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OECD chief economist supports RBI governor's Make for India view, insists, integrate it into Make in India

By Our Representative
Catherine Mann, chief economist of the Organization for Economic Co-operation and Development (OECD), has come out in sharp defense of the view taken by Reserve Bank of India governor Dr Raghuram Rajan, who stirred controversy late last year-end by declaring Make for India was a better policy option to follow as against Prime Minister Narendra Modi’s Make in India campaign. Talking with newspersons in Ahmedabad, Mann said, it would be better if India’s focus on “Make in India”  includes the “Make for India” concept of Dr Rajan.
Without naming Dr Rajan, Mann declared, "Make in India should be Make for India", pointing out, she is "quite aware" of strong views in the country in favours of Make for India. Mann was at the Indian Institute of Management-Ahmedabad (IIM-A) to deliver a lecture on Macroeconomic Challenges of India in context of the recently released report, ‘Third OECD Economic Survey of India’.
Suggesting that Make in India appears to suggest that India is seeking to follow the Chinese model, Mann said, China has developed islands of progress in its special economic zones where there are no-tax regimes with export as the key direction. This can result in short-term gain, but does not take into account the interests of the entire country's economy. She added, the Make in India concept does not clarify make for whom, whether for export to other countries.
In Dr Rajan’s view on Make for India, Modi 'Make in India' campaign assumes an export-led growth path of China. Speaking at an event organized by the Federation of Indian Chamber of Commerce and Industry (FICCI), he had insisted, it should instead it should be 'Make for India' that would produce for the internal market. He had underlined, an incentive-driven, export-led growth or import-substitution strategy may not work for India in the current global scenario.
Talking to newspersons after her lecture, Mann took a similar view, saying, China’s export model has would have limited success. It does not go far enough. There is a huge market within the country which needs to be tapped. Investments from all sources should beencouraged, allowing internal businesses to flourish. While there have been some policy declarations such change in the labour law, the main challenge is how these policy changes are implemented.
Pointing towards the need to come up with several reforms, Mann said, without naming any particular state, already, some Indian states are implementing progressive laws that will foster employment. The Prime Minister has provided a business-friendly umbrella for other states to act. While some of the states have gone ahead, others have not. The political process of implementing the reforms is challenging.
Answering a question on labour reforms, Mann asserted, they are extremely important because the current labour law may have some good points, but is does not help generate employment. There is a need to loosen the law in order to cover the informal labour market, contract workers, and other ill-paid workers. There are of course complexities in bringing about changes laws related with in tax, labour, wages and business. The present uncertainty must end.
To yet another question as to what she thought of the Government of India’s recent decision to redo the way it calculates GDP, which put India’s growth in 2013-14 at 7.4 per cent instead of 5 per cent under, the OECD chief economist said, the new method of calculation is more in tune with international norms. If under the earlier calculation large sectors of the economy were not part taken into account, under the new methodology several small firms’ performance has been mobilized into national accounts.

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