Make in India: Governance is the key

The Asian Age, May 31, 2016

By Pradeep S Mehta

In the context of a nation, organic change is always in the making. It is slow but steady, whereas sudden paradigm changes happen when either organic churning reaches the tipping point or a strong leadership takes charge.

In India’s case, it is the latter that can be credited with the change we see around us these days. Take the example of “Make in India”. Didn’t we all know about its importance to our job creation agenda all this time, but it’s only in the last 18 months that a sense of urgency has crept in at all levels to make this goal a reality.

The same set of businesses, bureaucrats and people are now in a rush to contribute towards it. They want to be productive and are intolerant of obstacles in their path. But this is also a tenuous situation as the very leadership that gave them the reason to act can quickly turn into a dart board if governance in the country is not fixed with speed. This is something which cannot be done gradually.

Besides bureaucratic reforms, there are many other ways to improve governance. First, we need to identify what to discard from the system; second, before discarding something, it needs to be identified as having no utility; third, we need to identify if a certain process is indeed needed to make things work better; and fourth, we need to salvage a good initiative from the grip of bad administrators. All these steps must be undertaken simultaneously to ensure a holistic impact.

Continuing with the example of “Make in India”, let’s make it easier to understand some of these examples.

Discard immediately what does not work: The Narendra Modi government is already repealing many unnecessary and obstructive laws. This is a commendable step and is likely to have a positive impact on governance, but there are other irritants too that need to be tackled. An apt example would be to discontinue with the civilian template in defence procurement. The General Financial Rules, that are a compendium of general provisions to be followed by all government offices while dealing with matters of a financial nature, cannot be the same for defence and civil procurement as the needs of the two are vastly different. Dhirendra Singh, chairman of the Committee on Facilitating “Make in India” in the defence sector, puts it succinctly when he says that financial rules for procurement of wheat cannot work in the case of a multi-role aircraft. It really doesn’t need more elaboration and it’s high time that we sorted this out.

Discard that which has outlived its utility: One of the first things that come to mind is the general opinion across the board that District Industries Centres as institutions have not only outlived their utility but have also become heavy-handed. If experts and practitioners feel alike on this point, then why are the states so reluctant to do away with them?

Follow all processes to make things work: We have been talking about MSMEs as the backbone for “Make in India”, but without a strategic roadmap based on the areas where India is competitive. Formulating such a roadmap will help to identify the MSMEs, develop strategic clusters of MSME and focus on their growth in a planned and strategic manner.

Let’s take another example. It is recognised that the defence sector is a crucial one for boosting domestic manufacturing but we don’t even have a national security doctrine. How can we ever know the strategic defence equipment requirement if we don’t know what our strategy should be?

Salvage good initiatives from the grip of bad administrators: Land is one of the most underutilised assets for “Make in India”. In the past it has been a controversial issue as well. But instead of getting into controversies we would do well by first managing it better by bringing the National Land Records Modernisation Programme on track. The programme was created in 2008 with the aim of having conclusive titles in the country, but eight years later it suffers from underutilisation of funds. Isn’t this an example of a good initiative being wasted because of bad governance?

In addition, it’s also important to add that we must implement the recommendations that we already have. The National Manufacturing Plan of 2012 deals with the strategies for accelerating growth of manufacturing in India in the 12th Five-Year Plan and beyond. This document is a useful one in that it focuses on implementation. It also identifies that poor planning and inadequate consensus are the main reasons why India lags behind in manufacturing. The plan articulates sector-wise recommendations that focus on implementation. We must revisit this document and its recommendations and evaluate the progress that we have made.

Ultimately, it will be strong political will that can change things, and fortunately we seem to have that in Prime Minister Narendra Modi. His leadership has also expedited the organic change, but one thing that he needs to do more is to empower other relevant ministries as well and bring in a culture of outcomes, which is what had been envisaged in 2005 when we implemented the system of outcome budgeting. Many years later, it seems to have only sub-optimally worked. We need to revive this mechanism for a longer sustainable solution, and who better than the Prime Minister himself to champion this cause?

The writers work for CUTS International, a public policy research and advocacy group

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