Monday, Nov 24, 2014

India in numbers: Why Modi said ‘Make in India’ on August 15

Prime Minister Narendra Modi The sluggish growth of our manufacturing sector has always put us at the mercy of imports. Can Modi reduce imports and increase exports? (Source: IE)
Express News Service | New Delhi | Posted: August 21, 2014 3:27 pm | Updated: August 21, 2014 5:49 pm

On August 15, 2014, Prime Minister Narendra Modi, in his maiden Independence Day speech, appealed to companies around the world to ‘Come, make in India’. From the ramparts of the Red Fort, Modi’s voice boomed from the lectern, urging world powers to ‘Come, manufacture in India’. “Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and determination to do something.

But when Prime Minister Narendra Modi extended the open invitation to the world to come and manufacture in India, he was trying to fix a problem we has overlooked for many years. The sluggish growth of our manufacturing sector has always put us at the mercy of imports.

But how bad is the situation? Well, between 2004 and 2011 manufacturing hit a sweet spot, registering annual growth of around 7.25 per cent. However, during the same period imports grew by an average of 23.75 per cent. The corresponding growth in exports was 21.25 per cent.

 

 

But the widening gap, rather imbalance, between exports and imports has been on a steady rise.

Despite Narendra Modi’s rousing speech, Gujarat, a state he had ruled for 14 years, saw little growth in manufacturing jobs. According to the data provided by Jigyasa, between 1998 and 2011, Gujarat saw 5.15% growth in this sector. States like Punjab, Haryana, Jammu & Kashmir have higher growth rates in comparison to Gujarat.

 

 

For a detailed analysis of how the parties contributed to manufacturing in the state, check out the visualisation here.

A head-to-head comparison of the Indian National Congress and the BJP in the states, show the former faring marginally better. But this also because it is ruling two Himachal Pradesh and Uttarakhand which has emerged as manufacturing hubs in recent years. The data is taken from the states both parties have ruled together for a combined 36 years.

 

Overall, INC averages 8.9% while BJP scores a 8.4% but we know it is not a good indicator of what is really happening on the ground.

Anyway, BJP’s past performance is in sharp contrast to Modi’s focus on creating manufacturing jobs. Under BJP rule (1999-2003), imports grew by 3% on average and exports grew by 4% on average. And manufacturing jobs increased by 1% on average.

In comparison, during Congress rule (2004-2011), imports grew by 24% on average and exports grew by 21% on average. And manufacturing jobs increased by 7% on average.

 

So Modi has a good reason to improve the NDA’s performance in the manufacturing sector. The next five years should shed more light on how he will achieve this ambitious task.

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The Indian Express has partnered Swaniti Initiative for a regular DATA series called India In Numbers.

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