The manufacturing sector’s contribution to India’s GDP has been stagnant at 15-18% for the past two decades. Not only has the sector’s contribution to GDP stagnated, so has the employment share of manufacturing. The unemployment problem in the country cannot be dealt with in a meaningful manner without growth in the manufacturing sector. There is a preponderance of extraordinarily small-scale establishments in the sector, which are underproductive and not competitive, caused largely by restrictive and business-unfriendly labour laws. Sridhar Krishna and Minu Chawla discuss this and how recent labour reforms and other efforts could help alleviate some of India’s labour manufacturing woes.
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