Context:

• Recently, Niti Aayog released “ strategy for new India @ 75, recommending many refreshing improvement from the erstwhile Planning Commission’s plans.

What's new in the strategy?

• The intent to change the approach to planning from preparations of plans and budgets to the creation of a mass movement for development in which “every Indian recognises her role and experiences the tangible benefits” is laudable.
• The strategy affirms that “policymaking will have to be rooted in ground realities” rather than economic abstractions.
• It says that stakeholders have been consulted widely in preparing the strategy, which is also something that the erstwhile Planning Commission said. However, what matters is the quality of consultation.
• It will be worthwhile for NITI Aayog to get feedback from stakeholders on whether it has improved the process of consultation substantially or not.
• The strategy emphasises the need to improve implementation of policies and service delivery on the ground, which is what matters to citizens.

Focus on meaning of growth

• The Niti Aayog clearly stated,Besides having rapid growth, which reaches 9-10 per cent by 2022-23, it is also necessary to ensure that growth is inclusive, sustained, clean and formalised.
• Employment and labour reforms, the second chapter in the strategy, have rightly been given the highest priority, which was not the case in the previous plans.
• Moreover, the strategy realise that the employment-generating capacity of the economy is what matters more to citizens than the overall GDP growth rate.

How to realise economic growth?

• The growth of industry and manufacturing is essential to create more employment, and to provide bigger opportunities to Indians who have been too dependent on agriculture so far.
• Labour-intensive industries are required for job creation. If the manufacturing sector is to grow from 16% to 25% of the GDP, which the strategy states as the goal, with more capital-intensive industries, it will not solve the employment problem.
• The strategy highlights the urgency of increasing the tax base to provide more resources for human development.
• It also says financial investments must be increased to strengthen India’s production base.
• A big weakness in the Indian economy’s industrial infrastructure is that middle-level institutions are missing.
• NITI Aayog’s plan for industrial growth has very rightly highlighted the need for strong clusters of small enterprises as a principal strategy for the growth of a more competitive industrial sector.

However, the strategy also have some shortcomings :

• The strategy states a goal of 16- 25% growth of manufacturing sector, thus do not clearly focus on employment generation, thus it could lead to more capital intensive industrial growth.
• Moreover, the strategy on labour laws appears pedestrian compared with the ambitious strategy of uplifting the lives of millions of Indians so that they share the fruits of economic growth.
• The paper recommends, complete codification of labour laws, which will enable easier navigation for investors and employers through the Indian regulatory maze. However, it focus less on social security of workers.

Way Ahead:

• First, the nature of work and employment is changing, even in more developed economies. It is moving towards more informal employment, through contract work and self-employment, even in formal enterprises.
• In such a scenario, social security systems must provide for all citizens, not only those in formal employment.
• Second, in a world where workers are atomised as individuals, they must have associations to aggregate themselves to have more weight in the economic debate with owners of capital. Rather than weakening unions to give employers more flexibility, laws must strengthen unions to ensure more fairness.
• As many international studies point out that one of the principal causes of the vulgar inequalities that have emerged around the world is the weakening of unions.
• Third, all employers in India should realise that workers must be their source of competitive advantage. India has an abundance of labour as a resource, whereas capital is relatively scarce. Human beings can learn new skills and be productive if employers invest in them. Employers must treat their workers — whether on their rolls or on contract — as assets and sources of competitive advantage, not as costs.

Conclusion

• The shape of the development process matters more to people than the size of the GDP. Development must be by the people (more participative), of the people (health, education, skills), and for the people (growth of their incomes, well-being, and happiness).
• How well India is doing at 75 must be measured by the qualities of development, as experienced by its citizens, along these three dimensions. GDP growth will not be enough.