In the 1987 movie, Wall Street, the industrial worker and trade unionist father Carl Fox confronts his finance whiz kid son raking in his millions, making money out of money, with words that resonate across America even today: “You stop going for the easy buck and produce something with your life. Create instead of living off the buying and selling of others.” America paid little heed to those words for two decades thereafter till the money machine imploded in 2008. Donald Trump came to power promising to bring manufacturing jobs back home from China.
It was no coincidence that in 2006 India also woke up to the challenge of revitalising Indian manufacturing, having lived through a decade of fantasy that services sector growth would help it leapfrog into the 21st century. Manmohan Singh’s National Strategy on Manufacturing (2006) aimed to take the share of manufacturing in national income from 16 per cent in 2006 to 25 per cent by 2020. Prime Minister Narendra Modi took this strategy forward calling it ‘Make in India’. Six years later, manufacturing’s share remains stubbornly stuck at 16 per cent.
A key policy initiative aimed at facilitating Make in India has been to improve the Ease of Doing Business. Various incentives, including cuts in tax and interest rates, have been given to the mobilisers of capital. Acquiring land and employing labour have been made easier. There is a growing celebration of enterprise, especially of small and medium entrepreneurs, and being self-employed has been made into an act of great creativity and patriotism. All this is good.
However, rapid industrialisation requires increasingly productive labour. The working class are the soldiers in the war against poverty and in the drive for modernisation. It is, therefore, surprising that few political parties have focused on improving labour productivity and the social security of the working class. Prime ministers, from Lal Bahadur Shastri to Narendra Modi, have said ‘Jai Jawan, Jai Kisan’, rarely do they say Jai Mazdoor. China’s rise has been on the back of its “creators”, to use Fox’s term for workers, and not just its traders.
The unionised working class has often been damned as a labour aristocracy that has prevented the growth of industrial employment. While industrial labour unions may have their faults, they can hardly be blamed for policies that have encouraged capital-intensive manufacturing rather than labour-intensive manufacturing. Consider the fact that so much of India’s labour-intensive manufacturing activity is getting exported out, and workers in Bangladesh, no less organised or militant than their Indian counterparts, are getting the jobs that workers in Gujarat are losing.
Why is it that political leaders are so quick to say Jai Kisan and so slow to say Jai Mazdoor? Prime Minister Modi’s Independence Day speeches have hardly said much to enthuse the industrial working class even as he has spoken so often about Make in India and Ease of Doing Business. This, despite the fact that the largest trade union organisation today is the Bharatiya Mazdoor Sangh (BMS), affiliated to the RSS and the BJP.
In the focus on the large deficit that India faces in its merchandise trade with China attention is often drawn, and correctly so, to China’s various unfair practices ranging from hidden subsidies to non-trade barriers. However, an important factor that has made China’s exports more competitive has been the rising and high productivity of Chinese labour. The average Chinese worker produces more per hour of work and unit of capital than the average Indian worker—thanks to being better skilled, better fed and in better health. Make in India requires investing in the capabilities, health and social security of the ‘makers of India’.
Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.