{"id":71007,"date":"2020-09-26T17:24:20","date_gmt":"2020-09-26T11:54:20","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=71007"},"modified":"2020-11-26T17:26:20","modified_gmt":"2020-11-26T11:56:20","slug":"indias-jobs-conundrum","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-jobs-conundrum\/","title":{"rendered":"India\u2019s jobs conundrum"},"content":{"rendered":"<p><strong><b>Source:\u00a0<\/b><\/strong><a href=\"https:\/\/www.livemint.com\/news\/india\/the-missing-middle-aggravates-india-s-jobs-conundrum-11600790342276.html\"><strong><u><b>LiveMint<\/b><\/u><\/strong><\/a><\/p>\n<blockquote><p><strong><b>Syllabus: GS3:<\/b><\/strong>\u00a0Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.<\/p><\/blockquote>\n<p><strong><b>Context<\/b><\/strong>: A country progresses when small and mid-sized firms grow, and create jobs alongside. \u00a0India over the years is facing the\u00a0<strong><b>problem of inadequate mid-sized firms.<\/b><\/strong><\/p>\n<p><strong><b>How are job creation and firms\u2019 size related?<\/b><\/strong><\/p>\n<ul>\n<li><b><\/b><strong><b>Contribution of Large firms<\/b><\/strong>: McKinsey Global Institute (MGI) in a recent report titled India\u2019s turning point, an economic agenda to spur growth and jobs points out that India has around 600 large firms which earn a revenue of more than $500 million per year.<\/li>\n<li><b><\/b><strong><b>Higher productivity:<\/b><\/strong>The labour productivity of large firms is 11 times higher than that of the overall economy.<\/li>\n<li><b><\/b><strong><b>Growth in export and employment generation:<\/b><\/strong>These firms are also responsible for 40% of exports and employ 20% of the people in the direct formal workforce.<\/li>\n<\/ul>\n<p><strong><b>Why does India have fewer large firms?<\/b><\/strong><\/p>\n<ul>\n<li><b><\/b><strong><b>India\u2019s missing middle of mid-sized firms<\/b><\/strong>: It\u2019s the mid-sized firms which grow into large firms, and create jobs and competition along the way.<\/li>\n<li><b><\/b><strong><b>Slow corporate growth:<\/b><\/strong>slow corporate growth led to slow economic growth and a situation where only 77 mid-sized firms became large between 2012 and 2018.<\/li>\n<li><b><\/b><strong><b>Chain reaction:\u00a0<\/b><\/strong>since 2017, India\u2019s GDP is free falling and in 2018, the revenues of large Indian firms amounted to 48% of nominal GDP compare to 58% in 2012.<\/li>\n<li><b><\/b><strong><b>Comparison with Other countries<\/b><\/strong>:<\/li>\n<li>The contribution made by large firms in other emerging economies like China, Malaysia and Thailand was 1.5 to 1.6 times that of India.<\/li>\n<li>India has\u00a0<strong><b>fewer large firms<\/b><\/strong>relative to gross domestic product (GDP) than China, Malaysia, South Korea and Thailand.<\/li>\n<li>As per MGI, India\u2019s 1,500 mid-sized firms per $1 trillion of GDP, with revenue between $40 million and $500 million, are only about half the number in peer emerging economies relative to their GDP.<\/li>\n<\/ul>\n<p><strong><b>What are the possible reasons for mid-sized firms?<\/b><\/strong><\/p>\n<ul>\n<li>India\u2019s high\u00a0<strong><b>cost of compliance.<\/b><\/strong><\/li>\n<li>The small and mid-sized firms\u00a0<strong><b>lack the organizational resources<\/b><\/strong>to manage costly procedures.<\/li>\n<li>Due to\u00a0<strong><b>cumbersome procedure<\/b><\/strong>, it takes 1,445 days to enforce a contract in India. However, in South Korea it takes 290 days.<\/li>\n<li>Lack of access to low-cost capital stops firms from growing bigger.<\/li>\n<\/ul>\n<p><strong><b>What steps should be taken to tackle this?<\/b><\/strong><\/p>\n<ul>\n<li>Lack of capital problem can be tackled by\u00a0<strong><b>deepening India\u2019s capital markets<\/b><\/strong>.<\/li>\n<li>India needs to triple the size of its large firms by 2030.<\/li>\n<li>Unlocking land supply and allow prices to fall by 20% to 25%.<\/li>\n<li>Creation of flexible labour markets, privatizing the 30 largest PSU firms.<\/li>\n<li>Efficient power distribution.<\/li>\n<li>Improving ease of doing business and sector specific policies to improve productivity.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source:\u00a0LiveMint Syllabus: GS3:\u00a0Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Context: A country progresses when small and mid-sized firms grow, and create jobs alongside. \u00a0India over the years is facing the\u00a0problem of inadequate mid-sized firms. How are job creation and firms\u2019 size related? Contribution of Large firms: McKinsey Global&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/indias-jobs-conundrum\/\">Continue reading <span class=\"screen-reader-text\">India\u2019s jobs conundrum<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1303],"class_list":["post-71007","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-eco_8","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700776344,"cached_date":1704836050},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71007","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\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=71007"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71007\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=71007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=71007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=71007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}