.1: Manufacturing as a share of GDP, 2011-12 to 2017-18 17% 16.8% 17% 16.7% 16.6% 17% Share of GDP (%) 16% 16% 16.1% 16.1% 16.0% 16% 15.9% 16% 16% 15% 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 (2nd AE) Source: MoSPI Regulatory uncertainty: Regulatory risks and improvements in our global EODB rank, it policy uncertainty in the past have dented continues to be a drag on the system. This is investor confidence. also true of investment conditions in the states. Getting construction permits, enforcing con- Investment: There has been a cyclical slow- tracts, paying taxes, starting a business and down in fresh investment since 2011-12. trading across borders continue to constrain Technology adoption: The adoption of new doing business. technologies like artificial intelligence, data analytics, machine-to-machine communications, Way Forward robotics and related technologies, collectively called “Industry 4.0”, are a bigger challenge Demand generation, augmentation of industrial for SMEs than for organized large-scale manu- infrastructure and promotion of MSMEs facturing. Data security, reliability of data and The government can play a crucial role in stability in communication/transmission also creating domestic manufacturing capabilities by pose challenges to technology adoption. leveraging proposed public procurement and projects. Mega public projects such as Sagar- Exports and insufficient domestic demand: There has been no export driven industrial mala, Bharatmala, industrial corridors, and the growth. Domestic demand alone may not be ad- Pradhan Mantri Awas Yojana (PMAY) can stimu- late domestic manufacturing activities provided equate for sustained, high value manufacturing. the projects are suitably structured and demand Challenges to doing business: Despite recent is aggregated strategically. This should be 21  Strategy for New India @ 75 accompanied by simplification of the regulatory the responsibility to award factory permissions process. The Madhepura Electric Locomotive and compliances. Project, a joint venture between the Indian For India to become the world’s workshop, we Railways and the French multinational Alstom, should encourage further FDI in manufacturing, provides a good example of how mega projects particularly when it is supported with buybacks can be leveraged to boost domestic production. and export orders. The project enabled effective transfer of tech- nology and the availability of state-of-the-art Streamline discretionary powers vested at locomotives for the railways. The Madhepura different levels of governance by adopting model is replicable in the defence, aerospace, digitized processes and making all approvals railways and shipping sectors. electronic in a transparent, time bound manner. Set up a portal to monitor projects beyond a Disruptive technology, while leading to job given threshold so that any roadblocks are losses in traditional areas, also presents new identified and addressed on a real time basis. job opportunities. A greater connect between State governments should be encouraged or government-industry-academia is required to incentivized to contribute data to this portal. identify the changing requirements in manufac- NITI Aayog’s Development Monitoring and Eval- turing and prepare an employable workforce. In uation Office (DMEO) can help set up the portal. the context of employability of engineers, there An inter-ministerial body with representatives is a need for thorough review of standards of of state governments and project promoters (as engineering education and its linkages with special invitees) may be constituted. industry. Efforts should be made to develop self-sufficient E-commerce can be the driver of overall eco- clusters of manufacturing competence, with nomic growth over the next decade through Cluster Administrative Authorities empowered its impact on generating demand, expanding to provide single window clearances to en- manufacturing, employment generation and trepreneurs and investors. Industrial corridors greater transparency. A Committee, chaired should address the lack of infrastructure and by CEO, NITI Aayog examined issues related logistics. Logistics will need to be supplemented to the e-commerce industry5. It made recom- with warehousing and other elements of the mendations for the sector’s growth including manufacturing supply chain. increasing internet access, digitizing payments, further improving transportation infrastructure, NITI Aayog could work with states to prepare logistics and distributed warehousing support. manufacturing clusters and develop export These may be examined for implementation at strategies based on their sector competitive- the earliest. ness and resource strengths. A cluster should have supporting industries and infrastructure. It Harmonize Indian quality standards with global should also develop a local brand and distribu- standards in many sectors. Lack of harmoniza- tion channel through an e-commerce platform. tion has affected Indian exports and prevented A Cluster Administration Office should be given the leveraging of trade agreements adequately. 22  For e.g., the medical device industry would Industry 4.0 benefit greatly from conformity to standards Launch a major initiative to push industry to that are essential for new products to be adopt Industry 4.0. Industry 4.0 is characterized acceptable to doctors and patients abroad. by increasing digitization and interconnection of The issues of regulations and standards setting products, value chains and business models. It are also intertwined. The following initiative is will significantly impact sectors like automobile, required in this regard: pharmaceuticals, chemicals and financial ser- o Task the Bureau of Indian Standards and vices and will result in operational efficiencies, Quality Council of India with assessing cost control and revenue growth. Experts feel the improvements in standards and that emerging markets like India could benefit productivity required to achieve global tremendously from the adoption of Industry 4.0 standards. practices. Address the following issues in respect of In his 2018 Budget Speech, the Finance MSMEs: Minister mandated NITI Aayog to initiate a national programme directing India’s efforts o Setting up of mega parks and manufac- on Artificial Intelligence6. On a similar note, turing clusters in labour intensive sectors NITI Aayog could organize a discussion on with common facilities to reduce costs and “Industry 4.0,” inviting leading manufacturing improve quality. It is also recommended companies from various sectors including that state governments should set up plug automobile/auto components, electrical and and play parks (flatted factories) to ensure electronics, chemicals, cement/steel, etc., international productivity standards. along with concerned ministries to discuss o Workers of industrial units in the new plans for adopting Industry 4.0. mega parks should have decent accommo- The Indian Institute of Science, a few select In- dation within reasonable proximity of the dian Institutes of Technology (IITs), National In- work place. stitutes of Technology (NITs) and other premier o An expert committee should examine engineering colleges should create specialized sector-specific pain points and make its training programmes on ‘Smart Manufacturing’ recommendations within three months. to address the shortage of high-tech human o The Department of Public Enterprises resources. (DPE) should ensure registration of all The Department of Heavy Industry (DHI) should public sector units (PSUs) on the Trade develop the Central Manufacturing Technology Receivables Discounting System (TREDS) Institute (CMTI), Bangalore, as a Centre of portal. Excellence for pursuing R&D in Industry 4.0 o Initiate a small business research technologies and systems. The Department programme in some select ministries for of Science & Technology should spearhead encouraging R&D in MSMEs. industry-academia R&D projects on cyber physical systems. 23  Strategy for New India @ 75 The development of industries that produce For efficient approval/inspection process, devel- the key building blocks forming the basis of op a system of accountability for major stake- Industry 4.0 could be incentivized. Incentives holders like inspection bodies, testing labs, etc. could be focused on MSMEs that manufacture For geographical planning and ease of products including sensors, actuators, drives, environmental clearances, adopt the system synchronous motors, communication systems, of using Geographic Information System (GIS) computer displays, and auxiliary electromechan- based maps at all levels to create pre-approved ical systems. Similarly, industries adopting In-