But Where Were Business And Industry In The I-Day Speech?

Modi boasted about a lot of his achievements in his Independence Day speech. But not a word about Make in India, about industrial growth, about employment generation

The most glaring omissions in Prime Minister Narendra Modi’s Independence Day speech were clearly the `I’ and `B’ words. Industry and business.

Modi boasted about the achievements of the many schemes his government had rolled out – the Jan Dhan Yojana, the insurance schemes for the unorganised sector workers, the construction of toilets in schools, the LPG Give It Up campaign, getting back black money.

But there was not a word – Not One Word – about Make In India, an exhortation in last year’s Independence Day speech which was launched as a programme in September and something Modi keeps talking about on all his foreign visits.

Is Make In India not the success it is being made out to be? But the department of industrial policy and promotion (DIPP) has been tom-tomming the surge in foreign direct investment (FDI) following the launch of Make In India. DIPP secretary Amitabh Kant uses every available opportunity to point out that FDI inflows have surged 48 per cent since September last year, when globally they have dipped 16 per cent.

What’s more, less than a week before Modi’s August 15 speech, global smartphone maker Foxconn Technology signed a memorandum of understanding to invest $5 billion in a factory in Maharashtra. This is expected to create 50,000 jobs.

Was Modi silent because these figures don’t quite portray the correct picture? But questions have been raised even about the figures about the Jan Dhan Yojana. That did not stop Modi from boasting about it. So why this coyness about Make In India?

Why also the silence about the ease of doing business initiatives? The Modi government has done a fair amount in one year – putting more services on the ebiz platform than the two that were there when the government took over, cutting down on paperwork for imports and exports, making compliance with labour laws easier, simplifying industrial licence applications, making environment and forest clearances online.

There’s quite a lot that remains to be done; business is nowhere close to a regulatory Utopia. Much of the action lies in the realm of state governments. But what it has done in one year isn’t something to be sniffed at.

The obvious – and sole – explanation for the deafening silence on this is that Congress jibes about his government working only for large industry have put Modi on the back foot. He wants to dispel that image.

But is the public distancing from industry the way to go about it? More importantly, is it even wise?

The single biggest challenge for Modi is job generation and poverty alleviation. They are both linked – poverty cannot be tackled by government doles alone. As the National Policy for Skill Development and Entrepreneurship notes, 62 per cent of India’s population is in the working age group of 15-59 years and more than 54 per cent is below 25 years of age.

Agriculture, a sector that accounts for only 18 per cent of the economy – cannot continue to bear the burden of providing employment to 50 per cent of the workforce. The burden has to shift to industry and services; more to industry, especially the manufacturing sector, because that is the first stop for unskilled or low-skilled people moving out of farms. The National Manufacturing Policy of 2011 clearly said that “every job created in manufacturing has a multiplier effect of creating two to three additional jobs in related activities.” Industry is an essential ingredient of the amrit dhara of development that Modi spoke about.

But the manufacturing sector is not in great shape. It accounts for only 17 per cent of the economy and a huge chunk of it is unorganised, which means the quality of employment is also extremely low. The share of manufacturing needs to increase; fortunately, this government is continuing with the UPA’s goal of taking the share to 25 per cent and push the growth rate of manufacturing to 12-14 per cent.

Now this requires a whole lot of things to be done. Better infrastructure has to be provided. The stifling regulatory environment, including labour laws, has to be eased to incentivise small firms to grow bigger, for informal enterprises to come into the formal sector. The regulatory compliance burden is the reason why firms prefer to stay small and informal. Inclusive growth means nothing when close to 90 per cent of employment is in the unorganised sector. The tax system needs to be rationalised wherever necessary.

Doing business has to be made easy. There is just no getting away from all this.

Was Modi’s silence on industry and business a diplomatic one ahead of the crucial Bihar elections? Was it to avoid saying anything that could be used to reinforce the image of a suit-boot sarkar?

If it was, that is fine, but it will be worrying if Modi not talking about industry leads to the Modi government not doing much for the industry.

Much is made of how industrialists no longer have a free run of the Prime Minister’s Office and ministries like they used to do earlier. That is good news, but keeping some industrialists at arm’s length should not mean turning a deaf ear to all industry voices, even of small industry.

But even if the silence was diplomatic, it is still worrying. It shows that Modi is thin-skinned on such issues, that he does not want to be seen as pro-industry because it is not populist.

Once the Congress and all left-of-centre opponents realise this chink in his armour, they will go for the jugular. Every action the government takes that will benefit industry will be opposed and displayed as proof of his pro-industry leanings. Every time it makes even a tactical retreat, it will be flaunted as a victory of the pro-poor brigade. But if the government does not take those steps, the manufacturing sector and the economy will continue to flounder.

In short, Modi will be damned if he does and damned if he doesn’t. So why not just go ahead and do what the country needs and stop being apologetic and surreptitious about it?

Modi’s strength was his refusal to pitch industry against agriculture, factory-owners against the workers, urban against rural. These were artificial divides that belonged to the sixties and seventies and had no place in post-1991 India, but which survived. He brought in a new economic narrative that was both inclusive and empowering.

It was this that captured the imagination of the youth and the aspirational classes. Why is he reverting to the tired, clichéd political dialogue? Just like he exhorted people to make dignity of labour a part of our national character, he should have asked for an end to the culture of seeing all industry with suspicion and simultaneously held out the promise that rogue businessmen will not go scot free.

If Modi’s silence is a sign that he himself is not convinced that helping industry revive is necessary, then there is no hope for the country. If he is convinced, then he will have to be aggressive about defending his government’s action and convince people about their soundness.

The anti-industry narrative has to change and right now he is the only person who can do it.