Economy

‘Specialisation’, key to become export powerhouse: CEA

Our Bureau Chennai | Updated on March 04, 2020

KV Subramanian (right), Chief Economic Advisor, and C Rangarajan, former RBI Governor, at the 7th Dr Raja J. Chelliah Memorial Lecture, in Chennai on Wednesday   -  Bijoy Ghosh

To become an export powerhouse, India needs ‘specialisation’ focus on labour-intensive manufacturing sectors, said KV Subramanian, Chief Economic Advisor.

Delivering the 7th Dr Raja J Chelliah Memorial Lecture at the Madras School of Economics here, he said India lagged significantly behind China in export performance due to inadequate specialisation in some sectors.

Though India is doing well on the diversification part with its entry into many sectors, there was no specialisation at all in the past one-and-half decades during which China zoomed in exports to become a powerhouse with specialisation focus.

He was of the view that ‘specialisation’ focus would create more jobs and wealth,thanks to the availability of a large workforce and the country’s demographic dividend.

Comparing China’s edge in specialisation, Subramanian said China assembled every iPhone that was sold all over the world. It helped the country to become a large exporter. China imports components at a lower cost, assembles the equipment using its large workforce and exports to various markets.

Assembly of network products, according to him, is one of the few sectors that offered huge scope for India to leapfrog in exports. The export of network products is expected to grow to $7 trillion by 2025 and held the potential to create 4 crore jobs by the same year and 8 crore jobs by 2030.

He also highlighted how the openness of the economy and competition enabled prosperity of society and job creation.

MCA-21 data issue

C Rangarajan, former RBI Governor and Chairman, Madras School of Economics, said calculation of manufacturing growth was showing some dissonance and he urged Subramanian to ask his colleagues to look at MCA-21 data more carefully.

There is certainly a problem in using the MCA-21 data. Because the corporate data are in value terms and the national income is looking at in real terms. How is the the translation done? Also, MCA-21 data is not in the public domain and none of us can really look at what has gone wrong, he said.

“Look at it sectorwise and see whether manufacturing growth of a particular sector is in accord with what the sector experts say. That is the most important thing. Whatever methodologies being discussed are not the answer. Trust in statistics and numbers has become a question mark and that should be clarified. It would be in the interest of the country,” he added.

Published on March 04, 2020

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