GoI, Reforms & Growth

GoI, Reforms & Growth​

By: Amit Bhushan Date: 6th July 2016

The government of India at least is talking that it is hard pressed for Growth, Job Growth that is - which now seems to matter in politics, a late realization. It is seen making efforts to open up sectors which can result in Investments to evolve projects that may result in job growth. High on agenda are Government consumption items which hitherto were imported, most notably the defence equipment. Then we have sectors which were marred with relatively high level of imports of manufactures say consumer electronics, most of which is not really high tech but somehow not evolved due to apathy by both government as well as private sector.

The role of private sector being chasing the quick buck through imports rather than evolve a sustainable industry. Evolving a sustainable industry would of course entail studies regards areas/segments of industrial components in which the country can currently compete, global directions & competitiveness and evolving a workable roadmap consisting of projects to make additional industrial segments/components to become competitive and a suitable import policy. Of course the impact is going to be scattered across multiple ministries and departments often working on cross-purposes rather than in rhythm. From consumer industry or even capital goods sector, much of it is yet to take off and hence a robust doe of criticism.

Then of course we have songs around rise of domestic Information Technology start-ups prominently in E-Commerce and FinTech arena with a rising tide of products, many of them struggling to find markets which would readily pay up for these services/products. While the government on its part has banned E-Commerce Markets which compete with domestic retailers to discount products outside of rules, it has done nothing to stop a well-funded start up to discount its product/service to corner a larger share of the markets from their competitors who cannot afford to do so.

This sets the ball for unfair competition within software markets whereby which there seems no pricing governance and well-funded start-ups, howsoever lousy can gobble up underfunded ones (with perhaps much more innovative idea) may be for peanuts or else let them pass away out of fund crunch. If an IT superpower like India, with scores of underfunded innovators can allow such situation for long is also a question that needs to be pondered upon while the telcos keep us awake with their near permanent issues with net neutrality.

We seems to be having a situation where equity from abroad is used as subsidy to "buy in" into profitable segments of customers while those without such funds are expected to expand the low-profit or unprofitable segments to bring them into profits and only to get consumed by the richer company. Again we have noise around domestic logistics market with Waterways being in demand from public as a cheaper means of transportation while the government seems to be drumming up Aviation through attracting private investments while its own investment continue to be poured onto roadways and some in railways.

To some observers it has some early successes while moving grains and steel to north-east via neighbouring country, however still negligible amount of tea, jute and fruits etc. from north-east move to say Mumbai or Gujarat via Waterways and same is situation of reverse movement of cotton or manufactures, although the government will keep pronouncing its policy success. On the aviation side, it seems hard-pressed to push for regional air connectivity by trying to workout a subsidy model whereby which metro fliers are made to chip in some additional amount to subsidise air passengers flying within small towns and that defined as regional air connectivity.

What may perhaps work better is that government plans an Asian Currency Union (ACU) wide regional air connectivity whereby which passengers (and goods) from these countries can travel directly to or quite near to their destination cities with some basic infrastructure at airports to support such movement. This would help two-way trade and P2P relations, cultural exchanges between people while gaining these airlines much needed traffic to develop markets rather than just a price control backed subsidy regime.

This may also help in promoting education and healthcare service industries and attract more nations to ACU and it to thrive as a payment mechanism. Lastly we have our existing private sector industries, many of which depend heavily on cornering government capital subsidies, tax-related jugglery and bank finance rather than competitiveness or innovation. Quite a few of which may still prefer to twist the government into bailout packages rather than restructure their assets towards competitiveness or drive towards innovation.

It is general understanding that the academicians in India have done little to educate people about the industry models where by units operate within overall governance structure, systemic costs in India vis-à-vis some of the overseas competitors and how and why's following existing practices. While the social media is changing these education patterns, while the government response is to import more of theoretical education possibly from free like "MOOC" adding little value to the students and then subsequently blaming the students rather than the netas for low skills. A lack of such debates on the commercial news media, the chase of retired senior bureaucrats and their progeny to settle outside rather to spar over such issues etc. speaks volumes in itself about our progress to development. Let's see if the game evolves further…

 

[Dhruv Bindhani]

Summary: Government Reforms & Growth Challenges (India, 2016)


The Government of India, in 2016, recognized the urgency of job creation and industrial growth, focusing on import substitution in sectors like defense and electronics. However, systemic inefficiencies, fragmented policymaking across ministries, and private sector complacency have slowed industrial self-reliance.


Key Observations:

• Industrial Strategy Weakness: Instead of building competitive manufacturing sectors, private players often relied on imports for quick profits. A sustainable roadmap involving component-level competitiveness was missing.
• IT & E-Commerce Concerns: While startups in fintech and e-commerce rose, the lack of pricing governance led to unfair competition — well-funded firms could undercut smaller, potentially more innovative rivals, stifling healthy growth.
• Subsidy Distortions: Foreign equity often subsidized market access, creating inequality. Meanwhile, government efforts like subsidized regional air travel raised sustainability concerns.
• Logistics & Connectivity: Though some progress was made (e.g., cargo movement to the North-East), inland waterways and reverse logistics remained underdeveloped. Aviation policy lacked regional or pan-Asian integration vision.
• Structural Flaws: Private industries leaned on subsidies and bailouts over innovation. Academic institutions and media failed to foster discourse on industrial models, competitiveness, and real-world economics.

Conclusion:
Despite pockets of progress, deep-rooted policy contradictions, weak regulatory frameworks, and a lack of innovation-centric focus constrained India’s push for sustainable job and industrial growth. A coordinated, knowledge-driven, innovation-first approach remains essential.