“Policy Paralysis Hurting Core Sectors” [June 2012]

By admin June 19, 2012 11:58 am IST

The current government is in the midst of a ‘policy paralysis’ or lack of firm policies focussed on critical sectors like steel, mining and power. The executions of initiatives in a time bound manner as per 12th Five Year Plan is yet to be seen in near future- Satish M. Bhat, Managing Director, Ador Welding Limited
Manufacturing sector can change the fate of economyThe manufacturing sector in India is currently undergoing turbulent times in the wake of weak and volatile global economic environment, depreciating rupee, high cost of credit, rising inflation and ever increasing trade deficit. The IIP for the month of March 2012 according to Government estimates had gone down by around 3.5 per cent; in which the Manufacturing sector’s IIP had come down by 4.4 per cent. However, Satish M. Bhat, Managing Director, Ador Welding Limited feels, “It is the manufacturing sector alone which can reverse this trend supported by some strong fiscal measures. This is because every job created in manufacturing has a multiplier effect of creating two to three additional jobs in related activities”.
“The National Manufacturing Plan can definitely be one of the important catalysts to boost this sector with special focus on critical industries like steel, automotive, mining, petrochemicals, etc”, he adds.
Current government in midst of a ‘policy paralysis’In FY 2012-13 the welding industry is expected to grow by at least 2-3 per cent more than the GDP growth rate. As welding industry is directly affected by the growth of the aforesaid industries, a boost in the demand for welding products is definitely expected in the coming years. However, the most important aspect of all these initiatives taken up by the government is the ‘implementation’ part. According to Mr. Bhat, “The current government is in the midst of a ‘policy paralysis’ or lack of firm policies focussed on critical sectors like steel, mining and power. The executions of initiatives in a time bound manner as per 12th Five Year Plan is yet to be seen in near future”.
Rupee fall – pain for manufacturing sectorTalking about the slower growth in manufacturing sector, Mr. Bhat also pointed out, “As a result of ever increasing demand of dollars due to the fact India imports 80 per cent of its crude oil that has resulted in the steeper decline of rupee against dollar as compared to some other countries globally. The fact that India has also decided to cut oil import from Iran by over 11 per cent doesn’t augur well for Rupee’s future. The shortage of crude oil will further accelerate the demand for dollar and consequent weakening of Rupee as India is one of the biggest importer of crude oil in the world. This has a long lasting direct/indirect impact on the manufacturing sector”.
India will become hotspot for manufacturingThe manufacturing sector has in recent past outpaced the overall growth rate of the economy indicating a surge in the manufacturing activity lately. However this is one sector which is still much below its true potential. Compared to other emerging economies of the world, India is still too dependent on the agriculture sector for its livelihood. However this has not deterred manufacturing sectors like welding from creating employment opportunities to a large section of population. But in order to increase the share of manufacturing sector to 25 per cent of GDP, skill development and technological innovation will be the key factors. “There have been multiple initiatives taken by the public and the private enterprises and we are sure that in the coming years India will become the hotspot of manufacturing activities”, Mr. Bhat asserts.Need for special focus on R&D In order to build a strong and sustainable growth pattern for the Indian industries there are certain challenges which need to be taken head on. One of the important challenges is the lack of skilled professionals in the manufacturing domain. For the manufacturing sector to become a substantial component of our GDP; industrial training and skill upgradation will become the key factors. Ador Welding Academy (AWA) is one of a kind institutions established by Ador Welding Limited has made a substantial contribution to the technical upgradation of the human resource base in the welding industry. Apart from skill upgradation, the small and medium enterprises (SMEs), which contribute significantly to the manufacturing output and provide nearly half of the total manufacturing jobs, struggle from access to finance and spending enough on the R&D expenses. “In our country the R&D expenses form just 0.9 per cent of the GDP which is far lesser compared to countries like China, Japan and USA. Special focus on R&D is required in the coming years”, Mr. Bhat comments.
Industry expects strong policy initiativesThe government has clearly stated that its approach to the 12th Five Year Plan is ‘faster, sustainable and more inclusive growth’. The government has indicated that it will invest considerably in improving the infrastructure, which is a major limitation currently. Apart from infrastructure, significant investments in railways, roads, ports and power sector is also expected. However, as mentioned earlier, policy paralysis has crippled the current government from taking firm steps in certain specific sectors like mining and steel. Citing the examples of different sectors, Mr. Bhat criticises, “The ‘Mines and Minerals Development Bill 2011’, which is supposed to provide a transparency to the mining sector, was introduced in Lok Sabha last year but still has not moved much due to pressures from coalition parties. Also the steel sector is mired in bureaucratic morass, environmental clearances and land acquisitions – specifically in states of Odisha, Jharkhand and Karnataka, where the approvals are not coming for a long time now”.
He opines, “Only strong initiatives from the Government to fast track the approvals can clear the cloud over these projects boost the development of this crucial sector”.

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