{"id":248316,"date":"2023-06-16T20:30:29","date_gmt":"2023-06-16T15:00:29","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=248316"},"modified":"2023-06-16T20:30:29","modified_gmt":"2023-06-16T15:00:29","slug":"indias-slow-but-sure-de-industrialisation-is-worrying","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-slow-but-sure-de-industrialisation-is-worrying\/","title":{"rendered":"India\u2019s slow but sure de-industrialisation is worrying"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201c<\/strong>India\u2019s slow but sure de-industrialisation is worrying<\/strong>\u201d published in Live Mint <\/strong>on\u00a016th<\/sup> June 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS 3 \u2013 Indian Economy \u2013 Growth & Development<\/strong><\/p>\n

Relevance: <\/strong>concerns with manufacturing sector<\/strong><\/p>\n

News<\/strong>: The national accounts data released last month showed India\u2019s provisional GDP growth rate at 7.2% in 2022-23. This was higher than the government\u2019s estimates and also that of the Reserve Bank of India (RBI).<\/p>\n

However, the data also suggests that the structural reasons that contributed to the Indian economy\u2019s slowdown before the pandemic are still present and may have worsened.<\/p>\n

What structural reasons are still present in the Indian economy?<\/strong><\/h2>\n

The continued weakness of private consumption and investment suggests that the economy is suffering from weak demand.<\/strong><\/p>\n

The GDP estimates show that the manufacturing sector<\/strong>, which is the largest sector of the economy in terms of GDP share and the third largest in terms of employment, grew only at 1.3%<\/strong>. This is its second lowest growth in the last 25 years.<\/p>\n

Moreover, manufacturing sector growth was 7.8% annually between 2003-04 and 2013-14, which increased to 9.1% between 2013-14 and 2017-18, but then declined to almost a third at 3.4% in the last five years.<\/p>\n

Similarly, the share of manufacturing in the GDP has also declined.<\/strong><\/p>\n

What does the weakening manufacturing sector imply?<\/strong><\/h2>\n

A weakening manufacturing sector raises concerns for the overall economy<\/strong>, especially for employment as this sector serves as a big source of jobs.<\/p>\n

According to the employment and unemployment survey of the National Statistical Office (NSO<\/strong>), manufacturing accounted for 12.6% of all workers in 2011-12. This declined to 10.9% in 2020-21.<\/p>\n

The declining share of manufacturing in overall economic output as well as employment is a worrying sign for the economy\u2019s long-term growth prospects<\/strong>.<\/p>\n

This decline signifies a gradual de-industrialization of the economy<\/strong>, which will not only impact output growth but also employment and income growth.<\/p>\n

Despite various policies like the ‘Make in India’, PLI schemes<\/strong>, and corporate tax benefits<\/strong>, the slowdown has continued. This suggests a policy bias in favor of large corporations rather than strengthening small and medium enterprises (SMEs).<\/p>\n

This also indicates the problem of declining demand in the Indian economy<\/strong>. Despite policy efforts and state incentives, the manufacturing sector has suffered due to a reduction in its consumer base.<\/p>\n

What can be the way ahead?<\/strong><\/h2>\n

Due to the declining trend in the manufacturing sector, workers have shifted from manufacturing to agriculture.<\/p>\n

Although agriculture has played a significant role in the economic recovery<\/strong> from the pandemic, it is unlikely to continue its contribution due to increasing input prices and the threat of El Ni\u00f1o.<\/strong><\/p>\n

Therefore, a revival of India\u2019s manufacturing sector is necessary. Hence, the key to boost the manufacturing sector lies in boosting overall demand in the economy, especially discretionary spending.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cIndia\u2019s slow but sure de-industrialisation is worrying\u201d published in Live Mint on\u00a016th June 2023. Syllabus: GS 3 \u2013 Indian Economy \u2013 Growth & Development Relevance: concerns with manufacturing sector News: The national accounts data released last month showed India\u2019s provisional GDP growth rate at 7.2% in 2022-23. This… Continue reading India\u2019s slow but sure de-industrialisation is worrying<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-248316","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/248316","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=248316"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/248316\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=248316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=248316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=248316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}