Arvind Panagariya
| Photo Credit: Shanker Chakravarty
Making a powerful case for more labour-intensive industries in sectors like attire and footwear to scale back the focus of low-productivity employment in agriculture, Sixteenth Finance Commission chairman Arvind Panagariya stated on Friday that India’s desire for companies that rely upon capital or skilled-labour is a legacy from the “Nehru era”.
Noting that 45% of India’s workforce continues to be employed in agriculture which produces about 15% of the GDP, Mr. Panagariya stated there’s a historic cause behind India’s profitable industries being in sectors like equipment, prescribed drugs, IT and petroleum refining. Wage prices account for simply 4% of complete prices within the auto business and that, he stated, may be very typical of Indian business.
“The focus generally in our intellectual thinking… and that goes all the way back to the Nehru era, that we started off with steel mills, machinery industries… and that kind of industrialisation got hardwired at all levels if you look at the political class, the bureaucracy and the businessmen,” he stated at a CII summit.
“But in the end, without, at least some of the capital beginning to move into these more labour- intensive activities, you would continue to have very heavy employment concentrated in agriculture, and that simply will impede the transformation that is actually required,” Mr. Panagariya stated, including that this could require labour reforms in addition to more capital being deployed in such sectors.
Citing the instance of South Korea, the place agriculture accounted for about 70% of employment in 1960 however had dropped to 18% by 1990, Mr. Panagariya additionally cited the event of Shenzhen and Shanghai in China which have remodeled into industrial hubs because the Eighties.
“A massive relocation of labuor from relatively low productivity employment into high-productivity employment, also raises the productivity in agriculture quite dramatically, because then the land available per worker, per farm worker actually became much larger,” he identified.
“So that I think is ultimately our challenge, and I expect that this is a challenge we are going to try to meet in the coming couple of decades. Otherwise, the growth prospects are absolutely excellent for India,” he stated.
