Modi govt likely to unplug dedicated manufacturing think tank NMCC

Monday, Dec 22, 2014

While the Narendra Modi government wants to revive the beleaguered manufacturing sector through its ambitious 'Make in India' pitch, it seems to be unplugging a dedicated think tank for the sector set up by the UPA government that included industry captains such as Ratan Tata and Adi Godrej — the National Manufacturing Competitiveness Council (NMCC).

V Krishnamurthy, the council's chairman since its inception in 2004 and who is said to be close to former Prime Minister Manmohan Singh, recently "resigned", said officials.

Its member secretary Ajay Shankar's term that expired in November hasn't been renewed, while other senior officials have quietly left for other pastures.

Two junior officers are all that is left of the council that has occupied significant real estate in the capital's Vigyan Bhawan, even as officials admit it achieved little purpose. India's manufacturing sector contracted 0.7% in 2013-14, the first drop in output in over two decades and only the third after the nation gained independence.

In October, industrial production dropped 4.2%, the worst in three years, with nearly half the officially tracked industrial sectors shrinking. Amid this slowdown, the headless manufacturing think tank's work has been transferred to the Department of Industrial Policy and Promotion for the time being, before the PM takes a final call on its future.

The department is also in charge of steering the Make In India campaign.

"There are no new appointments at the top level. It is to be seen whether NMCC remains or not and in what form. Most officials have already moved out," said a government official on the condition of anonymity. "The Prime Minister will also take into account the significant overlapping of work by the many think tanks created under the UPA government, with little policy decisions on the ground."

Krishnamurthy, as chairman of the NMCC, enjoyed the rank of cabinet minister, though he spent most of his time in Chennai.

The government had also nominated the 28 members of the council, who were representatives of various industrial sectors and technical institutions, management experts and economists.

"NMCC was doing what Planning Commission should be doing in the industry arena, but it was not enough. You needed to have far more activity in NMCC regarding industry, in the form of dialogues and make plans," said Arun Maira, a former member of the Planning Commission and NMCC. The purpose of each institution must be examined from time to time, he added.

NMCC was formed in September 2004 to advise the government on industrial and sector-specific initiatives required for enhancing competitiveness of industries. "The council gave many suggestions but those were not being acted upon by the government," Maira pointed out.

Another official argued that with the secretary at the Department of Industrial Policy and Promotion already holding intense dialogue with the industry and initiating steps to promote manufacturing, NMCC was in a way redundant.

"So many bodies are not required. The proliferation of these bodies with overlapping work only creates confusion," he said.

Some speculate that NMCC would likely be merged with the revamped Planning Commission. Modi scrapped the 64-year-old Planning Commission to replace it with an yet-to-beformed think tank.

"All these bodies are being wound up and will get blended into hopefully what will substitute the Planning Commission. There was anyway not much happening," said a former Planning Commission member.

Besides NMCC, there are other defunct think tanks such as the National Innovation Council and the Prime Minister's Economic Advisory Council or PMEAC, which was headed by former central bank governor C Rangarajan.

"These think tanks including NMCC and PMEAC were created by the UPA to accommodate senior retired officials close to the then regime. But what is the use to have so many such bodies when it did not result in improvement in the economy or say manufacturing," said a former NMCC member.

An industry official told ET that though the NMCC was a good idea, it degenerated into an ineffective parking place for retired officials as it never had teeth to implement recommendations, nor was it able to convince the government or the Prime Minister's Office to take meaningful corrective action to salvage the sector whose contribution to the economy has stagnated at the same level of 15% for nearly two decades.


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