The Centre for Social and Economic Progress (CSEP) hosted a seminar titled ‘Multiplying Multi-Plants and Large Plant Size: Consequences, Costs and Rationale’ on Thursday, November 28, 2024 from 12:00 to 1:30 PM (IST).

The seminar explored the insights presented in a paper by Arvind Subramanian, Abhishek Anand and Naveen Thomas. This was followed by a discussion between Arvind Subramanian, Senior Fellow, Peterson Institute for International Economics and former Chief Economic Adviser, Govt. of India and Montek Singh Ahluwalia, Distinguished Fellow, CSEP and former Deputy Chairman, Planning Commission, Govt. of India. Amita Batra, Senior Fellow, CSEP moderated the event.

About the event

Abstract: The under-performance of Indian manufacturing has been a development failure. This paper finds a new clue that sheds light on this failure in the relatively undocumented phenomenon of multi-plants, whereby a firm sets up multiple production facilities within a state. Multi-plants have grown dramatically over time, now accounting for 35 percent of employment in large firms (greater than 200 employees). They are important for three reasons. They change our understanding of the evolution of the size of large firms: contrary to recent research, this paper finds that accounting for multi-plants shows that large plants have not grown in size (and may even have shrunk) despite increasing recourse to contract labour. Second, multi-plant firms have lower productivity than single-plant firms of equivalent size, which potentially impacts competitiveness and export performance. Finally, multi-plants shed light on how regulations and labour markets work. They seem to be another mechanism (along with contractualisation) for large firms to not expand plant size in order to diversify political and regulatory risk. India does have large plants that operate well beyond thresholds in any of the labour laws. But there are not enough of them, and even those that exist are too small by international standards, undermining India’s manufacturing competitiveness. Multi-plants offer one clue to understanding why that is so.

Presenter

Arvind Subramanian

Arvind Subramanian, Senior Fellow at the Peterson Institute for International Economics, has been associated with the Institute since 2007. He was the Dennis Weatherstone Senior Fellow at the Institute during 2013–14 and was on leave for public service from 2014 to August 2023.

Previously, he was senior fellow at the Watson Institute for International and Public Affairs at Brown University, distinguished non-resident fellow at the Center for Global Development, professor at Ashoka University, New Delhi, and visiting lecturer at the Harvard Kennedy School. He served as the Chief Economic Advisor to the Government of India between 2014 and 2018. He currently advises the Government of the Indian state Tamil Nadu on macroeconomic and sectoral issues.

As Chief Economic Advisor during 2014–18, Subramanian oversaw the publication of the annual Economic Survey of India, which became a widely read document on Indian economic policy and development. For example, the 2018 Survey had 20 million views from over 190 countries in its first year of publication. Major initiatives carried out during his tenure included a uniform nationwide goods and services tax (GST), a bankruptcy code to tackle the Twin Balance Sheet challenge, a financial and digital platform for connectivity (the so-called JAM trinity), and universal basic income schemes.

While at the Institute, Subramanian wrote two critically acclaimed books: Eclipse: Living in the Shadow of China’s Economic Dominance, published by PIIE in September 2011, and India’s Turn: Understanding the Economic Transformation, published by Oxford University Press in 2008. Foreign Policy magazine named him one of the world’s top 100 global thinkers in 2011. He has written extensively for many academic journals on growth, trade, development, aid, India, Africa, and the World Trade Organization. His op-eds and essays have been cited and published in the Economist, Financial Times, Foreign Affairs, Washington Post, New York Times, Wall Street Journal, Newsweek, New York Review of Books, and the Business Standard, and he is a regular columnist for Project Syndicate.

Before joining PIIE, Subramanian was the assistant director in the research department of the International Monetary Fund. He served at the General Agreement on Tariffs and Trade (GATT) from 1988 to 1992 during the Uruguay Round of trade negotiations and previously taught at Harvard University’s Kennedy School of Government and Johns Hopkins School for Advanced International Studies.

He obtained his undergraduate degree from St. Stephens College, his MBA from the Indian Institute of Management at Ahmedabad, and his M.Phil and D.Phil from the University of Oxford.

Discussant

Montek Singh Ahluwalia

Montek Singh Ahluwalia, an economist, and civil servant, was former Deputy Chairman of Planning Commission, Government of India. He joined the Government in 1979 as Economic Adviser in the Ministry of Finance, after which he held a series of positions including Special Secretary to the Prime Minister; Commerce Secretary; Secretary in the Department of Economic Affairs; Finance Secretary in the Ministry of Finance; Member of the Planning Commission and Member of the Economic Advisory Council to the Prime Minister. In 2001, he was appointed as the first Director of the newly created Independent Evaluation Office of the International Monetary Fund. He resigned from that position in 2004 to take up the position of Deputy Chairman of the Planning Commission which he held from 2004 to 2014.

Mr Ahluwalia has been a key figure in Indian economic policy. He writes on various aspects of development economics and has been published in prominent Indian and international journals and books. He co-authored Re-distribution with Growth: An Approach to Policy, which, published in 1975, was a path-breaking book on income distribution. In February 2020, he published his book, Backstage: The Story Behind India’s High Growth Years, an insider’s account of policymaking from 1985 to 2014.

For his outstanding contribution to economic policy and public service, he was conferred the prestigious ‘Padma Vibhushan’ in 2011, India’s second highest civilian award for exceptional and distinguished service.

Mr Ahluwalia graduated from Delhi University and holds an MA and an MPhil in Economics from Oxford University. He is an Honorary Fellow of Magdalen College Oxford.

Moderator

Amita Batra 

Amita Batra is Senior Fellow at the Centre for Social and Economic Progress (CSEP), on leave from Jawaharlal Nehru University (JNU) where she is Professor of Economics in the Centre for South Asian Studies, School of International Studies. She was also Senior Visiting Fellow at the Department of Political Economy, University of Sydney in 2018 and Visiting Professor at the University of Edinburgh in 2013. She has been Visiting Professor at the Indian Institute of Management-Ahmedabad. Professor Batra served as a member of the Advisory Group for G20 Finance Track Agenda, Ministry of Finance, Govt. of India (January 2022-December 2023). She is on the editorial committee/board of several national/international journals. Professor Batra writes a monthly column ‘Straight talk’ for the Business Standard, a leading financial daily in India. She has written and published extensively on economic integration, preferential trade agreements, International Trade and India’s trade policy issues. Her latest book is titled India’s Trade Policy in the 21st Century, Routledge, London, 2022. Professor Batra has an MA, M.Phil., PhD from Delhi School of Economics, University of Delhi.

Please contact Gurmeet Kaur at GKaur@csep.org for general queries and Ayesha Manocha at AManocha@csep.org for media queries.

All content reflects the individual views of the speakers. The Centre for Social and Economic Progress (CSEP) does not hold an institutional view on any subject.