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‘Developed country’ needs industrial infra, admin reforms

India’s growth has impressed the world. We were the 12th largest economy, with GDP $266 billion, in 1991, just before liberalisation
Last Updated 25 March 2023, 22:58 IST

India’s growth has impressed the world. We were the 12th largest economy, with GDP $266 billion, in 1991, just before liberalisation. We are currently ranked fifth, with a GDP of $3.2 trillion, a growth of over 12 times; and in all probability, we will become the third largest economy before the end of this decade. At the same time, however, we lag behind our global peers in other indicators which, too, we need to address.

For instance, we figure in the list of the top 10 most polluted countries, though India’s economic successes have mostly come from the ‘services’ sector and a ‘highly skilled diaspora’ and not from manufacturing! We are often called the ‘Office of the World’, hosting over 1,500 ‘Global Capability Centres’ -- representing 45% of the global total -- created by multinationals in the internet-ruled world.

We have not, however, been an export manufacturing success story and are also heavily import dependent. Being the fifth largest economy, we are still 17th in the list of top exporters. Further, we are heavily polluted, while none of the other top 16, barring China, figure in the list of ‘most polluted’. Amongst cities, while Lahore is the most polluted, there are six Indian cities in the list of top 10, 14 in the top 20, 39 in the top 50, and 65 in the 100 most polluted cities! Delhi holds the dubious honour of being in the top 2.

Our pollution predicament has nothing to do with growth dynamics. Tiny Switzerland, or even Ireland or Netherlands, export more chemical or pharma products (the most pollution-generating products) than we do, often more than twice our levels, and yet are top-ranked in environment not only by global rankings but by casual visitors, too. Growth need not inevitably produce a poor-quality environment.

However, notwithstanding our import-dependence, we do have a large industrial sector; fifth largest in the world. It is dispersed across over 1,850 industrial estates, parks and coastal SEZs (268), but is not necessarily restricted to these regulated belts since we do not have a strict locational policy. So, a large number of our 2.4 lakh-plus ‘registered’ factories are outside these estates. This is globally the largest spread of factories. China has fewer, albeit much larger, estates. As such it is more difficult to monitor/inspect our factories than elsewhere. The annual reports of the Central Pollution Control Board highlight that reporting efficiency from even regulated factories is only 50-60%, despite best efforts and warning notices.

Additionally, a large percentage of our industrial activity comes from MSMEs (over 90% being ‘unregistered’), which are extremely cost-sensitive and thus often economical in their effort to control pollution or maintain standard quality. Being unregistered and unregulated, their entrepreneurial skills are uncontrolled. It is not for nothing that we are one of the largest importers of hazardous waste in the world. The recycling of this imported (as also domestic) hazardous waste is mostly done by the informal sector, and usually outside industrial estates, which also often do not have requisite high-grade pollution control infrastructure. Their supervision structures are small and often dismissed as unimportant by the factory owners. The conditions in which the unregistered MSMEs work is best imagined. This inability to monitor and regulate is the main reason why we generate higher industrial (air, water, soil) pollution than our peers.

Ironically, we are unable to scale up exports because of non-tariff barriers (NTBs) faced by potential exporters. These are basically the quality and environment sustainability norms in force in the developed world, as also increasingly in other markets. All our peer countries have strict and transparent locational and pollution management policies. The exporter has to show proof that similarly careful laws are followed by them in their production processes. Not all our manufacturers can do so. So we do not rise in the rank of exporter countries.

The inability to regulate is the reason for our poor manufacturing performance. Decentralisation of powers and accountability to the field staff with detailed SOPs is still mistrusted by our top decision-makers. They prefer to remain the final arbiters. So, all the senior officials are kept in centralised secretariats and not in the field. Similarly, urban pollution exists mainly due to the reluctance to promote well-planned urban growth of the lower tiered cities and to initiate planned de-densification of highly polluted metros/tier 1 cities because all the top bosses prefer a metro life. We need to change our attitudes if we wish to be called a developed country.

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(Published 25 March 2023, 18:48 IST)

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