The Bharatiya Janata Party-led National Democratic Alliance government headed by Narendra Damodardas Modi was voted to power with the sole mandate of creating more employment. In November 2014, just weeks after Prime Minister launched his Make-in-India campaign; Nokia shut its factory in Chennai, rendering 6,600 full-time workers jobless. Despite the government’s efforts to attract investment, sales of manufactured goods fell 3.7 per cent during 2015-16, the first decline in seven years, sparking fears of layoffs and debt default in the months to come, reveal a special studies conducted by the news agencies.
The study also pointed out that spurred by a global slowdown and lack of demand, sales of manufactured goods were falling even before demonetisation, affecting sectors ranging from textiles to leather and steel.
Small-scale private companies, with yearly annual sales of less than Rs 100 crore, have been more seriously affected as their sales have contracted continuously for the last seven years. Having registered an 8.8 per cent decline in 2009-10, their sales fell by 19.2 per cent year-on-year in 2015-16.
While the services sector grew by 4.9 per cent in 2015-16, faster than the 3.7 per cent recorded in the previous financial year, manufacturing contracted for the first time in seven years, from a growth rate of 12.9 per cent in 2009-10 to -3.7 per cent in 2015-16, Reserve Bank of India (RBI) data shows.
In Meghalaya where both production and manufacturing industries are practically non - existent, the service industries too are not doing well due to unprofessional management and an unfriendly environment to the visitors which has failed to attract the visitors for re-visit.
There is hardly anything to discuss about the manufactured goods, or even the handicrafts products which is stated to be below the International standards, above that, poor marketing and lack of impactful advertisement have always discouraged mass production in the state.
Tourism has always been considered as a sources of revenue, but lack of infrastructure and improvement of tourist spots, poor road communication, and inhospitality attitude of the locals have drive off many tourists who came here after hearing about Meghalaya through word of mouth from the acquaintance who have visited the state and left with a bad taste.
Coming back to the Prime Minister’s Make-in-India campaign, he had stressed more on developing the grassroots, tapping the Human Resources, hence over 3000 training centres were in the pipeline to be setup in partnership with established training institutes or Social Organizations to train even the school dropouts and unemployed manpower from the rural sectors. This will surely take some time to yield the result, and the traditional impatient Indian who wish to see results immediately are not participating whole-heartedly in such flagship programmes of Modi.
Meanwhile, if sales do not improve, companies will act to cut costs, manufacturers and traders said. The most common way of cutting cost in India is to reduce the workforce. As Companies are forced to close down due to financial distress, they will also lay off workers. Closure of 186 industrial units led to net job losses of 12,176 in the manufacturing sector over the last four years, the labour ministry estimated in a December 2015 reply in the Lok Sabha.
The Opposition members in the Parliament blamed the post-demonetisation cash crunch for falling sales as well as a shortage of workers due to mass exodus from cities, because most labourers have to be paid in cash as they do not have bank accounts. Since the traders were unable to pay the work force in cash, the workers have returned to their respective villages.
The statistics also show that in the first 34 days of demonetisation, micro- and small-scale industries have suffered job losses of 35 per cent and a 50 per cent dip in revenue, an All India Manufacturer’s Organisation study showed as the Indian Express reported on January 7, 2017.
The RBI also noted that Indian manufacturers have collectively run up debt of Rs 6.9 lakh crore. The decline in sales and its impact on profit margins has impacted manufacturing industries’ ability to service their debt. In its study of the financial statements of 1,707 manufacturing companies over the last four years, the RBI revealed that the number of vulnerable companies whose debt-equity ratio is higher than 200 per cent has increased from 215 in 2012-13 to 284 in 2015-16-an increase of 32 per cent. A high debt-equity ratio means a company is aggressively using borrowed money to finance its growth, leading to higher risk for default.
The immediate attention of both the Central and State Governments is to organize the industrial policy, expand the skill development to more practical productions such that the trainees can earned some revenue which will ease the tension of the ever increasing figures of unemployment in the country, in the case of the services sectors, respective state governments should extend their services to the stakeholders by assuring safety and securities to the visitors.
The services industry in Meghalaya has been recently tarnished due to the unholy sex-racket being conducted by the unchecked Guest Houses and other hotels in the state. It is time for the state government to streamline such services and keep a closed vigil on operation to regain the goodwill of the state, otherwise the state will suffer a huge loss of avenues in the services industry, which is the only sector which can uplift the economic status of the masses in the state.