Skip to main content

Job creation: Top ex-Modi adviser wants India to shed Reliance model, opposes minimum wage requirement

By Our Representative
Top Indian American economist, Prof Arvind Panagariya, who resigned as Prime Minister Narendra Modi's top man in the Government of India’s think-tank Niti Ayog, has controversially said that India does not need Reliance Industries Ltd (RIL) type of model, which are not job-intensive.
Contrasting RIL with a little-known industrial house, the top academic, who is professor at Columbia University, US, says, “Nothing explains India's job creation challenge better than a comparison between RIL and Shahi Exports”.
Dishing out figures, he says, “While RIL employs five workers for each $2.2 million in assets, Shahi Exports, which is India's largest apparel exporter, employs 1,260 workers for every $2.2 million in assets.”
Pointing out that “Shahi Exports creates 252 times the jobs that RIL does” across its various ventures in India, Panagariya, who remains in touch with Modi even after resigning from his top job citing India’s powerful bureaucracy, says, it is the “apparel industry model” which holds “the key for India’s job creation requirements.”
“Jobs that Shahi Exports creates are what India needs most today”, insists the top economist, adding, “Its factories can take someone with fifth-grade education and impart necessary training in just six weeks. On average, these workers earn Rs 15,000 a month. About 60% of Shahi Exports employees are women.”
He adds, “If we could rapidly multiply what Shahi Exports does, we could begin expanding formal-sector jobs rapidly — especially for women.”
Noting that “apparel requires modest investment per job and the demand for it is there”, Panagariya says, “In 2015, the apparel export market was $465 billion. India exported $18 billion of it compared with China's $175 billion. High wages are now forcing China to withdraw from this market. From $187 billion in 2014, its apparel exports have fallen to $158 billion in 2016.”
Insisting that “India must take the space China is vacating”, he says, India must work out ways to "encourage the global apparel firms exiting China", adding, they must "locate in India, instead of Bangladesh and Vietnam... These firms have the technology and management know-how to operate on large scale. They also have links to global markets. Once a few anchor firms locate in India, many more local Shahi Exports firms would emerge.”
Suggesting the urgent need to bring about policy changes, Panagariya says, “For decades, our policies reserved apparel for production by small-scale enterprises. These enterprises were too small and their product quality too low to succeed big in the export markets.”
Pointing out that as a result "India's investment policy confined large firms and big industrialists to investing exclusively in a set of listed 'core' industries, which were all highly capital intensive”, he adds, "Although the core industries regulation ended in 1991, and small-scale industries reservation was withdrawn more than a decade ago, investment in apparel remains entirely off the radar screens of India's big industrialists.”
But the  big industries to for in for labour-intensive investment, Panagariya wants India to make a major change its labour policies, allowing "greater labour market flexibilities. 
One of the policy changes requiring urgent attention, says the ex-Modi man, is to relax the policy of minimum wage requirement, “If you live in Delhi, you are likely to think that a minimum wage of Rs 15,000 per month is only fair. And yet, such a wage will drive many labour intensive, formal sector firms out of business”, he underlines.
“Reports that the Wage Code currently under consideration by Parliament may hike the national minimum wage to Rs 18,000 a month have left many formal sector firms very nervous”, he notes.

Comments

TRENDING

Girl child education: 20 major states 'score' better than Gujarat, says GoI report

By Rajiv Shah
A Government of India report, released last month, has suggested that “model” Gujarat has failed to make any progress vis-à-vis other states in ensuring that girls continue to remain enrolled after they leave primary schools. The report finds that, in the age group 14-17, Gujarat’s 71% girls are enrolled at the secondary and higher secondary level, which is worse than 20 out of 22 major states for which data have been made available.

Savarkar in Ahmedabad "declared support" to two-nation theory in 1937, followed by Jinnah three years later

By Our Representative
One of the top freedom fighters whom BJP and Prime Minister Narendra Modi revere the most, Vinayak Damodar Savarkar, was also a great supporter of the two nation theory for India, one for Hindus another for Muslims, claims a new expose on the man who is also known to be the original proponent of the concept of Hindutva.

