Reduce SLR to promote job-intensive manufacturing in India: Amitabh Kant
What's the story
Amitabh Kant, former CEO of NITI Aayog, has called for a reduction in the statutory liquidity ratio (SLR) to promote job-intensive manufacturing in India. He said that lowering the SLR could reduce credit costs for businesses. Kant stressed the need for sufficient credit to fuel growth of start-ups in new-age sectors. He also highlighted land acquisition and power availability as key factors for manufacturers.
Long-term strategy
PLI a short-term solution for manufacturing sector
Kant described the production-linked incentive (PLI) as a short-term solution for the manufacturing sector.
He advocated for reducing the cost of doing business by measures such as cutting the SLR.
"Statutory liquidity ratio at 18% is too high for India... I am a great believer in bringing it down because flow of credit to manufacturing sectors will be the key in the long run," Kant told PTI.
Credit concerns
Kant stresses need for adequate credit availability
While Kant didn't specify an ideal level for SLR, he stressed its impact on credit costs and resource availability.
The SLR, which is the mandatory percentage of net demand and time liabilities or deposits that banks must invest in government securities, was cut to 18% over a few years but has remained at that level since then.
Kant said without adequate credit availability, start-ups in new-age sectors like geospatial won't be able to grow into large companies capable of disruption.
Job creation
Easy land acquisition and long-term land leasing needed
Kant emphasized the importance of manufacturing in creating employment opportunities, especially for a country like India.
He also stressed the need for easy land acquisition or long-term land leasing to support the manufacturing sector.
"We need to look at how China and its 'proxies' like Vietnam and Mexico are supporting the manufacturing sector in their countries through easy land acquisition or long-term land leasing as well," Kant said.
Power issues
Kant calls for reducing power costs for manufacturers
Kant also highlighted the cost and availability of power as major concerns for manufacturers.
He lamented that India is the only country where businesses pay more for power consumption than residential consumers.
"So, you treat manufacturing as a second-grade subject," he added.
Despite these challenges, Kant remains optimistic about India's manufacturing potential and global trust in its capabilities.