| Introduction: Contextual Introduction Body: Significance of low-skilled employment and compare this with IT service-led growth Conclusion: Way forward |
India’s economic growth narrative is often marked by optimism, fueled by high GDP growth rates and the aspiration of becoming a major global economic player. However, for India to sustain this momentum and achieve its goal of becoming a $30-trillion economy by 2047, a shift towards low-skilled, employment-intensive manufacturing is crucial.
Significance of Low-Skilled, Employment-Intensive Manufacturing in India’s Economic Growth
- Addressing Labor Market Challenges: With 46% of India’s labor force still engaged in low-productivity agriculture and a female labor force participation rate (FLFPR) of just 37%, there is an urgent need to create job opportunities in sectors that can absorb large numbers of workers.
- Learning from the Asian Tigers: The success of countries like South Korea, Taiwan, Japan, and Vietnam—often referred to as the ‘Asian Tigers’—in achieving rapid economic growth through export-oriented, low-skilled manufacturing serves as a model for India.
- Export Competitiveness and Global Integration: Low-skilled manufacturing can help India become more competitive in global markets, particularly if the country can capitalize on the current geopolitical landscape, such as the China+1 strategy being adopted by multinational companies. By focusing on export-driven growth, India can increase its share in global trade and enhance its economic resilience.
Comparison with IT Services-Led Growth in the 2000s
- Inclusivity and Broad-Based Growth: The IT services-led growth in the 2000s primarily benefited urban areas and the educated middle class, creating a significant but somewhat narrow impact on the overall economy. While it contributed to India’s GDP and positioned the country as a leader in the global IT industry, this growth model did not significantly address the employment needs of the broader population, particularly those in rural areas.
- Reduce Regional Disparities: Low-skilled manufacturing has the potential to create jobs across different regions and social strata, fostering more inclusive growth. This sector can help reduce regional disparities by encouraging industrial development in less-developed areas, thereby promoting balanced economic development.
- Resilience and Sustainability: The IT sector, while a major driver of India’s economic growth, is vulnerable to external shocks such as global demand fluctuations and technological disruptions. On the other hand, low-skilled manufacturing offers a more stable growth path, as it is less susceptible to global market volatility and can absorb a larger portion of the workforce.
Conclusion
Low-skilled, employment-intensive manufacturing holds the key to unlocking India’s economic potential, providing jobs to millions, and driving inclusive growth. By focusing on manufacturing and export-led growth, India can build a more resilient and inclusive economy, avoiding the middle-income trap and achieving its long-term economic goals.
