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Source<\/strong>: The post challenges with India\u2019s service-driven growth has been created, based on the article \u201cWhy India needs deep industrialization<\/strong>\u201d published in \u201cThe Hindu<\/strong>\u201d on 14th February 2024<\/strong>.<\/p>\n UPSC Syllabus Topic:<\/strong> GS Paper 3 \u2013 Indian Economy- changes in industrial policy and their effects on industrial growth.<\/p>\n News<\/strong>: The article discusses India’s struggle with industrial growth and high unemployment. It critiques the focus on high-skill, service-based growth, arguing it increases inequality and neglects mass education, which is essential for successful industrialization and overall economic development. Why India needs deep industrialization<\/strong><\/p>\n Stagnant Manufacturing Sector:<\/strong> Manufacturing has consistently been below 20% in output and employment for 75 years.<\/p>\n Ineffective 1991 Reforms:<\/strong> These reforms, aimed at labor-intensive industrialization, failed to significantly boost the manufacturing sector.<\/p>\n High Unemployment:<\/strong> Persistent unemployment issues, including chronic disguised unemployment, reflect industrial challenges.<\/p>\n Widening Trade Deficit:<\/strong> Driven by an increase in imported goods, indicating a lack of domestic manufacturing capacity.<\/p>\n Shift to Service-Based Growth:<\/strong> Since the late 1980s, the focus has been on high-skill, service-driven growth, which hasn’t absorbed labor from agriculture effectively.<\/p>\n Neglect of Mass Education:<\/strong> Emphasis on higher education at the expense of mass schooling has led to a workforce not adequately equipped for industrial jobs.<\/p>\n Cultural Impact on Industrial Growth:<\/strong> Cultural factors, such as the undervaluing of certain vocational skills (like electrical and welding work), have hindered the development of the manufacturing sector.<\/p>\n Broad-based Employment:<\/strong> Deep industrialization offers more employment opportunities, absorbing labor from sectors like agriculture, unlike the limited absorption capacity of service-driven growth.<\/p>\n Economic Stability:<\/strong> A strong industrial base can lead to more stable economic growth and reduce dependence on imports, addressing India’s widening trade deficit.<\/p>\n Skill Development:<\/strong> Industrial growth encourages the development of a wide range of skills, benefiting from a focus on both vocational and higher education.<\/p>\n Innovation and Efficiency:<\/strong> Deep industrialization fosters innovation, leading to increased efficiency and competitiveness in the global market.<\/p>\n Limited Employment Absorption:<\/strong> Service-driven growth since the late 1980s couldn’t adequately absorb labor exiting agriculture, unlike manufacturing.<\/p>\n Requirement for High Skills:<\/strong> The service sector demands a highly skilled workforce, which India struggles to supply due to educational inequalities.<\/p>\n Increased Inequality: <\/strong>Service sector growth leads to higher inequality. The Gini index for regular wages in services is 44, compared to 35 in manufacturing.<\/p>\n Neglect of Mass Education:<\/strong> A focus on higher education over mass schooling contributed to a workforce ill-equipped for service sector jobs.<\/p>\n Elite Dominance:<\/strong> Higher education institutions fostered elites who advanced in the IT sector but contributed to stagnation in broader industrial areas.<\/p>\n Limited Rural Entrepreneurship: <\/strong>Compared to countries like China, India’s poor human capital endowment in rural areas hampers entrepreneurship, crucial for service sector growth.<\/p>\n <\/p>\nWhat are The Factors Affecting India’s Industrial Growth?<\/strong><\/h2>\n
Why is Deep Industrialisation Important for India?<\/strong><\/h2>\n
What are The Challenges with India\u2019s Service-Driven Growth?<\/strong><\/h2>\n
Read More UPSC Topics-<\/strong><\/h2>\n