Answer: 

Introduction:

A key lacuna in India’s growth has been slow growth of manufacturing in labor-intensive sectors like textiles, footwear, etc and concentration in capital intensive manufacturing sectors like auto parts, chemicals, software and pharmaceuticals. None of these sectors employ low-skilled workers in large numbers.

Body:

Reasons for failure of labor-intensive manufacturing sector:

• Lack of skilled labour: Workers moving out of agriculture into export-oriented manufacturing industries do not have the requisite skill set. This results in jobless growth.
  • The proportion of formally skilled workers in India is extremely low, at 4.69% of total workforce, compared to 24% in China and 52% in US.
• Lack of ease of doing business in India due to labour market rigidities, tax uncertainties, impediments to entrepreneurial growth have further hindered the expansion of a labour-intensive export manufacturing.
  • India ranks 63rd among 190 nations as per EoDB report 2020.
• Complex labour laws: There is a huge mesh of labour related laws in India which makes it difficult for employers to navigate. Also, there is no provision for public social security for these labourers making it a burden on the employers.

Measures to Promote Labour-Intensive Exports

• Ease Labour Law regulations such as wide-ranging and complex laws, mandatory contributions by low-paid workers, and lack of flexibility in part-time work etc. The codification of 38 Labour Acts into 4 labour codes is a positive step in this regard to encourage labour-intensive manufacturing.
• Promoting Labour-Intensive Sectors like apparel sector, leather and footwear. These have high export potential, require no skilled labour and are scalable.
• Promoting the Role of MSMEs: Labour intensity of SMEs is four times higher than that of large firms. Schemes like MUDRA loans should be promoted for this.
• Skill development to fill the gap of semi-skilled and skilled workers that manufacturers in India face frequently. PM Kaushal Vikas Yojana can be put to use here.
• Access to capital: Schemes like Start-Up India and Stand-Up India can also provide a suitable and favourable environment for entrepreneurs to enter the labour-intensive exports sector.

Conclusion:

Although India did not follow the traditional path for growth in the manufacturing sector, it is now working on course correction to this end. The various initiatives taken by the government would yield results sooner and the jobless growth curse could be reversed as labour-intensive manufacturing gains boost.

DOWNLOAD PDF