Roadmap for Answer Writing 1. Introduction Define the context: Industrial growth in relation to GDP growth in India post-reforms. State the significance of the industrial sector in the economy. 2. Reasons for Lagging Industrial Growth A. Inadequate Infrastructure Discuss the challenges posed by insufficient physical infrastructure. Fact: ...
Model Answer Introduction The manufacturing sector is vital for India’s economic landscape, contributing approximately 17% to the GDP in 2022. Micro, Small, and Medium Enterprises (MSMEs) account for about 40% of manufacturing output, playing a significant role in job creation, exports, and overallRead more
Model Answer
Introduction
The manufacturing sector is vital for India’s economic landscape, contributing approximately 17% to the GDP in 2022. Micro, Small, and Medium Enterprises (MSMEs) account for about 40% of manufacturing output, playing a significant role in job creation, exports, and overall economic growth. Recognizing this importance, the Indian government has implemented various policies aimed at bolstering this sector.
Importance of Increasing Manufacturing Sector Share
- Rural Development: Manufacturing is essential for rural upliftment. Initiatives such as Agro-based industries and Rural Self Employment Training Institutes (RSETIs) empower rural entrepreneurs, thereby enhancing economic conditions in these areas.
- Economic Resilience: A diverse manufacturing sector can provide stability during economic downturns. For example, small enterprises adapted during the COVID-19 pandemic to produce essential goods like masks and sanitizers, showcasing resilience.
- Employment Generation: According to the Ministry of MSMEs, this sector has created around 11 crore jobs in India. Small manufacturing units, tailoring shops, and handicrafts provide extensive employment opportunities.
- Innovation: MSMEs often serve as incubators for innovation. Companies like Flipkart and Zoho started as small enterprises and have revolutionized the e-commerce and software sectors.
- Exports: MSMEs contribute approximately 48% to India’s total exports, showcasing products like jewelry and spices, which are in high global demand.
Government Policies Supporting the Manufacturing Sector
- Make in India (2014): This initiative promotes India as a global manufacturing hub, exemplified by Samsung’s establishment of its largest mobile factory in Noida.
- MSME Samadhaan: A platform for MSMEs to address delayed payments, enhancing financial stability and operational continuity.
- Udyam Registration: Simplifies the registration process, encouraging new ventures to formalize and access government benefits.
- GST Implementation: Streamlined tax structures reduce the tax burden on MSMEs, promoting compliance and encouraging formalization.
- Startup India: This initiative fosters entrepreneurial growth by providing fiscal incentives and support, leading to notable success stories like Zomato.
- Cluster Development Program: Enhances competitiveness through the development of industry clusters, such as in Kanpur’s leather sector.
- Government e-Marketplace (GeM): Facilitates market access for MSMEs by connecting them with government buyers, thus expanding their reach.
- Digital MSME Scheme: Promotes digital literacy and technology adoption, helping businesses streamline operations and improve efficiency.
Conclusion
The current policies reflect a robust framework aimed at enhancing the manufacturing sector’s contribution to India’s GDP. By creating a supportive environment through effective implementation of these initiatives, the government can significantly accelerate the growth of MSMEs and manufacturing, ultimately driving economic development.
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Model Answer Introduction The industrial growth rate in India has lagged behind the overall growth of Gross Domestic Product (GDP) in the post-reform period. While the industrial sector contributes significantly to the economy, accounting for 27.6% of GDP, its growth has remained stagnant at aroundRead more
Model Answer
Introduction
The industrial growth rate in India has lagged behind the overall growth of Gross Domestic Product (GDP) in the post-reform period. While the industrial sector contributes significantly to the economy, accounting for 27.6% of GDP, its growth has remained stagnant at around 2-3%, compared to GDP growth rates exceeding 6-7%.
Reasons for Lagging Industrial Growth
The industrial sector suffers from a significant deficit in physical infrastructure, necessitating an investment of $1 trillion to improve capacities and efficiency.
Poor quality of industrial infrastructure has led to high logistics costs, making Indian goods less competitive globally. India spends 2-3 times more on logistics than its competitors.
Complex and rigid labour laws create challenges for employers, often leading to legal complications that hinder industrial growth.
A multi-layered tax system with high compliance costs adversely affects the competitiveness of manufacturing. India ranks poorly in regulatory aspects according to the Ease of Doing Business (EoDB) 2020 report.
The reliance on inefficient and outdated technologies results in low productivity and higher costs, further disadvantaging Indian products in international markets.
Recent Changes in Industrial Policy
The Department of Industrial Policy and Promotion (DIPP) has introduced several initiatives aimed at revitalizing industrial growth:
While these initiatives are long-term measures, they are expected to positively impact industrial growth in the future.
Conclusion
The industrial growth rate in India has lagged due to various structural challenges. However, recent policy changes by the DIPP aim to address these issues and stimulate growth in the industrial sector.
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