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Resource centre on India's rural distress
 
 

Manufacturing isn’t the villain in India’s jobless growth story -Roshan Kishore

-Livemint.com

Manufacturing is the biggest positive contributor to aggregate employment elasticity in the country, a fact which might appear counter-intuitive to many

New Delhi:
One of the biggest criticisms of India’s high growth trajectory this century has been its failure to generate jobs. Economists attribute this phenomenon to a decline in employment elasticity of output, which means that the same amount of output growth creates fewer jobs than it used to. Intuition might suggest that the fall in employment elasticity must be a result of change in the nature of technology from labour-intensive to capital-intensive. Such an argument would also suggest that the manufacturing sector must be responsible for the deceleration in job growth.

A recent Economic and Political Weekly paper by Deepankar Basu and Debarshi Das, economists at the University of Massachusetts, Amherst, and IIT Guwahati, suggests that this might not be the case.

Manufacturing is not the villain. Basu and Das find that it is agriculture that has made the biggest negative contribution to aggregate employment elasticity in recent years. This is both understandable and desirable, since agriculture employs a disproportionately large number of people in India. Manufacturing, on the other hand, is the biggest positive contributor to aggregate employment elasticity in the country, a fact which might appear counter-intuitive to many

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