Goldman Sachs has released a report highlighting a significant surge in employment within India’s capital-intensive industries over the past decade.
The report notes that sub-sectors such as electronics, chemicals, and machinery have seen substantial growth in both employment and exports.
Employment Growth in Capital-Intensive Sectors
The report states that capital-intensive sub-sectors, defined as those with a capital income share of 0.65 or more, have experienced higher employment growth compared to labor-intensive sectors like textiles and footwear.
This trend reflects the government’s focus on promoting the assembly of electronics, machinery, and pharmaceutical products.
As a result, exports to developed markets have experienced double-digit growth, contributing to India’s progress in creating an export basket comprising more high-value products.
Government Reforms and PLI Schemes
The manufacturing sector in India has undergone a significant transformation driven by government reforms aimed at boosting competitiveness and fostering sustainable economic growth.
At the heart of this transformation are the Production-Linked Incentive (PLI) schemes, introduced in phases beginning in 2020.
These schemes, with an overall incentive outlay of Rs 1.97 lakh crore, cover 14 critical sectors ranging from electronics and pharmaceuticals to drones and speciality steel.
The PLI schemes aim to enhance production capacity, create employment opportunities, promote exports, and reduce import dependency.
As of June 2024, the PLI schemes have attracted investments amounting to Rs 1.32 lakh crore and a significant boost in manufacturing output of Rs 10.9 lakh crore.
Additionally, these schemes have directly and indirectly created 8.5 lakh jobs, furthering the socio-economic impact.
The report highlights that despite impressive growth in capital-intensive sectors, labor-intensive sectors still account for a higher share of jobs in the country.
Employment Challenges and Future Outlook
While the growth in capital-intensive industries is promising, the report acknowledges that labor-intensive sectors continue to dominate employment numbers.
The construction sector remains a major employer, accounting for around 13% of the workforce, enabled by substantial capital inflows in real estate and infrastructure.
The report suggests that balancing the focus on both capital-intensive and labor-intensive sectors will be crucial for sustaining economic growth and job creation.
Goldman Sachs’ report underscores the significant employment growth in India’s capital-intensive industries, driven by government reforms and PLI schemes.
The focus on high-value exports and technological advancements positions India as a formidable player on the global stage.
However, the challenge lies in ensuring that labor-intensive sectors also benefit from these developments to create a balanced and inclusive growth trajectory.
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