Tuesday, August 9, 2011

National Manufacturing Policy

A Hundred Million More Jobs in Manufacturing by 2025 is the clever advertisement for the government's soon to be unveiled National Manufacturing Policy. The jobs are to be created by rapidly growing the share of manufacturing in the GDP from the current 16 per cent to 25 per cent by 2025. The government's seriousness in pushing the new policy is evident from its involvement of senior executives of Tata Steel, Vedanta Aluminum, Maruti Suzuki and other major maufacturers in putting together the plans to implement it.

The situation on the ground, however, is quite in contrast to the ambitious plans. The share of manufacturing in GDP has remained almost flat over the last decade, sharply differing with the historical pattern seen in countries transitioning from being agrarian to industrial societies. The total employment in manufacturing, inferred from the results of the National Sample Survey 66th round (NSS-66) conducted in 2009-2010, is just short of 53 million. Eighty percent of this employment is in 'unorganised' manufacturing (units using electricity that employ less than 10 workers, as well as units not using electricity that employ less than 20 workers). Organised manufacture employs fewer than 11 million workers.

On top of these poor numbers, the employment in India's manufacturing sector is actually showing a declining trend, despite the high GDP growth rate of the recent past. Employment growth in the period 2005-2010 has been entirely in services and in the construction industry, while an estimated 3.6 million jobs have been lost to manufacturing, almost all of them in rural India (inferred from an NSS-66 report of June 2011). It would be a safe assumption that this loss has been entirely in unorganised manufacturing.  Read the full India Together piece here