{"id":66885,"date":"2020-10-19T23:06:15","date_gmt":"2020-10-19T17:36:15","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=66885"},"modified":"2020-11-26T14:08:27","modified_gmt":"2020-11-26T08:38:27","slug":"infrastructure-and-manufacturing-led-growth-in-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/infrastructure-and-manufacturing-led-growth-in-india\/","title":{"rendered":"Infrastructure and manufacturing led growth in India"},"content":{"rendered":"<p><strong>Source-<\/strong><a href=\"https:\/\/www.livemint.com\/opinion\/online-views\/construction-and-manufacturing-could-be-our-growth-propellants-11603031302126.html\"><strong>Live Mint<\/strong><\/a><\/p>\n<blockquote><p><strong>Syllabus- GS 3- <\/strong>Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.<\/p><\/blockquote>\n<p><strong>Context-<\/strong> India needs to create 90 million non-farm jobs by 2030 to avoid economic stagnation.<\/p>\n<p><strong>What is the importance of these two sectors?<\/strong><\/p>\n<ul>\n<li><strong>Construction- <\/strong>24 million non-farm jobs could come from construction alone by 2030, 16 million from real estate and 8 million from infrastructure.<\/li>\n<li><strong>Manufacturing-<\/strong> Thus sector could generate one-fifth of the incremental annual GDP (about $750 billion) and close to 11 million new non-farm jobs by 2030.<\/li>\n<\/ul>\n<p><strong>How India can trigger construction growth and what are the reforms needed?<\/strong><\/p>\n<p>To generate its share of employment, the construction sector needs to grow at about 8.5%, nearly double its 4.4% growth rate over financial years 2012-13 to 2018-19. The following steps can trigger this growth-<\/p>\n<ol>\n<li>Spend about 8% of GDP on infrastructure annually for the next 10 years.<\/li>\n<li>Build 25 million affordable homes over the decade.<\/li>\n<\/ol>\n<p><strong>Reforms required-<\/strong><\/p>\n<ol>\n<li><strong>Real estate reforms-<\/strong><\/li>\n<\/ol>\n<ul>\n<li>India could include generously increasing <strong>incentives for home-ownership<\/strong> and <strong>creating rental stock.<\/strong><\/li>\n<li><strong>Tax incentives<\/strong>&#8211; At the central level, substantially raising tax deductions limits on mortgages and rental incomes, as well as introducing tax incentives for investments in rental housing stock could be considered.<\/li>\n<\/ul>\n<p><strong>For example-<\/strong> The US, which offers tax-deductible interest of up to $750,000 on mortgage loans and an effective low-income housing tax credit incentive.<\/p>\n<ul>\n<li>Rationalizing stamp duties and registration fees, introducing regulatory amendments in rent-control policies, launching digitally-enabled, single-window clearances to reduce time delays in affordable housing construction.<\/li>\n<li>Bringing the goods and services tax on modern construction methods in line with in-situ buildings.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong>High land-price-to- average-income ratio<\/strong>&#8211; In terms of per square-meter price to per-capita GDP, it is about 6.0 in Mumbai and 3.8 in Bengaluru versus 0.5 in Bangkok and 0.2 in Beijing. To narrow this gap, India could do two things.<\/li>\n<\/ol>\n<ul>\n<li>Release 20 to 25% of underused but buildable public-sector land.<\/li>\n<li>Reform zoning regulations in the top 300 cities by population.<\/li>\n<\/ul>\n<p><strong>What are the proposed ways to turbocharge Manufacturing<\/strong><\/p>\n<ol>\n<li><strong>Structural reforms<\/strong>&#8211; India could introduce targeted, time-bound and conditional incentives to reduce the cost disadvantage that Indian manufacturers face while competing with companies from China and Vietnam, among other countries.<\/li>\n<li><strong>Free trade warehousing zones<\/strong>&#8211; Indian states could also create powerful demonstration effects by establishing port-proximate manufacturing clusters that contain free-trade warehousing zones.<\/li>\n<\/ol>\n<ul>\n<li>They could provide land at lower costs, plug-and-play infrastructure, and common utilities, apart from expedited approvals.<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong>Reduction in costs<\/strong>&#8211; India also needs to consider reducing its factor costs of power and logistics.\u00a0Both these costs could be reduced 20\u201325% by enabling franchised and privatized distribution company models, reducing cross-subsidy surcharges, and establishing multi-modal freight ecosystems.<\/li>\n<\/ol>\n<p><strong>Way forward-<\/strong><\/p>\n<ul>\n<li>If adequately set up for success, manufacturing and construction could be pivotal in driving India\u2019s growth over the next decade.<\/li>\n<li>The government has to introduce sector-specific policies to raise productivity in manufacturing and real estate sectors.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source-Live Mint Syllabus- GS 3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Context- India needs to create 90 million non-farm jobs by 2030 to avoid economic stagnation. What is the importance of these two sectors? Construction- 24 million non-farm jobs could come from construction alone by 2030, 16&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/infrastructure-and-manufacturing-led-growth-in-india\/\">Continue reading <span class=\"screen-reader-text\">Infrastructure and manufacturing led growth in India<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,167,1266],"tags":[1308],"class_list":["post-66885","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-economy-subject","category-infrastrcuture","tag-eco_0","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704673048},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=66885"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66885\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=66885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=66885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=66885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}