How far will India go to be a manufacturing power?
- By Sun Xingjie
0 Comment(s)
Print
E-mail China.org.cn, September 20, 2015
To become a manufacturing power, a country should unite its resources of land, infrastructure, labor force, capital and technology. India could import capital and technology from other countries; but has to provide land, labor force and infrastructure by itself.
Land, however, remains an obstacle to developing large scale manufacturing. Lots of projects can't be carried out due to the difficulty of land acquisition. The same applies to the labor force. Although India has large population, the marketability level of labor force is relatively low. For example, when there are conflicts between labor force and enterprises, the government is usually involved. The recent general strike was due to workers thinking the government was too close to enterprises that threatened their interests.
At present, a strong coloring of a planned economy lingers on. Marketization is no doubt the future. Overprotection of the labor force and labor union power will impede the pace of a country's industrialization. However, trying to reform the unions is hard as they hold lots of votes in elections.
Modi's first act on taking office was to reform the country's goods and service tax, which is the key to establishing a unified domestic market. Before his reform, different states imposed different taxes, thus confusing foreign investors; after reform, the unified tax costs meant lower revenue for some, so the change met much resistance.
The essence of the tax law reform is to redistribute the benefits between central and regional governments, which is also a significant move for the former to gather resources. During economic development in East Asia, all central governments improved their resource gathering abilities, and then promoted economic projects and development in domestic markets. Without a strong central government, India's economic reform can't be carried out in the short term at the very least.
Land and tax reform can be considered a wind indicator for Modi's government to lift its capacity, as well as a key for India to tap out its economic growth potential.
The writer is an expert on international political economy.
The article was translated by Lin Liyao. Its original version was published in Chinese.
Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn
Go to Forum >>0 Comment(s)