The shape of growth matters
Mains Paper 2: Governance
Prelims level: Niti Aayog
Mains level: Strategy for New India @ 75
- There are many refreshing improvements in NITI Aayog’s ‘Strategy
for New India @ 75’ from the erstwhile Planning Commission’s plans, there
are also concerns about some of the strategies recommended.
- The intent to change the approach to planning from preparations of
plans and budgets to the creation of a mass movement for development in
which “every Indian recognises her role and experiences the tangible
benefits” is laudable.
- The strategy affirms that “policymaking will have to be rooted in
ground realities” rather than economic abstractions.
- It says that stakeholders have been consulted widely in preparing
the strategy, which is also something that the erstwhile Planning Commission
- However, what matters is the quality of consultations.
- It will be worthwhile for NITI Aayog to get feedback from
stakeholders on whether it has improved the process of consultation
substantially or not.
A solution in search of a problem
- The strategy emphasises the need to improve implementation of
policies and service delivery on the ground, which is what matters to
- Its resurrection of the 15 reports of the Second Administrative
Reforms Commission and recommendation that they must be implemented
vigorously are welcome.
- The previous government had taken its eye off the ball.
- It did not put its weight behind the implementation of these
well-thought-out recommendations, which had the endorsement of all political
parties, by a Commission it had supported.
The meaning of growth
- Employment and labour reforms, the second chapter in the strategy,
have rightly been given the highest priority, which was not the case in the
- Overall growth is also emphasised by NITI Aayog: “Besides having
rapid growth, which reaches 9-10 per cent by 2022-23.
- It is also necessary to ensure that growth is inclusive,
sustained, clean and formalised.” However, it is the shape of growth that
matters more than size.
- The employment-generating capacity of the economy is what matters
more to citizens than the overall GDP growth rate.
- There is no joy for citizens if India is the fastest-growing
economy and yet does not provide jobs and incomes.
Key highlights and its limitations
- The growth of industry and manufacturing is essential to create
more employment, and to provide bigger opportunities to Indians who have
been too dependent on agriculture so far.
- It is not the size of the manufacturing sector that matters but
- Labour-intensive industries are required for job creation.
- If the manufacturing sector is to grow from 16% to 25% of the GDP,
which the strategy states as the goal, with more capital-intensive
industries, it will not solve the employment problem.
- The strategy does say that labour-intensive industries must be
promoted, but the overall goal remains the size of the sector.
- Therefore, the goal must be clearly set in terms of employment,
and policies and measurements of progress set accordingly.
- Indian statistical systems must be improved quickly to measure
employment in various forms, formal as well as informal.
- The strategy highlights the urgency of increasing the tax base to
provide more resources for human development.
- It also says financial investments must be increased to strengthen
India’s production base. Managing this trade-off will not be easy.
- If tax incentives must be given, they should favour employment
creation, not more capital investment.
- A big weakness in the Indian economy’s industrial infrastructure
is that middle-level institutions are missing.
- Rather than formalising small enterprises excessively, clusters
and associations of small enterprises should be formalised.
- Small enterprises cannot bear the burden of excessive
formalisation — which the state and the banking system need to make the
informal sector ‘legible’ to them.
- Professionally managed formal clusters will connect the informal
side of the economy with its formal side, i.e. government and large
enterprises’ supply chains.
- NITI Aayog’s plan for industrial growth has very rightly
highlighted the need for strong clusters of small enterprises as a principal
strategy for the growth of a more competitive industrial sector.
Reorienting labour laws
- The strategy on labour laws appears pedestrian compared with the
ambitious strategy of uplifting the lives of millions of Indians so that
they share the fruits of economic growth.
- It recommends complete codification of central labour laws into
four codes by 2019.
- While this will enable easier navigation for investors and
employers through the Indian regulatory maze, what is required is a
fundamental reorientation of the laws and regulations they must fit emerging
social and economic realities.
- The nature of work and employment is changing, even in more
developed economies. It is moving towards more informal employment, through
contract work and self-employment, even in formal enterprises.
- In such a scenario, social security systems must provide for all
citizens, not only those in formal employment.
- Indeed, if employers want more flexibility to improve
competitiveness of their enterprises, the state will have to provide
citizens the fairness they expect from the economy.
The NITI Aayog strategy
- The NITI Aayog strategy suggests some contours of a universal
social security system. These must be sharpened.
- In a world where workers are atomised as individuals, they must
have associations to aggregate themselves to have more weight in the
economic debate with owners of capital.
- Rather than weakening unions to give employers more flexibility,
laws must strengthen unions to ensure more fairness.
- Indeed, many international studies point out that one of the
principal causes of the vulgar inequalities that have emerged around the
world is the weakening of unions.
- The NITI Aayog strategy mentions the need for social security for
domestic workers too.
- This will not be enforceable unless domestic workers, scattered
across millions of homes, have the means to collectively assert their
- All employers in India should realise that workers must be their
source of competitive advantage. India has an abundance of labour as a
resource, whereas capital is relatively scarce.
- Human beings can learn new skills and be productive if employers
invest in them.
- Employers must treat their workers — whether on their rolls or on
contract as assets and sources of competitive advantage, not as costs.
- The shape of the development process matters more to people than
the size of the GDP.
- Development must be by the people (more participative), of the
people (health, education, skills), and for the people (growth of their
incomes, well-being, and happiness).
- How well India is doing at 75 must be measured by the qualities of
development, as experienced by its citizens, along these three dimensions.
GDP growth will not be enough.
Q.1) With reference to the Pradhan Mantri Gramin Digital Saksharta Abhiyan,
consider the following statements:
1. It aims to make rural households digitally literate by providing each BPL
household with computers at subsidized
2. It will be implemented by the Ministry of Rural Development.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) What are the recommendations suggested by NITI Aayog’s ‘Strategy for New
India @ 75’? What are the limitations of it?