Debroy holds out hope for manufacturing, with caveats

Notwithstanding its current poor rate of growth, the manufacturing sector will recover in a year, claimed National Institution for Transforming India (NITI) Aayog member Bibek Debroy here on Wednesday.

But for the fantastic growth rates India had a few years back, the global economy would have to pick up, added Debroy, while addressing an award function of the Federation of Karnataka Chamber of Commerce and Industry.

"That is several years away," said the eminent economist. "The investment cycle needs to reverse. Investments are now beginning to unclog but, there are no fresh inflow."

Also, demand for credit is not high. The new investments are all from internal funds.

On investment, the Centre gets lagged information, as most of it happens in the states. "'Make in India' doesn't mean make in Delhi. It is happening in the states," said Debroy, who has been a part of NITI Aayog since its inception. He added the Centre was trying to reduce procedural costs.

The time difference between the signing of a memorandum of understanding (MoU) and its conversion into investment is two and a half years, and not all MoU are successes.

At present, micro, small and medium enterprises make up about 65 per cent of the industrial sector.

"Several things we are discussing today about the MSMEs were discussed 10 years back," said Debroy. The Centre does not have complete data on these enterprises - there are 36 million such enterprises and 80 million people work in them.

"With their small workforce, they have very little time for innovation," he added.

As 95 per cent of these enterprises are unregistered, it is difficult for the government to keep track of them.

"Many of them did not register themselves as they thought it would involve procedural costs and attract surveillance," said Debroy.