India Economy Growth Analysis: Bridging the Divide Between High-Skilled and Low-Skilled Jobs

Sunday, 15 September 2024, 19:30

India economic growth has been underpinned by the vibrant services sector, yet the ongoing stagnation in manufacturing casts shadows on job creation. With services driving growth, the disparity between high-skilled and low-skilled jobs continues to widen, raising alarms about the sustainability of India's economy. Addressing the decline in manufacturing is essential for balancing India's economic landscape.

India Economy Growth Analysis: Bridging the Divide Between High-Skilled and Low-Skilled Jobs

Overview of India's Economic Landscape

India economic growth has largely been influenced by the robust services sector, particularly in Information Technology (IT), banking, and finance. The services sector has expanded significantly since the turn of the century, but this expansion has corresponded with a decline in traditional industries, particularly affecting low-skilled workers.

Manufacturing Sector Stagnation

The manufacturing sector in India has consistently hovered around 14%, far below the targeted 25%, exacerbating the gap between high-skilled and low-skilled jobs. With multinational corporations opening data analytics and software development hubs, the demand for qualified IT personnel has surged. Yet, this has not translated into robust job creation in the low-skilled categories.

Economists emphasize that relying solely on the services sector is insufficient for a nation with a population of 1.4 billion.
The Economic Survey 2023-24 highlights India's need to create nearly 7.85 million jobs annually in the non-farm sector.

Decline in Labour-Intensive Jobs

A recent report from the World Bank revealed a troubling trend: direct employment linked to exports peaked at 9.5% of total domestic employment in 2012 but has now fallen to 6.5%. This decline is largely attributed to the dominance of high-skill industries, which do not absorb the labour pool effectively.

Rise of Global Capability Centres (GCCs)

Despite the stagnation in manufacturing, India has become a hotspot for multinational companies establishing Global Capability Centres (GCCs), with an estimated 1,600 GCCs in operation, mirroring China's role in tech hardware.

Elevating Global Competitiveness

India's participation in Global Value Chains (GVCs) remains low, restricting trade-related job creation. High import tariffs on key inputs raise production costs, complicating international competitiveness. Further reform is necessary to enhance India's economic standing globally.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.