Chapter 9 Current Issues
Ease doing business: The ease of doing business index is a ranking
system established by the world bank group wherein the ‘higher
rankings’ (a lower numerical value) indicate better, usually simpler,
regulations for businesses and stronger protections of property rights.
Every year the World bank publishes ease of doing business index this
rank indicates us how effortlessly you can start a business in a country.
India as performed well in 2019. According to EDOB Rank India has got
63 out of 190.
10 parameters that are used for calculating ease of doing business
• Starting a business
• Dealing with construction permits
• Getting electricity.
• Registering in property.
• Getting credits.
• Protecting minorities investors.
• Paying taxes.
• Export import across the border.
• Enforcing contracts.
• Resolving insolvency.
Importance of doing business ranks.
• Ease of do you business is clearly evaluated by investors.
• they try to invest money in any country are started firm.
• In a short way the countries GDP will start to increase rapidly.
An initiative of the government of the India
A lot of initiative ideas have taken by prime minister Narendra
Modi like the startup India, make in India and many others. The
camping was started on 15th August 2015. These action plans are
not working anymore. The government needs to implement those
ideas and relaunch them. Recently the government has cut off the
corporation taxes. Moreover, GST service is giving relaxation to
business.
Government initiatives:
• recently the Government of India as decided to bring various
amendments to insolvency and bankruptcy code and
companies act 2013 to enhance ease of doing business in
the country.
• The amendments to these laws are a part of the
governments economic stimulus package announced under
Aatmanirbhar Bharat Abhiyan.
• India was placed at 63rd position in the world banks ease of
doing business report 2020 out of 190 countries.
MSMEs
The Government of India has introduced MSME (micro, small
and medium enterprises) in agreement with micro small and
medium enterprises development act of 2006. These
enterprises primarily engaged in the production, manufacturing
processing, preservation of goods and commodities.
Importance of MSMEs for the Indian economy
Across the globe. MSMEs are accepted as a means of economic growth
and for promoting equitable development. They are known to generate
the highest rate of growth in the economy MSMEs have driven India to
new heights through requirements of low investment, flexible
operations, and the capacity to develop appropriate native technology.
1. MSMEs employ around 120 million person, becoming the
second-largest employment generating sector after agriculture
2. With approximately 45 lack units throughout the country, in
contributes about 6.11% GDP from manufacturing and 24.63%
of the GDP from service activities
3. MSME ministry targets to increase its contribution towards GDP
by up to 50% by 2025 as India moves ahead to become a $5
trillion economy
4. Contributing around 45% of overall Indian exports
5. MSMEs promote all inclusive growth by providing employment
opportunities, especially to people belonging to weaker
sections of the society in rural areas
6. MSMEs in tier-2 and tier-3 cities help in creating opportunities
for people to use banking services and products, which can
amount to the final inclusion of the contribution of MSMEs for
the economy
7. MSMEs promote innovation by providing an opportunity to
budding entrepreneurs so help them build creative products
and boost competition in business and fuel the growth
Make in India
Make in India is a major National programme of the Government
of India designed to facilitate investment, foster innovation
enhance skill development, protect intellectual property and build
the best in class manufacturing infrastructure in the country.
Make in India initiative was launched globally in September 2014
has a part of India's relieved focus on manufacturing. The
objective of the initiative is to promote India as the most
preferred global manufacturing destination.
Objectives of make in India campaign
1. To transform India into a global design and manufacturing
hub.
2. To introduce new initiative for the promotion of foreign
direct investment.
3. To implement intellectual property rights.
4. To develop the Nations manufacturing sector.
5. To boost the confidence of investors and manufacturers to
build and invest in India.
6. To improve India’s rank on the ease of doing business index.
7. To eliminate the hazels of Laws and regulations in the
bureaucratic process of business.
8. To promote job creation and innovation in the limits of the
country.
9. To improve the global competitiveness of the Indian
manufacturing sector.
10. To make government transparent and accountable in
its working.
11. To encourage the avenues of skill development.
12. To promote the sustainability of growth.
Target of make in India scheme:
1. To increase growth in the manufacturing sector to 12 to 14% per
annum over the medium term.
2. To raise the contribution of the manufacturing sector to 25% of
the gross domestic product from its current 16%.
3. To create 100 million additional jobs by 2022 in the manufacturing
sector.
4. To increase domestic value addition and technological depth in
the manufacturing sector.
*Key Schemes Launched to Support Make in India Program*
There are various key schemes launched by the government of India to
support the Make in India campaign from time to time. These include,
*1) Skill India Mission*: This mission aims to skill 10 million in India
annually in various sectors. There is a need to upskill the large human
resource available. Currently, the percentage of formally skilled
workforce in India is only 2% of the population. The Skill India
programme aims to widen this percentage through various skill
development programme across the country.