Congress 'promises' cancellation of Adani power project: Jharkhand elections

Counterview Desk
Pointing out that people's issues take a backseat in Jharkhand's 2019 assembly elections, the state's civil rights organization, the Jharkhand Janadhikar Mahasabha, a coalition of activists and people’s organisations, has said that political parties have largely ignored in their electoral manifestos the need to implement the fifth schedule of the Constitution in a predominantly tribal district.

Hindutva founders 'borrowed' Nazi, fascist idea of one flag, one leader, one ideology

By Shamsul Islam*
With the unleashing of the reign of terror by the RSS/BJP rulers against working-class, peasant organizations, women organizations, student movements, intellectuals, writers, poets and progressive social/political activists, India also witnessed a series of resistance programmes organized by the pro-people cultural organizations in different parts of the country. My address in some of these programmes is reproduced here... 
***  Before sharing my views on the tasks of artists-writers-intellectuals in the times of fascism, let me briefly define fascism and how it is different from totalitarianism. Totalitarianism is political concept, a dictatorship of an individual, family or group which prohibits opposition in any form, and exercises an extremely high degree of control over public and private life. It is also described as authoritarianism.
Whereas fascism, while retaining all these repressive characteristics, also believes in god-ordained superiority of race, cultur…

Ex-World Bank chief economist doubts spurt in India's ease of doing business rank

By Rajiv Shah
This is in continuation of my previous blog where I had quoted from a commentary which top economist Prof Kaushik Basu had written in the New York Times (NYT) a little less than a month ago, on November 6, to be exact. He recalled this article through a tweet on November 29, soon after it was made known that India's growth rate had slumped (officially!) to 4.5%.

With RSS around, does India need foreign enemy to undo its democratic-secular fabric?

By Shamsul Islam*
Many well-meaning liberal and secular political analysts are highly perturbed by sectarian policy decisions of RSS/BJP rulers led by Prime Minister Narendra Modi, especially after starting his second inning. They are vocal in red-flagging lynching incidents, policies of the Modi government on Kashmir, the National Register of Citizens (NRC), the demand for 'Bharat Ratna' to Savarkar who submitted 6-7 mercy petitions to the British masters (getting remission of 40 years out of 50 years' sentence), and the murder of constitutional norms in Goa, Karnataka and now in Maharashtra.

Post-Balakot, danger that events might spiral out of control is 'greater, not less'

By Tapan Bose*
The fear of war in South Asia is increasing. Tensions are escalating between India and Pakistan after the Indian defence minister's announcement in August this year that India may revoke its current commitment to only use nuclear weapons in retaliation for a nuclear attack, known as ‘no first use’. According to some experts who are watching the situation the risk of a conflict between the two countries has never been greater since they both tested nuclear weapons in 1998.

Ships recycling Bill 'allows' India to be turned into a landfill for foreign hazardous waste

Counterview Desk
In a letter to M Venkaiah Naidu, chairman, Rajya Sabha, senior activist Gopal Krishna of the Toxics Watch Alliance has said that the Recycling of Ships Bill, 2019 should be referred to the Parliamentary Standing Committee on Science and Technology, Environment, Forests and Climate Change to "safeguard country’s maritime environment from harmful and hazardous wastes and materials".

Worrying signs in BJP: Modi, Shah begin 'cold-shouldering' Gujarat CM, party chief

By RK Misra*
The political developments in neighbouring Maharashtra where a Shiv Sena-NCP-Congress government assumed office has had a trickle down effect in Gujarat with both the ruling BJP and the Congress opposition going into revamp mode.

'Favouring' tribals and ignoring Adivasis? Behind coercion of India's aborigines

By Mohan Guruswamy*
Tribal people account for 8.2% of India’s population. They are spread over all of India’s States and Union Territories. Even so they can be broadly classified into three groupings. The first grouping consists of populations who predate the Indo-Aryan migrations. These are termed by many anthropologists as the Austro-Asiatic-speaking Australoid people.