Industrial Production & Productivity in India
The article, ‘India’s Journey from Planning Commission to NITI Aayog’ by Nikita Dalal aims to discuss various differences between production and productivity along with a major emphasis on the trends followed between 2001-2022. In 1991, our Indian Economy was affected by the implementation of the New Economic Policy, commonly known as the LPG policy. LPG reforms are also known as liberalization, privatization, and globalization reforms.
In the year 2022, the tenth five-year plan was introduced and during this plan highest GDP was recorded at 7.8 percent. During the 11th FYP when the world suffered a financial crisis, still India managed to have a GDP Growth Rate of 8%. Under this plan, it was decided to have ‘faster sustainable inclusive growth’. Further, a plan was formulated for the year 2012-2017 with the main objective of the integrated development of the overall economy. Planning Commission was replaced in 2015 and thus NITI Aayog was formulated in its place. NITI stands for National Institution for Transforming India. Under NITI Aayog many schemes like ‘Make in India’ were launched.
Difference between Production & Productivity
Production basically refers to the method of transforming inputs into outputs, which are finished products that can be sold as a good or services whereas productivity reflects the operating efficiency of the enterprise upon which the profit of an enterprise depends. Production is an absolute concept and productivity is a relative concept.
While defining Production, no such reference is required such as the quantity or quality of input resources but Productivity deals with the concept of efficiency with which the input resources are utilized. Production can be increased by increasing the input resources, whereas productivity may remain the same or can also decline due to the inefficient use of inputs. Production may not increase by the economic and efficient use of input resources, on the contrary productivity can be improved by the economic and efficient use of input resources.
A Brief Outline of the Industrial Production & Productivity in India
In 2002, the 10th Five-Year Plan was introduced under Dr. Manmohan Singh’s Government. After reviewing the internal and external factors for the slowdown during the Ninth five Year Plan, the Tenth Plan stated:
“The industrial slowdown is widespread covering all broad sectors, e.g. manufacturing, electricity and mining and all end-use based groups such as capital goods, intermediate goods and consumer goods (both durables and non-durables). The slowdown in domestic and global demand appeared to be a major factor constraining decline in investment, noticeably by the private sector.”
The difficulties caused by internal factors were aggravated by the slow growth of the world economy, which resulted in a substantial slowdown in manufacturing exports. This implies that the failure of the Ninth Five-Year Plan in the industry could be attributed as a reason for the downfall in public sector investment. It was not compensated by an upturn in private investment.
Reviewing the performance of the Tenth Plan, the 11th FYP (introduced in 2007) stated that
“Industrial performance in the Tenth Plan period improved to a respectable level of 8.9% from the very low level of the growth rate of 4.3% in the Ninth Plan.”
Thus, the revival of industrial growth was a major achievement of the implemented aforesaid policy.
However, industrial performance needs to be improved in order to avail good employment opportunities in the non-agricultural sector. Within the industry, the manufacturing sector, accounting for 77% of Industrial output has shown growth in the last two years. This revival of dynamism in the industry has to be sustained to reverse the unacceptable decline in the share of manufacturing in GDP that occurred in the year 1992. This will also enhance employment opportunities for the burgeoning workforce.
11th Plan aimed at double-digit growth both in manufacturing and industry at the same time. It was a hard task to include the performance of the core sector (steel, coal, cement, oil, fertilizers, and refined petroleum) in order to ensure that supply responds adequately to sustain double-digit manufacturing and industrial growth. It may be mentioned that the 11th plan has the target of 10-11% growth in the industry, both in industry and manufacturing. In the first year of the 11th plan (2007-2008) industrial growth was satisfactory, but the performance of the year 2008-2009 was not satisfactory but it again improved in 2009-2010 and 2010-2011. Industrial growth dipped in the second, third, and fourth quarters of 2011-2012. This resulted in a slippage of the industrial growth rate to 2.8% in 2011-2012. Industrial growth further dipped only 1.1% in 2012-2013 and -0.1% in 2013-2014, before improving to 1.7%.
Industrial manufacturing in India shrank with the aid of using zero point eight percent from 12 months in advance in August 2022, the primary month of contraction seeing that February 2021 and under marketplace forecasts of 1.7 percent growth. Manufacturing output changed into down 0.7 percent, because of declines withinside the manufacturing of pharmaceuticals, medicinal chemical and botanical products (-19.zero percentage), textiles (-12.2 percentage), electric equipment (-28.2 percentage), fabricated metallic products, besides equipment and equipment (-7.three percentage), and rubber and plastics products (-7.6 percentage). Meanwhile, output rose for primary metals (2.9 percent) and coke and subtle petroleum products (6.6 percent), at the same time as it changed unchanged for meals products. Mining and quarrying reduced in size by three point nine percent, at the same time as energy output increased by one point four percent.
India is an attractive hub for overseas investments inside the production zone. Several cellular phones, luxurious, and vehicle brands have been launched and various companies desire to set up their production here, in India.
The production zone of India has the capability to attain US$ 1 trillion via way of means of 2025. The implementation of the Goods and Services Tax (GST) will make India, a unique marketplace with a GDP of US$ 2. Five trillion together with a populace of 1.32 billion people can act as a massive draw for investors. The Indian Cellular and Electronics Association (ICEA) predicts that India has the capability to scale up its cumulative pc and pill production potential to US$ hundred billion via way of means of 2025 through coverage interventions.
With impetus on growing commercial corridors and clever cities, the Government pursues to make certain holistic improvements to the nation. It can supplement in integrating, tracking, and growing conducive surroundings for economic improvement.
