Dear members of BCAS family,
On 5th November 2013, the Indian Space Research Organisation launched Mangalyaan into the earth’s orbit on its 780 million kms journey to Mars from its launch base at Sriharikota. India is only the 4th country in the world to have successfully achieved this. It is indeed a proud moment for all Indians. Amidst all the other achievements and accolades related to this project, the one significant aspect which impressed me was the cost of the project; ? 450 crores, a fraction of what expeditions of other countries cost. This proves a point that India has technological wherewithal to carry out complex projects, innovating on the way. Congratulations to Dr. K. Radhakrishnan and his team for this achievement.
India has an abundance of entrepreneurial resources. But individual enterprise can achieve precious little if the environment is not enabling. There are many shackles that need to be broken. The state needs to play its role of the facilitator. In the times of elections, everyone has their wish list. I have mine too.
India has gained a name for itself for IT/ITES. But its true potential is in the manufacturing services. That’s where value addition happens. That’s where we can use our natural resources and the abundant skilled labour to its potential. And that’s where capital creation will happen. And this sector needs liberalisation in Land, Labour and Licences.
Licence means a permit from an authority to own or use something, do a particular thing, or carry on a trade. After the initial spurt of liberalisation, we have stopped opening up our economy. Whether it pertains to investments, way of doing business, transfer of ownership, access to national natural resources etc. There are restrictions needing multiple permits for most aspects of businesses. One-window-clearance is unheard of. The next government should commit itself to creating an enabling, facilitative, non-interfering and progressive environment.
Labour laws are another area which needs liberalisation. Traditionally, the state has always tried to control the labour force. Reasons are obvious; vote bank, extortion and what not. There are over fifty national laws and many more state-level laws. These laws have hampered the growth of the formal manufacturing sector. According to a World Bank report in 2008, heavy reform would be desirable. The executive summary stated,
“India’s labor regulations – among the most restrictive and complex in the world – have constrained the growth of the formal manufacturing sector where these laws have their widest application. Better designed labor regulations can attract more labor- intensive investment and create jobs for India’s unemployed millions and those trapped in poor quality jobs. Given the country’s momentum of growth, the window of opportunity must not be lost for improving the job prospects for the 80 million new entrants who are expected
to join the work force over the next decade.”
Gone are the days of Zamindari and Maaliki. Labour needs no protection. There are ways to prevent exploitation. Inclusive growth will ensure that capital and labour work in tandem.
In my opinion, land is going to the biggest spoiler for the India Story. Everybody believes in the India story. Some are hugely optimistic, some cautiously optimistic and then a few are cynics. The chief constituents of our GDP are agriculture, services and manufacturing. The contribution of Agriculture to the GDP in terms of percentage will only keep shrinking as other sectors grow faster. More and more agricultural land is being converted to NA for non-agricultural purposes. Moreover due to the restrictive nature corporatisation or cooperative farming is a non-starter. Any progress in agriculture will involve improving yields hence more harvests in a year and more crops from same land. Agriculture will then not be constrained for want of land.
Services are another major contributor to the GDP, who will soon reach a plateau as they are not capital intensive and thrive on cheap labour. Such contracts will flow to other developing countries as labour and real estate become expensive in our country. Even otherwise, this sector is largely urban-centric, as it needs qualified labour and infrastructure. The availability of land for this sector can be easily addressed partly by improving infrastructure and connectivity to peripheral areas or by simply changing Development rules by granting higher FAR/FSI. Vertical development suits this segment. So there seems to be no constraints to this sector for want of land. Same is the case for residential development. High-rise, high-density is a solution to address scarcity of land.
The manufacturing segment will raise its share in GDP significantly. India has great enterprise, talented workforce, availability of many raw material, natural resources and cultivable, development of ports and other infrastructure. However, land for manufacturing segment has special requirements. This facility needs horizontal development, which means it needs higher ground coverage as compared to any other development. The high-rise concept cannot work here. Also, it needs to be away from cities and farms. Hypothetically, if the manufacturing segment doubles its output in the next ten years, it will need twice the land that this segment occupies today. Where is this land? The Land Acquisition Bill makes getting land thatmuch more difficult. The states are shying away from helping aggregation. The courts are taking pro-farmer stands. Barring a few states like Gujarat, no state is in a position to allot land for manufacturing when investors are queuing up with opportunities of setting up large facilities in India. Industrial development Corporations are failing to make land available for manufacturing. In a place like Chakan, off Pune, MIDC has over 7,000 applications pending for allotment of land. SEZ’s, a great vehicle for organised manufacturing, have fizzled out.
Hence, availability of land will be a major bottleneck to India’s growth story.
Solutions are obvious. There is no rocket science. We are not lacking in ideas. We are lacking in our political will. Politicians are playing their game of vote banks. Growth can only benefit all. Thus, I would like my next government to promise liberalisation of Labour, Licences and Land. Here’s wishing everyone happiness and love.
With Warm Regards
Naushad A. Panjwani
