THE NATIONAL MANUFACTURING Competitive Council has rightly emphasised the need for the manufacturing sector to enhance its contribution to the growth of the economy if India is to achieve a minimum 8 per cent growth rate in the near term. For well over two decades now, the share of the manufacturing sector in India's national output of goods and services has remained frozen at 16 per cent. Given the structural constraints in agriculture , there is a clear case for manufacturing to contribute substantially to GDP growth if India is to redeem its promise of delivering the vast millions of the poor from their wretched existence. It is in this context that the Council's call for tweaking the `manufacturing' engine to deliver a little more assumes importance.

The Council cannot also be faulted for its recommendation that the manufacturing sector's growth potential be improved by making it more competitive and thereby unleashing its capacity to tinker with the pricing structure to boost demand without compromising on its profitability. In this context it has argued for making power supply more affordable and improving port and road infrastructure substantially as that would have the effect of bringing about the needed correction to cost of manufacture. Much has been written and said about the high cost of electricity relative to that in competing economies such as China and South Korea or about the crippling bottlenecks in the port, road and rail infrastructure that inhibit India's efforts at becoming an efficient producer. These issues cry for priority attention by the Government. The Council has also shown a touch of realism in not calling for immediate labour reforms of the kind that chambers of commerce and industry are wont to seek, unmindful of practical politics.

Welcome as these suggestions are, it must be pointed out that the cost improvements that the Council has argued for and a consequent reduction in prices that they imply, may not bring about the desired increase in demand for manufactured goods, if attention is not paid simultaneously to raising the purchasing power among the disadvantaged in both rural and urban India. This becomes clear if one analyses the national income statistics. The share in the national income of wages earned by unorganised labour has remained stagnant from 1996-97 to 2002-03, the latest year for which official data are available. The situation is worse among petty entrepreneurs and the self-employed whose share of the total national income pie has declined sharply. Enhancing the purchasing power among the masses offers the real scope for bringing about economies of scale and sustainable competitive advantage.

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