One of the biggest reasons for India's slowing growth is the laggard growth of its manufacturing sector. The contribution of the manufacturing sector has stagnated at about 16% of the Gross Domestic Product (GDP). This is significantly lower than many of its Asian peers. For instance, China's manufacturing sector has grown phenomenally from 2.9% of GDP in 1991 to about 34% of GDP now. China's share in world manufacturing is 13.7%, whereas India has a miniscule share of just 1.8%.
Why is India's manufacturing under duress? If India-born British economist Meghnad Desai is to be believed, the root problem that's plaguing India's manufacturing sector is rigid labour laws. As per him, there is pressing need to initiate labour reforms and make labour laws flexible. The other point that he raises is the need to improve productivity to remove poverty. But these factors point at one common problem. India has failed to harness the potential of what it claims to be its demographic dividend. It is high time Indian policymakers take steps to address these important issues.
Why is India's manufacturing under duress? If India-born British economist Meghnad Desai is to be believed, the root problem that's plaguing India's manufacturing sector is rigid labour laws. As per him, there is pressing need to initiate labour reforms and make labour laws flexible. The other point that he raises is the need to improve productivity to remove poverty. But these factors point at one common problem. India has failed to harness the potential of what it claims to be its demographic dividend. It is high time Indian policymakers take steps to address these important issues.
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