 Every big modern economy has developed and become prosperous by building factories. Here there are smaller nations like Singapore and some in the Middle East who have prospered as trading ports, but they are very small with very small populations and can afford to live entirely off imports. Poor countries like ours, where 90% of people still have very little access to manufactured products, need many more factories and we need a factory output to grow very fast to catch up with affluent countries of the world. But India's factory sector, what is technically called the manufacturing sector, has completely collapsed in the last five to six years and it began well before COVID hit us. Let's quickly go through the data and I will begin with this graph, the one that you've seen on your screens right now. That line gives us the five-year moving average growth in the factory sector. Moving average means that each point on that graph is an average of the latest five years. The next point adds the next year but drops the first year of the previous point. You can see what has happened here, from 2017-18 factory output growth has dropped sharply. Yes, it includes the COVID year of 2020 when manufacturing output dropped marginally but precisely because of that drop, the very next year there was a sharp jump in manufacturing growth when factories opened up. That is why I have taken a five-year average which smooths out these fluctuations which can take place because of these momentary recessions that take place because of some kind of a disaster. We can also eliminate the impact of COVID by taking two points before and after the COVID lockdown. Let's compare 2018-19 the year before COVID and the government's projections for 2022-23 which is this fiscal. When there have been no lockdowns at all, factory output grew at an annual rate of just 1.9% in this four-year period. This extended back to another year to 2017-18 and take a five-year annual average. Even that is just 2.6% and this is the overall figure. During this period, India's population has grown. So ideally we should take the per capita factory output in these two periods to see how per capita availability of manufacturing growth has grown. Let's take the first period per capita output growth has grown by just 0.8% per year. During the five-year period from 2017-18 onwards, it has grown at just 1.5% per year. It's even worse if we compare the data from this fiscal year. We have factory output data in the form of the index of industrial production, IIP available till October 2022. So let's compare this. Between April to October 2018, the manufacturing index averaged 129.4. That has risen to just 133.3% in this fiscal. That's an annual growth rate of just 0.7% in the first half of the year. If you adjust for population growth, then it is actually down by 0.3% this year and an annual rate over the past four years. In fact, in rupee terms, in today's prices, the per capita availability of manufactured goods being produced in India is just a little over 2,000 rupees per month. That is not what an average individual is consuming on their own. It includes all factory products, which includes all of our share of the cement being used to build roads, the steel going into bridges, the diesel being burned by buses, by tractors. Every single manufactured good. When you take that into account, 2,000 rupees is nothing. It cannot provide the amenities that citizens in a modern nation need. At the current average growth rate, the rate at which our factory sector has grown annually between 2017-18 to this fiscal, it will take us 46 years to double the per person availability of factory products. But why is India's factory sector collapsed like this? This is because of the growth path that successive governments have followed since the 1990s, when India opened up to foreign capital and began encouraging the private sector. This has done two things. India's domestic industry, which by policy was being protected, was given tariff protection, has lost its ability to compete against cheap imports from China when it comes to cheap goods. But when it comes to higher end goods, in the 1980s, India's computer electronics hardware sector was growing at a very fast clip. But in the 1990s, policy changes, which allowed foreign players to enter, destroyed that growing hardware industry completely. Today, electronics hardware has become one of our three largest imports. The second big reason is how inequality has widened in our country in the liberalisation years. This has meant that only a very small proportion of India's population can afford to buy manufactured goods. And their demand is mostly for high end items, which are being imported, whether it is cars, TV sets, phones or other consumer durables or even clothes. Affluent Indians are increasingly turning to foreign brands. This is a double whammy for India's manufacturers because the vast majority of Indians cannot afford to buy what they produce. And those who can afford are buying foreign goods. So this is a problem that India's manufacturing sector faces. This is why even though Indian companies have made huge profits in the past two years, they're simply not investing in building factories or buying new equipment to expand capacity. In fact, the past one year, net assets of India's corporate sector has grown at a slower pace than inflation. Which means in real terms, the net productive assets of Indian companies are less than what they were last year. This is why the factory sector in India cannot provide any new jobs either. In 2018, there were nearly 40 million jobs in manufacturing. That has dropped to a little over 33 million in 2022. That's an annual decline of 4.3%. This is at a time when the total number of job seekers has increased significantly in these four years. In every modern nation, the rise of factory jobs created demand for factory goods. India's terrible record with providing factory jobs is one more reason for our industrial collapse. And if these neoliberal policies continue, then things will only get worse. That's the show today. If you've liked this video, please press the like button and do subscribe to our channel and press the bell icon so that you get to know as soon as a new video drops. Until next time, goodbye.