Foundation of Economy

On 31 Oct , PM Shri Modi unveiled the Statue of Unity

For 2 days, media ( online and offline ) were full of reports / articles / analysis of its significance

Newspapers printed millions of words and TV channels devoted hundreds of view-hours

Statistics were regurgitated : height / weight / concrete / steel / copper / workers / years / cost etc

Then on 2 Nov , Shri Modi laid the foundation of a low cost economy,  by announcing a slew of measures to boost our MSME sector

TV channels mentioned this in a passing reference of a few minutes

Newspapers barely devoted a few column-centimeter of real estate

Hardly any expert-panel debated its significance !

What makes MSME sector, the foundation of our economy ?

Here is what :

·         Country-wide 65 million MSME provide jobs to 120 million persons ( as per Shri Giriraj Singh – Minister of State for MSME )

·         MSME sector contributes 38 % to our GDP and 45 % to our Exports / Manufacturing output

I am referring to the announcements made by Shri Modi with regard to boosting MSME sector

 

These announcements will help lower the COSTS of the following INPUTS :

COST  of  MONEY

·         Quick access to credit at attractive terms (  Rs 1 crore in 59 minutes  !  )

·         2 % subsidy on interest ( for MSME registered for GST )

·         MSME exporters to get 5 % interest subsidy ( up from current 3 % )

·         Credit based on trade receivables ( by analyzing GST / Income Tax Returns )

COST  of  TECHNOLOGY

·         Rs 6,000 Cr scheme for technology up-gradation ( 20 hubs / 100 spokes )

COST  of  COMPLIANCE

·         Returns under certain Labour Laws to be filed once a year ( instead of twice a year )

·         Computerized software to decide inspection of MSME factories

·         Inspectors to file their reports in 48 hours

·         Easier process for Environment Clearances and “ Consent to Establish “

COST  of  LAND

·         70 % cost of “ Pharma Clusters “ to be borne by the government

COST  of  SELLING

·         Minimum procurement by PSUs ( from MSME ) raised to 25 % ( from current 20 % )

·         3% procurement from MSME run by women

COST  of  MANPOWER

• A mission will be launched to ensure that MSME employees  have Jan Dhan Accounts, provident fund, and insurance

These measures make for a GOOD  BEGINNING , and I hope that announcements which will further lower their INPUT COSTS , will be made soon

But, we have a long way to go to make ours’, a truly LOW  COST  ECONOMY

I urge the Policy Makers to look up my following blogs ( earlier sent as emails ) , for suggestions on how to lower the costs of the following left out INPUTS :

·         Land

·         Machineries

·         Materials

·         Manpower

·         Energy

·         IT / Communications

·         Transport / Logistics

·         Training / skilling

·         Systems / Procedures

Level Playing Field ?    …………………………………………………………………………………[  11 June  2016  ]

How to break the vicious circle ?   .........................................  …………….[  03 July 2016  ]

Teach them to fish   ……………………………………………………………………… …………… .[ 05 Nov 2016  ]

Automation is Inescapable   ……………………………………………………………………………[ 30 Nov 2016 ]

Gist :

Reduce " Cost of Inflation " by limiting  " Annual Wages-Salaries Increases " to 75 % of

the  preceding year's GDP number ( ie: if GDP for 2015,  is 8 % , maximum salary /

wage increase  that can be granted on 01 April 2016 , will be 6 % ) . 

How much capital needed to create ONE job ?   …………………………   ……………[ 22 June 2017  ]

Solar Power at Re 1 / kwh ?   ………………………………………………………….             [ 29 Jan 2017   ]

Unlimited Power and around the clock   ………………………………………….             [ 29 July 2016  ]

Universal  Basic  Income   ……………………………………………………………….. ……………[ 20 Jan 2017  ]

Can Indian IT re-invent itself  ?   …………………………………………………….. ……………[ 03 Feb 2017  ]

HOW CHINA MAKES CHEAP ?   ………………………………………………………………………[  08 Nov 2014  ]

" BACK FACTORY " OF THE WORLD ?   …………………………………………………………..[ 09 Sept 2015 ]

How to Boost Economy    ………………………………………………………………………………[ 20  Sept  2017 ]

In a State of Denial ?   ………………………………………………………………………………….[ 22  Sept  2017 ]

What would happen ?   ………………………………………………………………………………….[ 29  Sept  2017 ]

Discovering the Obvious ?    …………………………………………………………………………..[ 30 Nov 2017  ]

Not Good Enough !   ………………………………………………………………………………………..[ 02 Dec 2017  ]

Saving Jobs : Creating Jobs   ………………………………………………………………………… [ 19 Dec 2017  ]

Free Electricity ? Possible   ……………………………………………………………………… …. [ 28  Dec  2017  ]

Of Interns and Apprentices   ………………………………………………………………………….[ 07 Jan 2018  ]

Whose Interest ?    ………………………………………………………………………………………..[ 26  Jan  2018  ]

Car Grave-Yard of World ?    ………………………………………………………………………   [ 14  Feb  2018  ]

Modiji’s ( incomplete ) Message !   ……………………………………………………………….  [ 13 Mar 2018  ]

A  TradeWar  Epidemic  ?    ……………………………………………………………………………  [ 22 Mar 2018 ]

Thanks  for  Speaking  Up  !   ………………………………………………………………………… [ 27 Mar 2016 ]

A  Robotic  Invasion  ?     ……………………………………………………………………………   [ 19  Apr 2018  ]

An Important Challenge ?    ………………………………………………………………… .      [  01 July 2018   ]

The E Commerce Elephant    ……………………………………………………………………………[ 02 Aug 2018 ]

And a final observation :

Without waiting for formulation of any MSME  POLICY , Shri Modiji  just went ahead and made these announcements !

I urge Shri Modiji to encourage his cabinet colleagues to start making similar announcements without waiting for finalization of the following :

#    Electric Vehicles Policy

#    E Commerce Policy

#    Data Protection Policy

#    Old Vehicle Scrapping Policy

#    Export  Policy

#    Intelligent Transport Policy

#    $ 5 Trillion GDP Economy Policy

#    Solar Energy Storage Policy

Of course , in hindsight , some decisions may turn out “ poor “ and seen as “ mistakes “

But “ not taking any decision “ is not an option !

There is no shame in admitting such “ honest mistakes “ and make a “ course correction “

Thank You , Shri Modiji  !

04  Nov  2018

www.hemenparekh.in / blogs

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Added  on  04  Nov  2022  :

India has cheapest manufacturing cost globally, bags 31st position: Report 

Extract :

India has been ranked as the nation with the cheapest manufacturing cost ahead of China and Vietnam, according to a report.

According to the US News and World Report, out of 85 nations, India has bagged the 31st position in the overall Best Countries ranking.

India featured at the 37th spot in the 'Open for Business' category.

The report evaluates 85 countries across 73 attributes. Attributes are grouped into 10 sub-categories, including adventure, agility, entrepreneurship, open for business, social purpose and quality of life.

Under the open for business sub-category, India has scored 100 per cent when it comes to cheap manufacturing costs.

 But in 'favourable tax environment', it has scored 16.2 out of 100; 18.1 in the 'not corrupt' category and 3.5 in 'transparent government policies'.

Similarly, under the 'quality of life' segment, India has scored 1.9 in 'income equality'; 4.3 in 'safe'; 2.3 in 'well-developed public health system'; and 9.9 in 'economically stable' sub-parameter.

The government has taken steps such as rolling out production linked incentive schemes and reducing compliance burden with a view to make India a global manufacturing hub.

In the overall Best Countries ranking, Switzerland has topped the chart, followed by Germany, Canada, US and Sweden.