Policy Mandala: New Cities, New Pension, and an Old Census
Today, we would discuss 3 major policy news: New Industrial Cities, Unified Pension Scheme and the wait for Census in India, along with 2 reflections and an exciting book recommendation. Let's start!
Story 1: 12 Industrial Cities: A Blueprint for India's Global Manufacturing Push
Did you know that in 2023, industries contributed 25%1 to India’s GDP and employed 27%2 of the population? Compare that to China’s 39% and Bangladesh’s 24%, and you’ll see we have a golden opportunity to boost our manufacturing sector and hit that $5 trillion economy goal in the next three years.
But why are we discussing this today?
Because the government announced that it is rolling out 12 new industrial cities across 10 states. But does building new cities automatically mean a manufacturing boom?
Not exactly, but it’s a big step in the right direction.
For manufacturing to thrive, we need a few essentials: friendly government policies, raw materials, labor, land, investments, and solid infrastructure like roads, power, and water. Over the past decade, the government has been ticking these boxes with policy reforms in FDI and taxation, and incentives like the PLI scheme and Make In India. Initiatives like PM Gati Shakti and the National Logistics Policy are also making it easier to move goods across the country.
These new cities are part of the National Industrial Corridor Development Program (NIDCP), strategically placed across 10 states and six major industrial corridors. This means all the recent policy and infrastructure improvements will directly benefit these cities.
Smart move, right?
The cities include Khurpia (Uttarakhand), Rajpura (Punjab), Dighi (Maharashtra), Palakkad (Kerala), Agra and Prayagraj (Uttar Pradesh), Gaya (Bihar), Zaheerabad (Telangana), Orvakal and Kopparthy (Andhra Pradesh), and Jodhpur (Rajasthan), while one more city will be announced soon.
You see 5 out of these 12 cities come from states with top-3 ranks in Ease of Doing Business rankings. Sounds like a reward for improving their business environment, right!
With an estimated cost of around ₹28,000 crore, this project is set to revolutionize India’s industrial landscape. Currently, India accounts for about 2% of global trade6, but this initiative is a step towards capturing at least 10%.
On the global stage, the China+1 strategy is gaining traction, and this move is likely to grab the attention of many International corporations looking to diversify their supply chains. Socially, these new cities are expected to create around 4 million jobs, boosting employment and improving socio-economic conditions in states like Bihar, West Bengal, and Andhra Pradesh.
In a nutshell, these new industrial cities are set to transform India’s manufacturing landscape and create millions of jobs. It’s an exciting leap towards a more prosperous and globally competitive India, with a string of policies enabling it!
Story 2: Unified Pension Scheme: New (or the old?) chapter in Government Jobs
On any given day, 1 in 20 Indians is prepping for a government job. Why? Because it’s the ultimate ticket to job security, a decent income for life, and a respectable status in society. But here’s the kicker: only 1 in 300 aspirants8 will actually land one of these coveted positions, often spending crucial years chasing this dream. And now, there’s a ‘new’ twist to this dream: Stable Pension Income for life and beyond. Enticing, right? Let’s take a trip down memory lane.
Until 2004, the government was doling out mandatory pensions to all its employees.
However, this was deemed unsustainable for national finances. Enter the National Pension Scheme (NPS), where both the government and the employee chipped in 10% each. Fast forward to 2019, and the government upped its contribution to 14%. Now, with the Unified Pension Scheme (UPS) on the horizon, the government plans to increase its share to 18% starting April 2025.
While this isn’t exactly a return to the pre-2004 model, the new scheme does guarantee a minimum fixed pension of up to 50% of the last-drawn salary for government employees. This has been a long-standing demand, and states like Rajasthan and Chhattisgarh have already implemented it.
But what does this mean for us, the middle-class working Indians
Switching from NPS to UPS will add an extra ₹6250 crore9 to the government’s expenses. To put that in perspective, that’s roughly the cost of adding 20 km of metro9 line annually in a city like Bengaluru or the cost of insuring the crops of 2 crore farmers11 in India.
