The steep drop to 0.5 per cent in the manufacturing sector output in November should ring alarm bells in the corridors of government as it plans for the sector to create one million new jobs in the next three years. The reasons for this drop need to be analysed by the government and acted upon if the situation is not to deteriorate. The manufacturing sector is an employment generator, so there is all the more reason to be concerned at the steep negative growth. The government needs to heed the view of the information technology czar N.R. Narayana Murthy who has pointed out that job creation will have to come from manufacturing and low-tech services for the 400 million semi-literates and 400 million illiterates.
India’s growth in recent times has been consumption-led and demonetisation and the Goods and Services Tax had enfeebled the spending capacity of consumers. This effect is now waning but the manufacturing sector needs a push from the government as it did in the case of the electronics industry in a bid to curb imports. India has the potential to be the manufacturing hub of the world specially since China is exiting this position due to higher wages and changing dynamics in its manufacturing sector .
The government needs to build on the steps it has taken to boost the ease of doing business. Industry bodies for instance have suggested an independent regulatory system for the manufacturing sector and empowering of local authorities to deal with them rather than going to the Centre for issues concerning the sector.
