Indian Manufacturing Jobs Declining
Source : Indian Express
GS III : Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Why in News ?

Indian Manufacturing Jobs Declining based on the reports : State of Working India (SWI) 2021, a report brought out jointly by the Centre for Monitoring Indian Economy (CMIE) and Centre for Economic Data and Analysis or CEDA

State of Working India (SWI) 2021

State of Working India (SWI) 2021 showed that the pandemic had forced people out of their formal jobs into casual work, and led to a severe decline in incomes.

• State of Working India (SWI) 2021 which was brought out by the researchers at Azim Premji University.
• The report, which is an annual feature documented the impact of one year of Covid-19 in India on jobs, incomes, inequality, and poverty.
• SWI 2021 provides the impact on livelihoods before the second Covid wave unfolded and, in that sense.

CMIE-CEDA report

• looked at the employment in India and its distribution across different sectors such as agriculture, industry and services.
• CMIE’s monthly time-series of employment by industry going back to the year 2016.
• It shows employment data across seven sectors, viz. agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services.
• Between them these sectors account for 99% of total employment in India.

Key Facts

• Women and younger workers have been disproportionately affected.
• Households have coped by reducing food intake, borrowing, and selling assets.
• Government relief has helped avoid the most severe forms of distress.
  • The reach of support measures is incomplete, leaving out some of the most vulnerable workers and households.
• Maharashtra, Kerala, Tamil Nadu, Uttar Pradesh, and Delhi contributed disproportionately to job losses.
• The number of people employed in the manufacturing sector of the economy has come down.
  • It has come down from 51 million to 27 million.
• India has seen a hike in the number of people “employed” in agriculture over the past year due to disguised unemployment.
• The fact is that manufacturing hasn’t been able to increase its share in overall employment even since the economic reforms of 1991.

P C Mahalanobis strategy : To gain self-reliance by investing in capital intensive industries so that India does not have to import machines etc. from other countries.

Why declining of Manufacturing Job trend is a concern ?

• Manufacturing sector is our best hope to accommodate the surplus labour otherwise employed in agriculture.
• It can make use of the millions of poorly educated Indian youth, unlike the services sector, which often requires better education and skill levels.
• Most of the manufacturing jobs lost are in labour-intensive sectors such as textiles, construction material.

Reason for the Indian Manufacturing Jobs Declining

• Governments have been corrupt, with officials and politicians extracting bribes.
  • The combination of these factors makes starting a manufacturing firm that much riskier and that explains the slow growth.
• Indians have always consumed relatively less of manufacturing goods and relatively more of food and services.
  1. Most Indians are quite poor and hence most of the income is spent on food.
  2. Repairs and maintenance are a very high part of our consumption choice.
• India did not push for integrating its labour-intensive manufacturing in the global supply chains by aggressively following exports.
• India aimed more at capital intensive manufacturing, not labour intensive ones.
  • Labour-intensive ones such as leather, handicrafts, textiles etc. were reserved for the small-scale industry framework.
• The two Covid waves have further hit the same informal manufacturing sector in 2020 and 2021.

Lessons from Other countries

• Other Asian economies have exploited their comparative advantage.
• Between 2000 and 2018, Bangladesh and Vietnam have increased in their share of global clothing exports from 2.6% to 6.4% and from 0.9% to 6.2%
  • India’s share has largely remained stagnant at 3% to 3.5%.

Government Efforts

• Indian government unveiling its ambitious Make in India (MII) initiative and the latest Production-Linked Incentive (PLI) scheme.

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