So, this additional cost to the central government means less money for other infrastructure projects or social security efforts aimed at the weaker sections of society, like our farmers and workers. So, the big question is: Is it fair to use taxpayer money to fund pensions for government employees who form a very small segment of the workforce while many others lack basic social security? What do you think?
While we wait to see the true impact of this move, we hope for more government efforts to create meaningful employment opportunities for the youth by investing in the entrepreneurial, manufacturing, and services sectors.
Story 3: Population Survey 2024: The Wait Isn’t Over Yet!
We’re 3.5 years late for our nationwide headcount, and while we wait.
143 countries12 have already wrapped up their censuses since 2020. So, why are we late?
Pandemic Lockdowns? A digital shift from paper counts to mobile surveys? The urge to also do a national population register? We'll never know.
What do we know or Need to know?
Firstly, in the 2011 Census, questions about owning a transistor or TV were used to assess economic status; will the 2024 Census focus on OTT subscriptions or WiFi speed as new parameters?
Secondly, in 2011, the census cost us roughly ₹18.19 per person13 to be counted. With tech reducing costs and inflation increasing them, what’s it gonna be this time?
Thirdly, the 2024 census is expected to take 18 months, so just by the time it’s done, we might have 2 crore more people to count. Can we make it shorter? What’s your suggestion?
Why It Matters?
The census is the foundation of policy-making without census from MGNREGA to Public Distribution System, and from planning public health infrastructure to our cities’ urban planning models, all of these could end up being less effective and more hit-or-miss. It’s like trying to solve a puzzle with missing pieces. It just doesn’t work.
Hopefully, soon someone will be at our door asking for more than just directions—someone gathering data to help shape our future.
Let’s get this done before we hit 1.5 billion!
Self Mandala
Reflection #1
Over 60% of India’s population is dependent on agriculture14, and like everyone else farmers also need some financial security when they are old? What would it take to create a system for Farmers' financial security in old age? Can we create a farmer’s pension scheme? What else can we do?
It’s time to consider a sustainable and inclusive retirement plan for everyone—not just the lucky few in government jobs or do we?
Reflection #2
With a new census coming in, what do we want measured in it?
There have been various demands, from some political parties wishing to measure caste data, and some thought groups have asked for deeper technology penetration data. Some thinkers we talked to about creating a digital map of human density via e-collection of information, while some experts shared the possibility of a digital information stack emanating from the upcoming census.
What would you want to be measured with the upcoming census?
Book Recommendation
How Prime Ministers Decide by Neerja Chowdhury
The book takes us through a journey of important decisions made by 6 Indian Prime Ministers: From Indira Gandhi, Rajiv Gandhi, PV Narasimha Rao, VP Singh, Atal Bihari Vajpayee and Manmohan Singh. The author’s, personal experience of covering the PMO over 4 decades, along with interviews with close associates of past Prime Ministers gives us an insider view into the minds of India’s top leaders and their thought processes while taking historical decisions that changed the course of the country's history.
Our take: For any current and aspiring policymaker, decision-making is the most critical skill, and this book takes us on an adventure ride through the complexity of decision-making, and how politics and policy play together to run the nation.
Thoughts on the NPS and UPS: Though they play an important role in job security for government employees, hasn't the introduction of EPF and EPS not completely solved an important aspect of this problem?
Government Employees are part of government bodies, so it's valid for the government to pay them for those aspects, whereas private entities do this for their employees.
However many unorganized sectors need to be looked upon in this aspect.
Nice initiative.
I subscribed and commented.
Skilled manpower is a must for industrial growth. Our education system has to be geared to skilling and vocational training.
2. Higher pension payout is certainly unfair. Small holding farmers need a Pension, crop insurance.
3. Let's use technology for census. We have so many ways.