In The Media ⁽⁴⁰⁰⁾

Do not look for easy interventions to help small-scale enterprises - carry out the reforms that will let them grow big Read full article Abstract: Realisation that the small-scale industries (SSI) reservation had failed to deliver on employment creation while impeding export growth led India to systematically roll back that policy beginning in 1997. While we have barely reached the tail end of the rollback with 20 items still remaining on the reservation list, the old view that small-scale enterprises are the silver bullet that will solve India's jobs problem has resurfaced. We are being advised to forget about labour law reforms and labour-intensive manufacturing in the organised sector and count instead on micro, small and medium enterprises (MSMEs) in the manufacturing sector for good jobs for the masses. Possibly, these commentators feel exasperated by the hesitant response of large-scale firms to the removal of the SSI reservation. But the hesitant response is due to yet another layer of regulations embedded in Indian labour and exit laws. These regulations have continued to hold back entry of large-scale firms into labour-intensive…

Read full article Abstract: With nearly 150 days having passed since Prime Minister Narendra Modi entered office, we can see silhouettes of the new regime emerge. Although the economy had been at the centre of Modi’s election speeches, social goals and foreign relations have come to occupy an equally important place in his early action agenda – if not even more. At least three initiatives of his government can be potentially transformational. First and foremost, Swachh Bharat Abhiyan is easily the most ambitious step towards improved health outcomes in recent decades. Public health has been a much-neglected area and has been waiting to be tackled on a war footing. With the 150th birth anniversary of Mahatma Gandhi strategically chosen as the target date for conclusion of this campaign, there is hope that government will closely monitor progress, take timely corrective actions and sustain momentum. Second, setting aside near universal opposition from within his party, Modi has decided to complete the Aadhaar project which would give biometric identification to every Indian. Alongside he has launched the Jan Dhan Yojana that promi-ses…

Read full article Abstract: The high-profile launch of the ‘Make in India’ campaign today is a good occasion to remember the development experience of East Asian economies such as South Korea, Taiwan and Singapore in the 1960s and 1970s and China more recently. East Asian economies principally relied on growth in labour-intensive industry and accompanying expansion in jobs at ever rising wages, as the principal means of prosperity for the bottom half of the population. India focused more directly on social protection for workers through legislation, foregoing good jobs and to a great extent growth as well. In the East Asian economies sustained rapid growth of labour-intensive manufacture created well paid jobs for the low skilled and paved the way for the migration of vast numbers of agricultural workers into manufac-turing. As a concrete example, South Korea grew at an average rate exceeding 8% between 1965 and 1985. During the same years, the employment share of agriculture fell from 59% to 25%. Industry and services absorbed the workers so released. Alongside, average real wage rose more than 8% per year.

Read full article Abstract: Complexity of World Trade Organisation (WTO) agreements has meant that much of the commentary on the recent decision by the Narendra Modi government against ratifying the Bali package has been marred by confusion. Officials from most countries and commentators from around the world, including many from India, have nearly uniformly criticised the government for blocking a deal that had taken 12 long years to negotiate. The government and its handful of defenders have argued the contrary, but mostly unconvincingly. Who is right? Contrary to the vast majority of analysts who have uncritically accepted the usual developed country accusation that India has played its conventional role of an obstructionist and a spoiler in the negotiations, the answer is more nuanced and equivocal. The problem India confronts is that the food procurement component of its food security programme violates its WTO obligations. Contrary to common impression the public distribution system (PDS) component, which provides foodgrain at subsidised prices to households, is WTO legal and is not an issue. Under its WTO obligations, the value of subsidy India provides…

Vasundhara Raje is pioneering the 'Rajasthan Model', which places policy reform at the centre of the development strategy Read full article Abstract: Bihar, Chhattisgarh, Gujarat and Odisha, which have all delivered excellent growth and development outcomes for their citizens during the last decade, have one thing in common: they all have had chief ministers who provided generally clean and transparent administration and effective implementation of infrastructure projects and social schemes. Policy reforms that economists often advocate were not a major part of their strategy. In areas covered by the Union and Concurrent Lists of the Constitution, these states took as given the laws enacted by the central government. And in areas included in the State List, with rare exceptions such as the agricultural produce marketing committees Act and the repeal of the urban land ceilings Act, no new legislative actions were taken. Vasundhara Raje Scindia, the chief minister of Rajasthan, is now breaking that mould. She is pioneering what may be called the "Rajasthan Model", which places policy reform at the centre of the development strategy. She has begun with…