Editorial: India Can Count On High Growth Despite Slowing Global Economy

The World Bank has revised its growth estimate for India for this fiscal year from 6.6% to 7% on the back of higher public spending in infrastructure and an uptick in household savings going into real estate. However the Bank sounded a cautionary note in its latest report, saying that the country may be losing an already modest global market share in labour-intensive apparel and footwear sectors. Despite the salutary effort to make labour laws pragmatic without in any way jeopardising employees’ welfare, unfortunately little forward movement has been made in this regard. It was hoped the formation of four new labour codes replacing 29 existing labour laws would incentivise direct employment as against contractual work. In reality, no progress has been made. As the on-going strike by workers in the South Korean behemoth Samsung Electronics’ Tamil Nadu plant underlines, the sticking point is not the wages or other pecuniary benefits, but the fear of militant trade unionism. The Korean company is determined not to grant recognition to its CPI(M)-affiliated union, insisting in principle it is against a workers’ union associated with a political party, any party. A fair point, this. Despite the intervention of the DMK government, the stalemate at the Samsung plant near Chennai is proving hard to resolve. The strike was in its second month at the week-end. Given that such prolonged labour protests could discourage foreign companies to invest in India has not persuaded the striking workers to heed the appeal of the State government. It is remarkable that the State Government had to be publicly nudged by the Centre for it to try and resolve the strike since its continuance sent a wrong signal to foreign investors. Yet, the matter remains unresolved.

Now, it cannot be anyone’s case that the Korean company is short-changing the workers. No, it is paying them fair market wages. But the employer has a right to shield itself against future militant trade unionism usually associated with CITU. Much is at stake here for the DMK government, especially when a host of marquee global brands are either operating out of Tamil Nadu already or are in the process of setting up their plants there. Given that relatively higher labour costs have made Bangladesh a bigger attraction for labour-intensive readymade garments exports, pandering to the politically inclined trade unions further is bound to exacerbate the environment for a significant growth in Indian apparels exports. Also, the Opposition parties which cry themselves hoarse from the housetops about lack of jobs in order to score brownie points against the Modi government, would prove their worker-friendly credentials if they stopped encouraging the strikers in Tamil Nadu. The anti-DMK parties are egging on the striking Samsung employees only to embarrass the Stalin Government without realising the damage their actions do to the overall investment climate in the country. In several different ways, how the Samsung strike is resolved will hold lessons for foreign investment capital in India.

To come back to the World Bank growth projections, it sees a little slowdown in industrial growth in the coming financial year. Also, it projects a similar slowdown in the services sector in the next financial year largely owing to slowing global economy and rise of protectionist tendencies in the western countries. But the WB report sees a sharp uptick in the agriculture sector, which may register a little above 4% this financial year. Actual granular data about agriculture growth however runs contrary to the popular perception insofar as whatever growth is taking place in recent times it is in the non-cereal, non-field crops. The wheat- and rice-heavy cultivation seems to have reached a near saturation point but farmers in Punjab and Haryana refuse to diversify into more profitable horticulture, livestock sectors. Milk, poultry meat, fish, eggs, etc. do not rely on the minimum support price and yet have registered a healthy growth in recent years. Wheat and paddy, heavily reliant on government support prices, have been laggards when it comes to growth.

Given that the overuse of chemical fertilisers in Punjab and Haryana in particular has contaminated the soil, water, crops, et al, and is said to be a major cause for a higher incidence of cancer in parts of the population in the Malwa region of Punjab, it is advisable that the farmers in the two States gradually diversity into livestock and horticulture which is both environmentally friendly and profitable. Though it is less appreciated, from being milk-deficient in the early decades after Independence, the country has witnessed a virtual milk revolution, exporting milk products world-wide. Farmers in Punjab and Haryana in particular need to diversify away from wheat and paddy, instead of indulging in militant trade unionism over the minimum support price for their crops. No government can guarantee endless support for non-remunerative crop practices. The surprise results of the Haryana Assembly, it should be noted, also marked a setback for the Punjab and Haryana farmers demanding legally guaranteed MSP for their crops.