Making ‘Make in India’ a reality

Devendra Kothari PhD

Population and Development Analyst

Forum for Population Action

India’s large unwanted fertility, a threat to ‘Make in India’ initiative, demands immediate attention.

During U.S. trip, Prime Minister Narendra Modi’s important outreach was to American business. This was part of his "Make in India" drive, which he lunched in a high-profile event a day before he embarked on his U.S. trip. He wrote in the Wall Street Journal: “Make in India is our commitment — and an invitation to all — to turn India into a new global manufacturing hub. We will do what it takes to make it a reality.” Also, it was a message occupying front and centre when he met both Japan's Shinzo Abe and China's Xi Jinping. India’s prime minister is known for his pro-business policies, and his steady efforts to draw foreign investments could plant the seeds for a more prosperous India.

But there are some major problems standing in the way of making India an attractive investor destination that can not be solved overnight.  There is a long list of infrastructure problems: patchy electricity, lack of roads, inadequate port facilities. Further, cumbersome labor regulations are among the biggest hurdles to setting up manufacturing in India, which fell to 134th place this year in a World Bank index of countries for doing business. Moreover, land for factories is often impossible to acquire at any price. Another problem is that India’s labor force is skewed toward the agriculture sector, even though its highest groth industries like information technology, telecom, healthcare, and retail are projected to require millions of new skilled workers which they may not be able to find due to poor quality of education. There is another major problem that is red tapism and the culture of babugiri that it has engendered.[1]

In short, India is ranked as one of the worst countries of the world in which to do business. PM Modi is already in the process to create investor friendly environment.  “For the success of ‘Make in India,’ ease of doing business should be given priority,” said PM Modi, while inaugurating ‘Shramev Jayate Karyakram'. He announced labor reforms at this occasion, simplifying employment rules and aiming to give a lift to manufacturing and job creation. At the same time, he announced a program for skills development, in which the Labor Ministry will finance the first two years of training for apprentices in manufacturing units. Also, since he took office in May, Modi has begun to execute on the systematic reformation of India’s inefficient and bureaucratic markets to make them friendlier and more open for investors and businesses. Lots of other measures are under active consideration; and things will be much clearer by next budget. I believe GST will be in place by then, some labor reforms will take place and some important pressing issues like environmental clearance and land acquisition bill will be sorted out as soon as possible.

No doubt, such relatively straightforward steps could make a powerful difference, raising the Indian growth rate by two or even three percentage points from its current 4-5% but not create sustainable environment for ‘Make in India’ to succeed. The Modi government could be wrong in simply believing that the big investments by the American, Chinese and Japanese among others will solve all the problems of India. Some experts are saying that ‘make in India’ is more of hype than substance.

The economic liberalization in India started in 1991 of the country's economic policies, with goal of making the economy more market-oriented and expanding the role of the private and foreign investment. As a result, a decade ago India’s economy was winning new-found respect as a riot of energy and enterprise, but its performance in recent years has been dismal. Now foreign bosses roll their eyes when you mention India, as they did in the 1980s. Growth has fallen to 5%, half the level at the peak of the 2004-08 boom. Inflation and public borrowing are too high. The rupee slumped all the time low in 2013. Private firms are fed up with red tape and graft and have cut investment from a peak of 17% of GDP to 9%. On some measures the country is going backwards in time. In a country that should be industrializing, the contribution to GDP from industry has been declining while manufacturing jobs have stagnated. 

Now question arises: Why India could not reap the fruits of economic liberalization? There may be several reasons behind this sorry state of affairs, but I think that efforts made over the last two decades to improve the economy have mainly been neutralized by the rapid growth of population. The economic reforms completed 20 years in July, 2011, however, during this period, India’s population increased by 365 million, much more than the total population of USA - the third most populous country in the world; and it is still growing by around 17 to 18 million every year.  One has to recognize that population is an important factor in sustainable development, especially when it is growing seemingly out of control since it leads to a significant diversion of national investable resources to consumption which could otherwise be used for increasing investment and productivity and for improving the quality of public services such as education, health, sanitation, provision of safe drinking water, etc

