India's sub-optimal industrial policy

India's Industrial Policy: A Reassessment: Growth, Employment and Gender Justice in Tamil Nadu by Padmini Swaminathan Published by Madras Institute of Development Studies/Primus Books 542 pages ₹6,772 The history and study of policy evolution enhances the possibility of optimising policymaking considerably. It offers rapid insights into the action-response sequences of various stakeholders in diverse contexts, saving significant time and cost often spent on rediscovering past lessons. This historical perspective holds substantial potential for positive externalities within society. India's Industrial Policy: A Reassessment is a contextualised version of papers written over time by the author, a former director of the Madras Institute of Development Studies, which commissioned this volume to commemorate its Golden Jubilee. The book traces various policy developments, the myriad pulls and pressures that shaped them, and the lessons for contemporary policy and action. Chapter 1, which chronicles the nascent stages of state intervention in Indian industry and technical education, demonstrates how vested interests often completely sideline the interests of beneficiaries. This is typified by Lord Curzon's statement that 'Indian fiscal policy is settled in Manchester not Calcutta; not in Indian interest but English'. A telling example from 1916-17 reveals that the Coimbatore jail, which employed 110 looms for prisoners, was characterised as causing 'serious injury' to private mills (which had 102,781 looms): A case of laissez faire being opposed to competition. Dani Rodrik characterises the ideal model for industrial policy as a strategic collaboration between the private sector and the government, aimed at uncovering obstacles and planning interventions. While South Korea and Taiwan focused on what they did best, delegating other tasks to the private sector and involving them in policymaking and curriculum planning, India adopted an imperial command-and-control model. With minimal industry involvement, India now faces a paradox: Abundant employment yet a shortage of employable talent that industry truly needs. India's inability to replicate successful models from elsewhere extends beyond capabilities and stages of growth. US growth stemmed from firms that gained market power not through artificial barriers, but through innovation and technology. Japanese collaborators often criticise the Indian approach to technology absorption, citing: (i) a lack of continuous improvement efforts for acquired technology; (ii) a prevalence of 'desk engineers' unwilling to dirty their shoes; (iii) a lack of humility in learning new technologies; and (iv) the privatisation of provided know-how without efforts for wider diffusion. The book presents a case study of the well-known TVS group, illustrating how it protected the status quo after acquiring technology and gaining market share, creating hurdles for others attempting similar advancements. The discussion of the Tirupur cluster as a non-replicable model, its dubious environmental practices, and how implementation can be obstructed for decades on the ground is well illustrated. The importance of optimal 'location' within the supply chain is also cogently reasoned. For sustained industrial growth, a workforce with the right quality and quantity of technical skills is essential. India has struggled to achieve this balance, producing too many non-technical social science graduates and technically qualified individuals who lack usable skills. A combination of factors — including a lack of coordination within the government, insufficient involvement of end-user industries in curriculum design and administration, poor planning, examinations conducted without first providing teachers, and missionary schools with divided foci — has rendered India's supply of skills highly inefficient for its industry. The percentage of vocationally trained individuals in India's labour force was a mere 5.06 per cent, against South Korea's 95.86 per cent and Germany's 75.53 per cent. Even other developing countries fare better, such as Mexico (27.58 per cent) and Colombia (28.06 per cent). The book attributes this current predicament to the involvement of academics whose educational philosophies are rooted in reading and writing, with limited understanding of the relationship between technology and science. The employment intensity of Indian manufacturing has been declining for decades. Over the 10 years from 1983 and the seven years from 1993, while gross domestic product (GDP) growth increased from 5.2 to 6.7 per cent, employment elasticity sharply fell from 0.52 to 0.16. Consequently, employment growth decreased from 2.7 per cent to 1.07 per cent. GDP-employment elasticity has been negative in the public sector, near zero in the formal private sector, placing the entire burden of job creation on the informal sector. The fact that the percentage of people below the poverty line exceeds those unemployed indicates that employment does not necessarily guarantee an escape from poverty. Gender bias in the workplace, equal opportunities and pay, and gender sensitivity are undoubtedly workplace issues. Treating ASHAs as paid volunteers and recruiting nearly all teachers as para-teachers without formal 'worker' or 'employee' status appears dysfunctional. However, a good part of the discussions in Part IV on gender issues, with the exception of maternity benefits, has only a remote connection to industrial policy: Perhaps they are better placed in a book human development. For instance, how does patriarchy in education relate to industrial policy? The subtitle could have been more accurately framed, as most analyses and discussions adopt an all-India context, despite the case studies being from Tamil Nadu. Overall, the narration and content are rich, and the book masterfully weaves literature review with policy analysis to optimal effect. It stands as a fitting tribute to the Institute's founder, Malcolm Adiseshiah. The reviewer is the author of Making Growth Happen in India