*2) Startup India*: Startup India Program aims to build an ecosystem
that fosters the growth of startups, driving sustainable economic
growth, and creating large-scale employment. Under this program, the
government has introduced several key relaxations for entrepreneurs.
*3) Digital India*: This aims to transform India into a knowledge-based
and digitally empowered economy by making many services completely
online.
*4) Pradhan Mantri Jan Dhan Yojana (PMJDY)*: The mission envisages
financial inclusion to ensure access to financial services, namely banking
savings and deposit accounts, remittances, credit, insurance, pension in
an affordable manner.
*5) Smart Cities*: This mission aims to transform and rejuvenate Indian
cities. The goal is to create 100 smart cities in India through several sub-
initiatives.
*6) AMRUT*: AMRUT is the Atal Mission for Rejuvenation and Urban
Transformation. It aims to build basic public amenities and make 500
cities in India more livable and inclusive.
*7) Swachh Bharat Abhiyan*: This mission aims to make India cleaner
and promote basic sanitation and hygiene.
*Progress so far in Make in India initiative*
*1. Boost in investment*: Make in India initiative led to radiant growth
in the IT and manufacturing sectors. This has encouraged various global
foreign investors to make investments in India and boost their business
by building the products in the country. In 2015, India emerged as the
top destination for foreign direct investment, surpassing the U.S. and
China.
*2. Boost to MSMEs*: The ‘zero defect zero effect phrase which came
with Make in India campaign has shown positive impact on the Micro,
Small and Medium Enterprises (MSMEs) of India. As a result, many
companies are manufacturing goods with ‘zero defects’ and ensuring
that the goods have “zero effect on the environment.
*3. Accountability*: The implementation of Goods and Services Tax
(GST) and demonetisation have made the industry as a whole much
more transparent and accountable. Now the processes have been
simplified such as obtaining licenses and clearances that have brought
in more transparency into the system. The digitisation initiative that is
part of Make in India had helped make processes much more
transparent and easier to implement.
*4. Ease of doing business*: Steps taken to improve ease of doing
business include simplification and rationalisation of existing rules. As a
result of the measures taken to improve the country’s investment
climate, India jumped to 63th rank in World Bank’s ease of doing
business rankings as per World Bank report.
*Various shortcomings in meeting objectives under Make in
India*
*1. Not much impact on manufacturing*: One of the major objectives
under Make in India was to increase the manufacturing sector’s
growth rate to 12-14% per annum. Monthly index of industrial
production pertaining to manufacturing shows that only on two
occasions during the period April 2012 to November 2019, double-
digit growth rates was registered. Data show that for a majority of the
months, it was 3% or below and even negative for some months.
*2. Employment generation*: Under Make in India, it was envisaged
that 100 million additional manufacturing jobs would be created in
the economy by 2022. Data shows that employment, especially
industrial employment, has not grown to keep pace with the rate of
industrial growth in the labour market.
*3. Decreasing investment*: Make In India aimed that the
manufacturing sector’s contribution to GDP is increased to 25% by
2022 (revised to 2025) from the current 16%. This was envisioned to
be achieved through increased investment. Unfortunately, the last 5
witnessed slow growth of investment in the economy. Gross fixed
capital formation of the private years sector (a measure of aggregate
investment) declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-
14 (Economic Survey 2018-19). The private sector’s share has declined
from 24.2% to 21.5%.
Economic infrastructure
Economic infrastructure means those basic facilities and services
which directly benefit the process of production and distribution of an
economy. Example : irrigation, power, transport and communication
etc.,
Importance/significance of economic infrastructure
Following are the significance of economic infrastructure and its impact
on the economy as follows:
1. The smooth functioning of the economy: infrastructure facilities
are very necessary and vital for the smooth functioning of the
economy. They are like wheels of development without which the
economy will not be able to function properly.
2. Development of agriculture; the development of agriculture to a
considerable extent depends on the adequate expansion and
development of irrigation credit transport power marketing
training and education.
3. Development of industry : industrial production requires not only
machinery and equipment but also requires the energy, skilled
manpower, management, banking insurance and transportation
services. These activities and facilities will directly leave to the
development of industrial sector of the economy.
4. Development of backward region: the development of backward
regions and the removal of regional imbalance is yet another
significant contribution of infrastructural facilities.
5. Promotion of investment: infrastructure development is definitely
pre condition got increasing economic investments. Those areas
with the sound infrastructure base may succeed in attracting all
the more capital for investment.
6. Improvement in productivity: infrastructure development such as
transportation facilities, science and technology, research and
development are important in improving the economic
productivity.
