The Hindu : Business : Strategy to accelerate manufacturing sector

Online edition of India's National Newspaper
Tuesday, Sep 27, 2005

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Strategy to accelerate manufacturing sector

Special Correspondent

Amendments to IDA have to be legislated first, says council

NEW DELHI: The National Manufacturing Competitiveness Council (NMCC), headed by V. Krishnamurthy, on Monday unveiled a draft strategy to achieve a manufacturing sector growth of 12 per cent so as to sustain a higher GDP (gross domestic product) growth at 9 per cent.

The council, which was set up by Prime Minister Manmohan Singh to identify the problems impeding the growth of the manufacturing sector, has pinpointed nearly a dozen constraints that require immediate corrective action. Apart from finding the remedy for certain sectoral ills, the steps to rectify the problems include prioritising the development of poor infrastructure, particularly power, labour reforms, reversing the inverted duty structure and dismantling of the `Inspector Raj.'

At an interactive session here, Mr Krishnamurthy noted that it was an aberration that the manufacturing sector accounted for just 17 per cent of the country's GDP, way below when compared to China's 35 per cent, 34 per cent in Thailand, 31 per cent in Malaysia and 25 per cent in Indonesia.

For India, he said, a 12 per cent growth in the manufacturing sector was the bare essential for dealing with the unemployment problem, especially when each year about ten million people were set to join the workforce. A manufacturing sector growth of 12 per cent would result in 1.6-1.9 million direct jobs each year, he said.

On labour reforms, the council Chairman said there was no denying the fact that amendments to the Industrial Disputes Act (IDA) had to be legislated first despite the opposition by the Left parties. However, there were a number of other issues such as the Contract Labour Act which could be taken up immediately.

Mr Krishnamurthy pointed out that even without amendments to the IDA, the domestic industry was going ahead with programmes to downsize and restructure the workforce. In fact, there was need to look into the workers' welfare aspects which could bring about a change in mindset among the trade unions to the need for labour reforms.

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