Economic Survey calls for 'Make in India' and 'Skilling India' balance
The Survey contemplates “What should India make? Manufacturing or Services? ” As a prelude, the Survey states that, in order to bring about expansion and structural transformation, India should utilize its dominant resource of unskilled labour.
The survey distinguishes registered manufacturing ( formal sector)from the general manufacturing which covers informal sector as well. The Economic Survey recognizes registered manufacturing as having “the potential for structural transformation.“ Registered manufacturing exhibits high productivity compared to other sectors of the economy.
However, the Economic Survey observes that manufacturing productivity in India lags behind other nations. The Survey points out that all Indian states exhibit declining share of manufacturing in the State GDP. In addition, the Survey identifies that registered manufacturing couldn’t bridge regional disparities in India. In addition to this, registered manufacturing now in India has been identified as skill intensive which is not in line with the India’s comparative advantage in unskilled labour.
The Economic Survey identifies four factors for non development of manufacturing as an engine of economic growth –
• Distortions in Labour Market
• Distortions in Capital Market
• Distortions in Land Market
• Specialization not in line with India’s comparative advantage in unskilled labour
Certain subsectors of services – financial services and business services, exhibit higher productivity levels than registered manufacturing. However, these sectors being highly skill intensive (excluding construction) are out of line with the skill profile of the Indian labour force. They are unlikely to generate widely shared and inclusive growth. However, the survey observes that the service sector has the potential for domestic growth convergence across regions.
Hence, the survey redrafts the question of manufacturing versus service. It posits that the real question should be whether we want to concentrate on non-skilled labor intensive sectors or the development of skill intensive sector. The Economic Survey concludes that Indian growth should balance the nation’s comparative advantage in availability of low skilled labour with skill development required by future generations to take advantage of lost opportunities. The registered manufacturing must be expanded to take leverage of India’s abundant unskilled labour.
While “Make in India” occupies prominence as an important goal, the future trajectory of Indian Development depends on both “Make in India” and “Skilling India”, the Economic Survey says.
Support Our Journalism
We cannot do without you.. your contribution supports unbiased journalism
IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.