World not ready to Make in India? Samsung plant masks Modi govt's struggle

Despite a sleek marketing campaign, the world isn’t quite ready to ‘Make in India.’

Last week, Indian Prime Minister Narendra Modi and South Korean President Moon Jae-in celebrated the inauguration of what Samsung Plant called the world’s largest mobile phone factory. At the splashy event just outside New Delhi, Modi said the facility was “extremely important” for his 'Make in India' initiative to boost manufacturing to 25 per cent of India’s economy by 2020 and create millions of jobs. Samsung said the plant was a “shining example” of the success of the program.

But the investment is more the exception than the norm. Data from the World Bank and the Reserve Bank of India (RBI) show manufacturing hasn’t received a significant boost since Modi took office in 2014.

While India’s economy has overtaken France to become the world’s sixth largest, manufacturing has shrunk to about 15 per cent of gross domestic product (GDP) from a peak of 18.6 per cent in 1995, according to the World Bank. Other data show new investments in India have dropped and stalled projects are on the rise.

Good show by Modi govt in four years; private sector now needs to pitch in

Evaluating the performance of any government on economic grounds is challenging. This is so because direct linkages are at best by chance as phenomena like oil prices, monsoons, global forces etc. affect inflation and exchange rates which are beyond the purview of any government. Further, it would also be disingenuous to say that the NPAs are high during a particular regime due to the ruling government as these things build up over time and mere recognition cannot be attributed to a government.

Hence, to evaluate the performance of the NDA government in the last 4 years a twofold approach is required. The first is to judge what is within the purview of the government and the progress made therein and the second is a comparison of economic indicators in the pre- and post-periods as part of the routine.

The performance of the NDA government in terms of conceptualisation and implementation of policies has been most remarkable with very little left to be done. The major reforms that were noteworthy are bringing in the eNAM (electronic national agricultural market), opening up of FDI (defence and railways equipment included), GST, power sector reforms, addressing NPA issue through the IBC and recap measures, improving the doing business environment, channeling funds for the SMEs etc.