Challenges Associated with Industrial Sector
- Lack of Efficient Infrastructure and Manpower: Infrastructure is required particularly for transportation and professional manpower is vital for boosting production competitiveness across the globalized economy. Telecom and verbal exchange centers are particularly limited to huge cities. Most of the State Electricity Boards are strolling in loss and are in deplorable condition. Rail delivery is overburdened whilst street delivery suffers from a lot of problems.
- Maintaining a Level Playing Field: The MSME region appears to be quite much less favourably located in phrases of credit score availability and credit score price of operating capital in comparison to the medium and massive scale commercial and offerings sectors. This chronic bias wishes to be corrected.
- Reliance on Foreign Imports: India remains dependent on overseas imports for delivery equipment, machinery (electric and non-electric), iron and steel, paper, chemical compounds and fertilizers, plastic fabric, etc. In India, the entire commercial manufacturing of purchaser items contributes 38%. In newly industrialized nations like Singapore, South Korea, and Malaysia this percentage is 52, 29, and 28 respectively. This suggests that import substitution remains a far-off purpose for the country.
- Improper Location Base: Industrial locations, in numerous instances, had been hooked up without connection with price-powerful points. Industry clamors to be established within the public region, and the place selections are frequently politically motivated.
- Loss in Public Sector Industries: Owing to the cognizance of the socialistic sample of development, a decline in funding expanded phenomenally for the duration of the early 5 -12 months plan.
Make in India
The Make in India internet site additionally has indexed the 25 awareness sectors and additionally supplied all applicable information about those sectors, and associated authorities schemes, which include the FDI policies, IPR, etc. The primary sectors (27 sectors) included in this marketing campaign are given below:
- Aerospace and Defence
- Automotive and Auto Components
- Pharmaceuticals and Medical Devices
- Capital Goods
- Textile and Apparels
- Chemicals and Petro chemical compounds
- Electronics System Design and Manufacturing (ESDM)
- Leather & Footwear
- Food Processing
- Gems and Jewellery
- New and Renewable Energy
- Information Technology & Information Technology enabled Services (IT &ITeS)
- Tourism and Hospitality Services
- Medical Value Travel
- Transport and Logistics Services
- Accounting and Finance Services
- Audio Visual Services
- Legal Services
- Communication Services
- Construction and Related Engineering Services
- Environmental Services
- Financial Services
- Education Services
Reasons for ‘Make In India’
India boom tale appears to be led through the offerings zone. This technique paid off in the short-run, and India’s IT and BPO zone noticed a big leap, and India changed into regularly dubbed the ‘lower back workplace of the world’.
However, despite the fact that the percentage of the offerings zone within the Indian financial system rose to 57% in 2013, it contributed only 28% to the percentage of employment. So, the producing zone had to be augmented to reinforce employment.
Another cause to release the marketing campaign is the bad circumstance of production in India. The percentage of production within the usual Indian financial system is approximately 15%. It is lower than our neighbours in East Asia. There is a usual change deficit in terms of goods. The change surplus in offerings infrequently covers one-fifth of India’s change deficit in goods.
The authorities expect to inspire businesses, each Indian and overseas to spend money on production in India so that it will assist this zone and additionally generate employment at each professional and unskilled level.
Several schemes were launched to support the Make in India programme. These schemes are discussed below:-
- Skill India- This aims to skill 10 million in India annually in colourful sectors. In order to turn, Make in India into a reality, there is a need to upskill the large mortal resource available.
- Startup India- The main idea behind this programme is to make an ecosystem that fosters the growth of startups, driving sustainable profitable growth, and creating large-scale employment.
- Digital India- This aims to transfigure India into a knowledge-grounded and digitally empowered frugality.
- Pradhan Mantri Jan Dhan Yojana( PMJDY)- Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a national mission for financial inclusion to ensure access to financial services, namely, banking/ savings and deposit accounts, remittance, credit, insurance, pension in an affordable manner.
- AMRUT- AMRUT is the Atal Mission for Rejuvenation and Urban Transformation. It aims to make introductory public amenities and make 500 metropolises in India more inhabitable and inclusive.
- Swachh Bharat Abhiyan- It aims to make India cleaner and promote introductory sanitation and hygiene.
- Sagarmala- This scheme aims at developing anchorages and promoting harborage-led development in the country.
- International Solar Alliance( ISA)- The ISA is an alliance of 121 countries, the utmost of them being sun countries, which lie either fully or incompletely between the Tropic of Cancer and the Tropic of Capricorn. This is India’s action aimed at promoting exploration and development in solar technologies and formulating programs in that regard.
- AGNII- AGNII or Accelerating Growth of New India’s Innovation was launched to push the invention ecosystem in the country by connecting people and aiding in commercializing inventions.
The world faced fiscal heads in 2008. Also during the 9th FYP, India faced numerous warrants due to its Nuclear Test. In the 10th FYP, India’s GDP Growth Rate was 7.8 and that was the loftiest. During the 12th FYP planning commission was replaced by NITI Aayog. India’s Assiduity Growth Pattern from 2014- 2022 was as follows:-
- Make in India crusade was launched to attract manufacturers and FDI.
- Government is giving emphasis on schemes like ‘ Oral for Original ‘ and ‘ Original for Global ‘ to make India a global manufacturing mecca via different policy measures and impulses to specific manufacturing sectors.
- In FY21, there were 539 new business enrollments in the manufacturing sector, a 50 increase from, 404 in FY20.
- Electronics, vehicle, and solar panel production account for around 80% of total manufacturing expenditure, with the semiconductors/electronics value chain accounting for 50% of total expenditure in February 2022.
 Dutt & Sundram, Indian Economy, Available Here
 India’s Industrial Sector, Available Here
 About the make in India, Available Here
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