Notwithstanding India recording highest GDP growth in the world, the employment opportunities are languishing in the country. Similarly, despite Japan being the third biggest economy in the world, it reels under protracted recession over two decades, leaving rare rooms for employment opportunities.

To build India with big employment opportunities, Mr Modi’s model of reform is Make In India. Make-in-India will make the country a manufacturing hub in the world and will be the main pillar for GDP growth. Mr Abe’s 3-Arrow Economy will make Japan a domestic demand oriented economy, with the three pillar macro-economic policies, viz, monetary liquidity, robust fiscal policy and structural reforms to stimulate private investment.

The challenges by both prime ministers were hyped and caught the headlines. But, later they were embroiled into cynical debates as the windfall of the reforms were not visible.

Manufacturing was the main driver for the high GDP growth of India - 7 to 7.5 per cent a year. It outnumbered the Chinese GDP growth rate. During the two-year period of Modi government, manufacturing witnessed 9.3 per cent growth in 2015-16, making a big leap from 5.5 per cent in 2014-15. But, this contrasts starkly with the growth of manufacturing, measured by index of industrial production, which is considered the real measuring rod for manufacturing growth. In 2015-16, the index crawled to 2.4 per cent growth. This resulted a myopic visibility of the growth of manufacturing sector among the media and created a strong debate over the success of the reforms.

Why is there a big gap between the growth in manufacturing sector measured by GDP growth and index of industrial production? The fallacy lies with the coverage of items and the base year. While the index of industrial production is based on 2004-05 base - a decade old base, manufacturing growth in terms of GDP is on the current base. Since 2004-05 much has changed in the structure of manufacturing sector. With the structural changes in manufacturing, growth changed its track. For example, the growth in manufacturing was triggered by technology oriented and value-chain base structures than the resource based industrial growth. Higher investment in telecommunication, electronics, mobile phones, automobiles are the examples of structural changes and their contributions to the high growth in manufacturing sector.

Manufacturing growth in terms of GDP was based on wide coverage of items and industries, irrespective of sizes. For manufacturing growth in GDP, data are collected from the listed companies in the stock market and the corporate ministry, irrespective of the size of the industry.

Growth in mobile phone manufacturing is a case in point. A large number of domestic mobile phone manufacturers belong to small scale sector. Mobile manufacture spurred in 2015-16. It doubled from 54 million numbers in 2014-15 to 110 million numbers in 2015-16.

The passage of GST bill is another case of green-shoot of Modi’s reform. GST is the stimulus for Make In India. It will have a price oriented benefit for the consumers, which will be a leg up for Make in India. It will shred cascading impact of multiple taxes. This will result in fall in prices of several consumer goods. Lower the prices, higher will be the incentive for manufacturing.

Modinomics may have fallen short of hype after two years. But, a mindset has been created for investment in manufacturing. Foreign investment jumped by 67 per cent over the two-year period of Modi government. About 65 per cent of foreign investment flowed in manufacturing sector.

Even though the domestic investment in new projects – one of the indicators for the success of reform - declined in 2015-16 (by 22 per cent) after posting a surge in 2014-15 (77 per cent), the spur in completed projects counter-balanced the windfall of the reform . During the two-year period, projects completed increased by 17 per cent in 2014-15 and surged by 36 per cent in 2015-16. This reflects the boon of ease of doing business – the positive side of the reform.

Similar on the heels, Abenomics is viewed subdued, by the observers, especially the foreigners. Inflation remains well below the target of 2 per cent. The economy remained weak and failed to set up a strong platform for another hike of consumption tax of 8 per cent.

But, they are not without windfalls. Japan witnessed a mild inflation, compared with deflation in the past preceding the Abenomices era. After reeling under deflation for two decades, Japanese consumer prices (excluding energy and fresh foods) have risen moderately for 32 months since 2013. The Economist said “Abenomics under-performed the target, but over-performed the past”

The number of workers has increased by more than 1.5 million under Abenomics period. Many people have taken up part-time job for modest wages.

In fact, the poor assessment of the outcome of reforms are due to media and naysayer analysts obsessed with sizzling news and outcome. Even though consumer prices nosedived to half during the two-year period of Modi era, the media and naysayers clamour when the food prices increase marginally during the monsoon season. (IPA Service)