From UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Paper 3-Areas to put work on to put India on the path of growth
The article suggests the three areas on which country should work on to make it resilient in the future. These three areas include the labour laws for informal employment, conditions of our cities and the strength of our rural economy.
- The Prime Minister, while addressing the Confederation of Indian Industry (CII) annual meeting urged to think big and partner with the government in putting India on the path to growth.
- There is much that we can be achieved if government and industry work towards the same objective, and in a spirit of mutual trust.
Let’s look into some areas
- Over 85 per cent of employment in India is in the informal sector.
- The Centre for Monitoring the Indian Economy (CMIE) estimates that between mid-March and mid-April, 120 million people lost their jobs.
- With this unemployment rise to an all-time high of 27 per cent.
- There was reverse migration on an unprecedented scale — some 10 million people abandoned cities to return to their native villages.
- As economic activity has restarted in cities, CMIE reports that unemployment is now down to around 9 per cent.
3 Problems we must address
1) Need for labour regulation
- We have stringent labour laws to protect workers, but this covers only the 15 per cent formal sector employment.
- The 85 per cent of our workforce who are informally employed have almost no protection, and employers have almost complete flexibility.
- We need to address both the formal and informal labour spectrum to get the balance right between flexibility and protection for all labour.
- Everyone must have a minimum level of protection, and every employer a minimum level of flexibility.
- This calls for a new social contract to define a well-calibrated social security system.
- This huge project demands good faith and strong leadership by industry, labour and government.
2) Living conditions of our cities
- We need a massive private home-building programme.
- It probably needs much more liberal land-use regulations — our cities have among the least generous floor-space indices (FSI) in the world.
- New York, Hong Kong, and Tokyo have an FSI five times Mumbai’s.
- Again, this is a multi-year project, and it involves state and city governments partnering with private developers.
- India is unique in having 70 per cent of our population still residing in rural areas.
- We must encourage the migration of people to higher productivity occupations in our cities.
- And we must ensure that clean, affordable and accessible housing is available for all in our cities.
3) Strength of our rural economy
- Reverse migration is also an opportunity to collaborate in spreading the geography of development.
- We need a three-pronged approach:
- 1) As Ashok Gulati has often argued, the easiest way to grow farmer incomes is by having them grow more value-added crops.
- Exports of fruits and vegetables must be consistently encouraged.
- The cultivation of palm plantations with potential for huge import substitution, we need corporate farming as the gestation period of seven years for the first crop is too much for the average farmer to handle.
- The Atmanirbhar agricultural reforms, which permit contract farming, and open up agricultural markets, are major medium-term reforms. Implemented right, they can transform agricultural markets.
- 2) We need to encourage agro-processing near the source.
- Fostering entrepreneurship in rural and semi-urban areas would combine nicely with local processing.
- 3) We need to invest even more massively in rural connectivity.
- Today, we would add digital connectivity to road connectivity to level the playing field for all regardless of where they live.
Consider the question “What are the vulnerabilities in our economic structure that were highlighted by the covid pandemic? Also suggest the measures to make our rural economy strong and resilient to such shocks.”
The task is huge, and only collaboration between all levels of government (Union, state, and city) and our dynamic private sector can hope to make substantial progress.