7. Employee generation: infrastructures play a crucial role in the
generation of employment opportunities. They improve mobility
efficiency and productivity of labour. The development of industry
and agriculture create all the more employment opportunities.
8. Social change: infrastructure facilities will also act as an
instrument of social change. Development of industries transport
facilities and education will increase standard of living of the
people in the society.
9. The growth of GDP: larger investment in productivity it increase
the growth rate of GDP in the economy.
10. All round development or overall development:
infrastructure development is important not only for economic
growth but also for the overall development in the country.
Social infrastructure
Social infrastructure includes the construction and maintenance of
facilities that support social services.
Social infrastructure plays an important role in both the economic
development of a nation and development of societies quality of life.
Social infrastructure enhances social will being and furthers economic
growth by providing basic services and facilities which allow business to
develop.
Education, health and housing facilities are the core elements of social
change which serve as a base for the process of social development of
an economy.
Education
Role of education in economic development
• Education increases the accessibility of people to modern and
scientific ideas.
• It increases efficiency and the ability of people to observe new
technology.
• It creates awareness of available opportunities and the mobility
of labour.
• It helps people to gain knowledge, skill and attitude which would
enable them to understand changes in society and scientific
advancement.
• Investment in education is one of the main sources of human
capital which facilities invention and innovations.
• Available educated labour force facilities the adaption of advanced
technology in a country.
Steps to achieve growth in education
• Navodaya vidyalaya samiti was launched in 1987- 88 for the
establishment of residential schools to provide advanced quality
education to children in rural areas.
• Sarv Shiksha abhiyan is a scheme that aims to provide a primary
education to all children between the ages of 6 to 14 years. It also
organize mid-day meal scheme to encourage attendance and
retention of children with improved nutritional status.
• Kendriya vidyalaya were set up by the central government in 1965
to provide educational facilities to the children of transferable
Central Government employees.
• The National Council of Educational Research and Training(NCERT)
functions as an Apex institution to provide academic improvement
of school education.
• Indira Gandhi National open University was established in 1985 to
facilitate educational opportunities for school dropouts,
housewives, employed and unemployed people.
• The university grant commission UGC was set up in 1956 to
determine the standards in higher education.
Health system
Health is an essential requirement for making an efficient and
active work force. It reduces the production loss caused by
workers illness.
Causes of poor health in India
• High birth rate: because of the rapid growth of the population
providing a safe and sufficient drinking water supply and proper
sanitization for the community becomes very difficult. This leads
to many health risks in society.
• Malnutrition: malnutrition results in numeral health problems and
serious health issues among children.
• In sanitary conditions and housing facilities: poor households are
surviving in crowded and un sanitary places. The they face the
problem of contaminated food and water and leave in sub
standard dwellings lacking in space, air and sunlight.
Family planning: family planning means having children by choice
rather than by chance. It focuses on minimizing the size of the
family and proper spacing of children.
Housing: skin is known as the Pradhan mantri gramoday Yojana was
launched during 2000-01 for the development of rural housing.
National monetization pipeline
The national monetization pipeline focused by central government in
sectors such as roads, railways, oil and gas pipelines, telecom, civil
aviation etc., over a 4 years period (FY 2022-25).
Objectives of the programme
• NMP aims for universal access to high quality and affordable
infrastructure to the common citizen of India.
• Asset monetization based on the philosophy of creation through
monetization is aimed at tapping private sector investment for
new infrastructure creation.
• This is necessary for creating employment opportunities there by
enabling high economic growth and seamlessly integrating the
rural and semi urban areas for overall public welfare.
• The strategic objective of the program is to unlock the value of
investments in brown field public sector assets by tapping
institutional and long term patient capital.
Rational behind asset monetization
A developing country like India needs asset monetization for the
following reasons:
• Financing the infrastructure creation: with a massive
infrastructure deficit finding resources to build physical assets is a
difficult task. Hence the government wants to monetize existing
infrastructure assets by leasing them out to provide firms for a
fixed tenure under a revenue-sharing model.
• Easing fiscal burden: it will help the authorities ease fiscal
constraints and free up balance sheets for more Greenfield
infrastructure creation. For example stadium built by the
government that remains idle for the most part of the year, can be
leased to a private party that can efficiently manage it by
organizing cultural functions and allowing the public to use it for a
fee.
• It could also provide States with the additional resources needed
to sustain public investment during this period of stressed public
Finances.
National monetization pipeline benefits
• Creation of capital assets and meeting the infrastructure
requirements of the country.
• Ensures resource efficiency in infrastructure operations and
maintenance.
• It works towards ensuring a transparent mechanism for public
authorities to monitor the performance of the private players.
• Reduced risk for the private sector as these are brown field
projects.
• Assist in quality job creation in the different sectors.
