MODI GOVT'S IMPERATIVE FOR EMPLOYMENT GROWTH

There has been a longstanding vision to make India a global manufacturing hub to create millions of jobs. However, considering India's size and status as one of the world’s fastest-growing economies, it's perplexing how the potential for job creation and growth in the manufacturing sector has been overlooked for so long.

- AS MITTAL

The new government must implement a new industrial policy having decisive measures to address current structural constraints and reshape India's manufacturing sector in response to global supply chain shifts. This is crucial for achieving a GDP of $5 trillion and making India the world's third-largest economy by 2027. It's alarming that unemployment among young people with graduate degrees is at an all-time high of 29 per cent as India moves towards becoming the third-largest economy.In 2019, manufacturing was the second largest employer in India after agriculture, but it has now fallen to fourth place behind the construction sector, trade, and hospitality.

The National Sample Survey Organisation(NSO) data shows that 45.5% of the workforce is employed in agriculture, 12.4% in construction, and only 11.6% in manufacturing, despite its potential to create a multitude of job opportunities. Manufacturing still employs around 60 million people in India, effective action is needed to unlock its full potential for job creation at large.India's impressive growth is hindered by the lacklustre performance of the manufacturing sector, which has shown limited expansion over the past 25 years. Unlike other countries, India's production structure has shifted directly from agriculture to services-driven growth, resulting in a stagnant contribution of manufacturing to India's GDP at 15-17%, significantly lower than in East and South-East Asian countries. China has a 31.63% share of global manufacturing, the US has 15.87%, Japan 6.52%, Germany 4.78%, and India 2.87%. This highlights the urgent need for India to address the challenges in its manufacturing sector.

The reasons for this stagnation could be diverse, such as high tax burden, overburdened regulatory compliances, inadequate infrastructure and connectivity, unreliable electricity, lack of access to credit or a skilled workforce, and insufficient focus on research, development, and technology adoption.