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Why manufacturing?

It has been argued that between the three broad sectors of the economy — agriculture, industry and services — it is the industry sector, and within industry, the manufacturing sector that has the highest potential to absorb the surplus labour in the economy.

Agriculture, which engages almost half the Indian workforce, does not grow fast enough and is, as such, not remunerative enough to provide gainful employment to the millions who join India’s workforce each year. It is for this reason why more and more people have left agriculture and tried to join other sectors of the economy since 2004.

Services is a fast-growing sector and pays well but it places far greater demands on job seekers in terms of skills and education. Often, the rural millions looking for a job find themselves inadequate in terms of delivering in the services sector — not without skills education at least.

That leaves the industry, which includes sub-sectors like manufacturing and non-manufacturing (that is, construction and mining etc.). Research shows that the employment elasticity — the ability to create new jobs with every additional increase in a sector’s growth — of the manufacturing sector is the highest.

What did the past governments do?

For a while now, both UPA and NDA governments have tried to focus on boosting the growth in the manufacturing sector. For instance, in 2011, Congress-led UPA came out with a new National Manufacturing Policy that aimed at raising the share of the manufacturing sector to 25% of the GDP by 2022. The BJP-led NDA too unveiled the Make in India initiative that focussed using manufacturing as the main platform to create jobs.

Each Union Budget tends to focus on measures that will promote manufacturing — both big- and small-scale — and create jobs.

However, despite such a focussed stand right through the past decade, manufacturing’s share is still under 17% of the GDP and the jobs situation in the country has only got worse.

What does the data show?

An analysis of the Indian manufacturing sector done by India Ratings shows that manufacturing units in the organised sector are becoming more capital intensive — that is the capital-to-labour ratio is increasing. In other words, instead of increasing the number of workers in a unit, owners are choosing to increase the amount of capital.

This raises several questions for policymakers:

1> Why are manufacturing owners increasingly preferring to substitute labour with capital? It is important to note that they continue to do so even when the return on capital is falling.

2> If this is the trend, how reasonable is it to assume that boosting manufacturing growth will create more jobs for the Indian youth?

3> The government has been increasingly pushing for “organised” or formal sector manufacturing but if this trend is anything to go by, is such a push justified?

4> What is the extent to which the lack of significant labour reform is holding back manufacturing from achieving its potential to create jobs?


When Finance Minister Nirmala Sitharaman stands up to present the Budget on February 1, these are some of the issues she could be expected to address when discussing the growing question mark on unemployment in India.



BJP campaigners, from Union Home Minister Amit Shah to local rabble-rousers like Kapil Mishra, frame the protests in this Muslim-dominated neighbourhood against the new citizenship law — that excludes Muslim migrants from Pakistan, Afghanistan and Bangladesh — as challenging not only the party and the government but also the sovereignty of the state. Last week, Mishra called Shaheen Bagh “a mini-Pakistan” and compared the election to an India-Pakistan contest, prompting the Election Commission (EC) to ban him from campaigning for two days. Shah picked up from where Mishra left and exhorted a rally to “press the button with such anger that the current is felt at Shaheen Bagh”.

So, when Anurag Thakur, a junior minister in the Narendra Modi government, hollers, “desh ke gaddaron ko”, and gets the crowd to howl, “goli maaro saalon ko”, he is, clearly, reading from a script that was first flaunted by Mishra. In doing so, Thakur, who has earlier packaged himself as the players’ voice in the cricket board, is now being a minion who echoes his masters, says what he thinks they want to hear.


The Election Commission, the institution with the remit to draw the red lines during an election campaign, needs to step in. Azam Khan and Pragya Thakur have been banned from campaigning for violating the Model Code of Conduct in the past.

The institutional credibility of the EC to ensure a fair campaign, no matter how high the office of the violator, is on test.

Chief Election Commissioner Sunil Arora and his colleagues should ensure due process and let Thakur & Co. know that they can get cheers, even votes, but they can’t get away with incitement to violence.


In a little more than a week, deaths due to coronavirus have multiplied by more than 20 times. Over a hundred people have succumbed to the mystery virus that originated in China’s Wuhan province and it has been confirmed in at least 10 other countries.

The Chinese authorities have acknowledged that the virus has affected 4,500 people.

But modeling by researchers at Imperial College London suggests that 70,000 to100,000 people could be affected.

The Indian government is reportedly considering steps to prepare for evacuating the country’s nationals from Wuhan.

The outbreak has evoked memories of the SARS epidemic of 2002-2003, which killed nearly 800 and affected more than 8,000 people worldwide.

It was also ascribed to a coronavirus and manifested similar symptoms — fever, cough and shortness of breath.

Antibiotics do not work against such viral pneumonia and there are no vaccines against them.

The coronavirus is a zoonotic virus — one that jumps from humans to animals.

The WHO estimates that three out of four new diseases that have infected humans in the past decade have been transmitted by animals.

Bats are known to be the carriers of virus such as Ebola, SARS and even the current coronavirus. How such viruses spills over to humans is still not clear.

But we do know that bushmeat markets — in China, Southeast Asia, Africa and other parts of the world — provide conditions for such pathogens to proliferate.

The recent virus is reported to have originated in a wet market in Wuhan. In a globalised world, chances of the flu spreading fast are high. But global cooperation to check such virus has, at best, been episodic. Viruses are a global challenge and it’s time they are seen as such.


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