How the heroes of enterprise are paving the way for Aatmanirbhar Bharat
India Today Editor-in-Chief talks about the different sectors of the Indian economy which have thrived and emerged as truly world-class despite an overbearing bureaucracy, in the August 24, 2020 edition of the India Today Magazine.
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Nothing captures a nation’s zeitgeist better than a political slogan. In the mid-1960s in India, it was the guns and butter ‘Jai Jawan, Jai Kisan’. It signified India’s rising military-industrial base and the start of the Green Revolution. This helped independent India realise what was unarguably its most significant achievement — the ability to feed all its people. In 1971, it was Indira Gandhi’s ‘Garibi Hatao’ which signalled the country’s socialist turn (for the worse). In the 1970s, ‘Indira Hatao, Desh Bachao’ became a call to rid the country of a democrat who had briefly turned dictator. More recently, in 2004, it was the Congress that pulled off a shock victory, defeating the BJP’s India Shining campaign with its promise of ‘Congress Ka Haath, Aam Aadmi Ke Saath’. A decade later, Narendra Modi stormed the national stage with his vow of ‘Ab Ki Baar, Modi Sarkar’.
Prime Minister Modi’s ‘Atmanirbhar Bharat’ vision for a self-reliant India announced on May 12 after a 48-day lockdown is different in that it is not linked to electoral politics—it was born in a crisis. Our 73rd Independence Day this year is different from all previous ones because of a threefold turmoil facing the country—a Covid-19 pandemic, an economic meltdown caused by a harsh lockdown and an aggressive deployment by the Chinese army on our border.
There was, of course, a slow build-up to this announcement. The winds of protectionism had already begun sweeping the globe. The pandemic also brought home the realisation of how dependent India was on China even for something as necessary as Personal Protection Equipment.
The Prime Minister’s definition of Atmanirbhar Bharat seems different from the socialist-era shibboleths of import substitution and the Licence Raj that shielded Indian industry from global competition and gave Indian consumers third-rate goods at exorbitant prices. The current slogan is an attempt to make India globally competitive and sync it with the global supply chain. With a substantial focus on Indian MSMEs, the government’s Rs 20 lakh crore stimulus package announced on May 12 was a step towards this. Then, on August 9, in an unprecedented negative list, the import of 101 defence items was banned and the Indian defence industry was assured of orders worth Rs 4 lakh crore in the next 5-7 years.
India Today August 24, 2020 cover, Champions of Self-Reliance
If you take the considered view that reform in India takes off only when there’s a crisis staring us in the face, there is a genuine chance that we could be looking at something beyond rhetoric. To make Atmanirbhar Bharat a reality rather than just a return to import substitution with high tariffs and shoddy Indian products, a lot of fundamental work has to be done. India needs to create world-class infrastructure in roads, railways, ports and power to make the cost of production competitive. Take aluminium, for instance, the most used metal in the world after steel. Although India is endowed with rich and good quality coal and bauxite reserves, the domestic aluminium industry is struggling to remain globally competitive in the wake of increasing production costs. Power is a critical input for the aluminium industry, accounting for 30-40 per cent of its cost of production. Coal subsidies in China, natural gas subsidies in Russia and subsidised power in West Asia and various other aluminium-producing countries give them an edge over Indian players. The Indian mining sector has run up against delays in the grant of environmental and forest clearances, land acquisition issues and the lack of railway connectivity and transport infrastructure.
Indian manufacturers pay 12-14 per cent bank lending rates annually, the highest among the emerging market economies. With the cost of capital even to top blue-chip businesses being in the range of 7-10 per cent, it is impossible to compete with countries where the cost of capital is less than half of this. Companies can borrow in the international market at 5-5.5 per cent without any forex hedge. The exorbitant cost of logistics, which is 30-40 per cent higher than the global benchmarked logistics cost, is another dampener.
Similarly, with convoluted laws on the conversion of land use for industrial purposes, land at a reasonable cost is not easily available in places where there is a suitable infrastructure. The inflexibility of labour laws is well known, and no economy can progress unless there is mobility of labour. This can happen only when opportunities of skilling and reskilling are provided. However, what needs to be done foremost is to reduce the heavy hand of government in business. A July 2020 study by TeamLease Compliance outlines the enormous hurdles a businessman encounters while setting up a business in India. The country’s most industrialised state, Maharashtra, also has the most regulation—67 Acts, 3,657 compliances and 215 filings—required of businesses.
What makes businesses and sectors truly self-reliant where they can compete with the best in the world? The answers often lie within the country. For our Independence Day special issue, ‘Champions of Self-Reliance’, we decided to look at examples in different sectors of the Indian economy which have thrived and emerged as truly world-class despite an overbearing bureaucracy.
So, whether it is space launch technology, automotive, textiles or pharmaceuticals, each sector has shining examples that have emerged as world-beaters. They have thrived in the face of stiff global competition or, in areas like space rockets, delivered when there were no easy import options. The learning from them is that the government needs to create an enabling environment for business. I have always maintained that India is a land of entrepreneurs and, if unshackled from stifling government control, we can conquer the world. The prime minister has promised a quantum leap rather than incremental change. I hope he delivers. Otherwise, the slogan of Atmanirbhar Bharat will remain just that, and we will continue to muddle along. With the world in flux, our moment is now. We need to seize the day and realise what our first prime minister spoke about on our first Independence Day — our “tryst with destiny”.
(India Today Editor-in-Chief's note for the cover story, Champions of Self-Reliance, for August 24, 2020)