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Resource centre on India's rural distress
 
 

India’s productivity challenge is especially steep in service sectors -Vidya Mahambare and Sowmya Dhanaraj

-Livemint.com

Value-addition per worker needs to rise sharply in several fields for the country to enhance prosperity and reduce inequality

It is known that productivity is the key to economic prosperity. How do we raise the productivity of service workers? This is one of the biggest challenges that India faces which hasn’t yet received much attention.

Why is this important? First, low and medium-productivity service sectors (services except real estate, business and professional services) and construction account for over 70% of non-farm employment in India. This is based on productivity measured via a crude proxy in terms of real gross value added per worker. Second, there is still no proven method to raise productivity in these service sectors. Third, while India aims to expand employment in manufacturing, there is no doubt that today’s low and medium-productivity services would continue to generate most jobs going ahead.

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