In the three year agenda released in 2017, NITI Aayog noted that
"unemployment is the lesser of India’s problems. The more serious problem,
instead, is severe underemployment. A job that one worker can perform is often
performed by two or more workers. In effect, those in the workforce are
employed, but they are overwhelmingly stuck in low-productivity, low-wage
jobs...Therefore, what is needed is the creation of high-productivity,
high-wage jobs."
The action agenda therefore emphasized on increased emergence of
larger, organized-sector firms that can create high paying jobs. To meet this
end, promoting exports was considered a better option rather than trying to
substitute imports by producing in India.
The agenda paper accordingly highlighted that "A focus on
the domestic market through an import-substitution strategy, however attractive
it may seem, would give rise to a group of relatively small firms behind a high
wall of protection. They will not only fail to exploit scale economies but also
miss out on productivity gains that come from competing against the best in the
world. The electronics industry offers a case in point. Our domestic market in
electronics as of 2015 is only USD 65 billion. In contrast, the global market
is USD 2 trillion. Our policy of import substitution under high protection has
given rise to a group of small firms none of which is competitive in the world
markets. In contrast, a focus on the global market can potentially result in
output worth hundreds of billions of dollars and hence a large number of
well-paid jobs."
NITI Aayog underlined the demographic advantage and wage
competitiveness of India vis a vis China, while spotting an attractive
opportunity in shift of businesses from China. It noted "Today, with
Chinese wages rising wages due to an ageing workforce, many large-scale firms
in labour-intensive sectors currently manufacturing in that country are looking
for lower-wage locations. With its large workforce and competitive wages, India
would be a natural home for these firms. Therefore, the time for adopting a
manufactures- and exports-based strategy could not be more opportune. Keeping
this context in view, the Action Agenda offers detailed proposals for the
implementation of an exports-based strategy. Among other things, it recommends
the creation of a handful of Coastal Employment Zones, which may attract
multinational firms in labour-intensive sectors from China to India. The
presence of these firms will give rise to an ecosystem in which local small and
medium firms will also be induced to become highly productive thereby
multiplying the number of well-paid jobs."
The Action Agenda in particular offered "specific proposals
for jumpstarting some of the key manufacturing and services sectors, including
apparel, electronics, gems and jewellery, financial services, tourism and
cultural industries and real estate."
After two and half years, the implementation of the agenda is
found lacking on almost all fronts.
(a) Industrial
production growth has slipped.
(b) Work force
participation rate has slipped to multi decade low. Unemployment rate is
highest since 2011. Labor productivity growth is at lowest level in a decade.
(c) Exports are
mostly stagnant. Imports are marginally higher.
(d) No significant progress
is seen on coastal zones, increase in port capacities. The work on dedicated
freight corridor has progressed but still running much behind the revised
schedule.
(e) Some impressive
projects have been announced by some major global manufacturers. However, on
ground little progress is visible. In 2018 the import of telecommunication
equipments was highest in five years. FDI has been lower in 2018 and 2019 as
compared to 2017.
