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Doubling India's labour productivity in the next decade: Why and how | Current Affairs | Vision IAS

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Doubling India's labour productivity in the next decade: Why and how

2 min read

Faster Growth in Labour Productivity

Faster growth in labour productivity—output per worker or per hour—is crucial for India's development goals. Nobel laureate Paul Krugman emphasized, "Productivity isn’t everything, but, in the long run, it’s almost everything." Improving productivity is vital for raising living standards and personal empowerment, aligning with the vision of Viksit Bharat.

Comparative Productivity

In 2020, American workers were nine times more productive than Indian workers, mirroring the income gap. China doubled its productivity in the decade before 2020, setting a benchmark for India to aspire to greater productivity improvements.

Factors Influencing Productivity Growth

  • Stanley Fischer identified three key factors: 
    1. Capital Investment: Includes physical (machinery, transport) and intangible (software, design).
    2. Improved Labour Quality: Education, vocational training, and experience boost workforce capability.
    3. Systematic Innovation: Innovations like AI and computer-aided design increase resource value.

India's Unique Position

India, with a growing labor force, differs from advanced economies like the US. Emerging markets like India have significant unmet demand for manufactured goods, which can drive productivity as incomes rise.

Key Challenges and Innovations

  • India's transition from agriculture has been slow, with success in services exports.
  • Advanced countries' technological innovations present opportunities for India to enhance productivity without local invention costs.

Government's Role

  • Initiatives such as the Production-Linked Incentive (PLI) scheme, Skill India, and National Education Policy 2020 are critical.
  • States are also implementing reforms in skill development, agro-modernisation, and industrial growth.

Global Lessons

  • East Asia's focus on infrastructure and exports.
  • Germany's support for medium enterprises and vocational training.
  • Nordic countries' inclusive labour policies.
  • The US and Japan's investment in research and digital technologies.

Harnessing Emerging Technologies

Technologies like AI offer transformative opportunities. India must invest in digital infrastructure, ensure inclusive access, and enhance reskilling, particularly for rural workers.

NITI Aayog's Role

NITI Aayog is pivotal in aligning national and state policies, promoting skill development, empowering marginalized groups, and fostering innovation. Coordination between the Centre and states is crucial for inclusive growth towards Viksit Bharat by 2047.

  • Tags :
  • Viksit Bharat by 2047.
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