With 1.27 billion people and still growing, India is getting dangerously overcrowded. India is currently the second most populous nation in the world. It will surpass China as the most populous within 5-7 years. India's population is projected to peak at 1.7 billion in 2060. China at its peak in 2025 will have 1.4 billion people. In fact, when China peaks, India will have already surpassed it in population. Many Indians including policy makers see these emerging demographics as a critical advantage in competition with the nation it regards   as its chief rival – China.  Another popularly held belief by India’s policy makers and experts is that as a country becomes economically more prosperous, its fertility declines significantly and leads to a stable population. However, this is a simplistic view of a complex phenomenon.[2] 

Current population growth is mainly fuelled by unwanted fertility. More than four in ten pregnancies are unintended/unplanned or simply unwanted by the women who experience them and half or more of these pregnancies result in births that spur continued population growth.  More than  26 million children are born in India every year and out of this about 6 million births have been classified as unplanned/unintended or simply  unwanted. Based on findings of the National Family Health Surveys 1, 2 and 3, it is estimated that currently there are around 460 million people out of 1270 million in India who are product of unwanted pregnancies, and most of them are from the lower economic strata. [3]  The consequences of unwanted pregnancy are serious, slowing down the process of socio-economic development. It is because unwanted childbearing results in poor physical growth, reduced school performance, diminished   concentration in daily tasks thus impacting work capacity and work output resulting in diminished earning capacity. The impact of unwanted childbearing is reflected in widespread hunger, poverty, unemployment as well as increasing scarcity of basic resources like food, water and space in several parts of India despite concerted developmental efforts since 1991.

There may be several reasons behind unwanted childbearing, but most important one is related to the imperfect control over the reproductive process. While India’s population continues to grow by 17-18 million annually, 15 million  married  women, mostly from  Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh , seek to postpone childbearing, space births, or stop having children, but are not using modern contraception. Often, these women travel far from their communities to reach a health facility, only to return home “empty handed” due to shortages, stock outs, lack of options, and/or non availability of doctors and paramedical staff.  So letting women have the means to manage their childbearing will help to make India a more stable, equal and vibrant place. When women have access to contraception appropriate to their needs, desires, and budgets, the potential benefits are many, including reduced maternal and child mortality as well as lesser number of abortions and unwanted pregnancies. In addition to its health benefits, family planning allows families and communities to invest more in education and health care and helps reduce poverty, as argued by the President of Population Council, Peter J. Donaldson.

Here, children by choice not by chance are the only way poor can aspire a better life and good health. For this, direct efforts aimed at decreasing the rate of natural increase of population should be intensified through greater access to suitable voluntary reproductive health services, information, and education and of acceptable methods of family regulations ( see:  Kothari, Devendra and Sudha Tewari. 2009. “Slowing Population Growth in India: Challenges, Opportunities and the Way Forward”. MIPD Policy Brief No.2, Management Institute of Population and Development, a unit of Parivar Seva Sanstha, New Delhi.). Also, fertility reduction efforts, beyond family planning, should become an integral part of the planning for human development, and should aim at improving quality of life of the family and the status of women.[4]

Food for thought: 

Over the past half century most East Asian countries have prospered by focusing on the reproductive health including population stabilization and education (Table 1). The replacement level fertility of 2.1 children per woman, required to initiate the process of population stabilization, has already been achieved by Thailand (1.5), China (1.6), Brazil (1.7) and even Islamic country Iran (1.9), as shown in Table 1.  Indonesia, another Muslim dominating country is going to attain it within couple of years; However, India will not achieve this level before 2035, as per the UN Population Division. In the last forty years, the total fertility in China declined from 6 children per woman in 1970 to 1.6 in 2010, whereas the rate of decline was much slow in India in the corresponding period (Table 1).[5] On an average, a woman in India produces 2.7 children during her lifetime and more than thirty percent of it could be classified as unwanted fertility.[6] The replacement level fertility of 2.1 children per woman, required to initiate the process of population stabilization, has already been achieved by Thailand (1.5), China (1.6), Brazil (1.7) and even Islamic country Iran (1.9), as shown in Table 1.  Indonesia, another Muslim dominating country is going to attain it within couple of years; However, India will not achieve this level before 2035, as per the UN Population Division.

Table 1: Trends in total fertility, infant mortality and literacy rates, selected countries.

Country	Number of children per woman (TFR)*		Infant deaths per 1000 births (IMR)*		% literates (age 15 and over  who can read and write)**
	1970	2010	1970	2010	2012
1	2	3	4	5	6
India	5.7	2.7	132	51	61
Brazil	5.4	1.7	100	24	89
china	6.0	1.6	163	18	92
Indonesia	5.6	2.2	118	29	90
Iran	6.7	1.9	154	21	87
Mexico	6.8	2.3	80	17	86
Thailand	6.0	1.5	76	12	93
Source: *World Population Prospects: The 2012 Revision and **CIA World Fact book.

The most important change in the world over the past 40 years has been the rise of China. The increase in its average annual GDP per head from around $300 to $6,750 over the period has not just brought previously unimagined prosperity to hundreds of millions of people, but has also remade the world economy and geopolitics. India’s GDP per head was the same as China’s four decades ago. It is now less than a quarter of the size. Despite a couple of bouts of reform and spurts of growth, India’s economy has never achieved the momentum that has dragged China out of poverty. The human cost, in terms of frustrated, underemployed, ill-educated, unhealthy, hungry people, has been immense. In fact, PM Modi is interested in copying China’s development agenda.   He came to power promising manufacturing jobs, high-speed trains and ‘smart’ cities. Hope India will learn from the East Asian countries, especially China that the reduced population growth rate and quality of education helps in achieving sustainable and faster development.    

The country stands on the threshold of becoming a powerful regional, if not world, power. For this to happen, India's politicians will need the political gumption to initiate a bold population policy. Now, for the first time ever, India has a strong government whose priority is growth and at the same time most of the people including Muslims do not want more children (See article by the author - Growing Population in India and Islam: Some Facts - at http://kotharionindia.blogspot.in/2011/09/growing-population-in-india-and-islam.html).  The Modi government’s most important immediate task is to initiate the process of population stabilization by providing services in un-served and underserved areas by realigning the capacity of health system to deliver quality care to suit the needs of clients. This would bring economic as well as governance benefits. A radical revamps of family planning program is the only way to do justice to the politics of aspiration that is ‘Make in India’.

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[1]See: Jug Suraiya, Red tape carpet: For ‘Make in India’ to succeed, Modi needs to end babugiri at http://blogs.timesofindia.indiatimes.com/jugglebandhi/red-tape-carpet/ 

[2] Kothari, Devendra and S.  Krishnaswamy. 2003. “Poverty, Family Planning and Fertility vis-a vis Management of Family Planning Services in India: A Case Study” in Maria Eugenia COSIO-ZAVALA (ed.) Poverty, Fertility and Family Planning. Paris: CICRED, pp. 335-58.

[3] Kothari, Devendra. 2014. “Managing Unwanted Fertility in India: Way Forward”, Institute of Economic Growth (ed.):   National Rural Health Mission: An Unfinished Agenda, New Delhi: Book Well. 

[4] Kothari, Devendra. 2014. “Empowering women in India: Need for a Feminist Agenda”, Journal of Health Management, 16 (2), pp 233-43. 

[5] For example, in the late seventies, it was quickly realized by the policy makers of China that with half of the population under the age of 21, further growth was inevitable even if each family was quite small. Some drastic measures are needed. The “One Child Policy” backed by quality Family planning services  was the answer to that concern and the Chinese leader Deng Xiaoping announced it in 1979 to limit China’s population growth. Such interventions were also adopted in India during seventies.  Sanjay Gandhi, a member of the Nehru-Gandhi dynasty, publicly initiated a widespread compulsory sterilization programme to limit population growth. Journalist Vinod Mehta in his 1978 book - The Sajay Story -  states that the sterilization programmes were initiated at the behest of the IMF and the World Bank. But India could not continue with the program.

[6] As per National Family Health survey-3, over all, the total wanted fertility rate of 1.9 children per woman is lower by 0.8 child (that is by 30 percent) than the total Fertility rate of 2.7. This means that if unwanted baths could be eliminated, the Total Fertility Rate would drop to below the replacement level of fertility (1.9 children per woman).