Skill development key for Make in India objective, says report

Sanjeev Sharma

Tribune News Service

New Delhi, February 27

The Economic Survey for 2014-15 presented today has clearly stated that the Prime Minister’s Skill India objective should be accorded high priority in order to realise the Make in India objective.

It has suggested that transformational sectors could be in registered manufacturing or services. Raising economy wide skills must compliment efforts to improve the conditions for manufacturing. Prime Minister Narendra Modi has made the revival of Indian manufacturing a top priority reflected in the Make in India campaign.

The Economic Survey concludes that Indian growth should balance the nation’s comparative advantage in availability of low skilled labour with skill development required by future generations to take advantage of lost opportunities. The registered manufacturing must be expanded to take leverage of India’s abundant unskilled labour. While “Make in India” occupies prominence as an important goal, the future trajectory of Indian development depends on both “Make in India” and “Skilling India”, the Economic Survey says.

The Survey concluded that efforts to improve the conditions of labour-intensive manufacturing need to be complemented with rapid skill upgrade because skill-intensive sectors are dynamic sectors in India and sustaining their dynamism will require that the supply of skills keeps pace with the rising demand of these skills, otherwise even these sectors might become uncompetitive.

However, the Economic Survey observes that manufacturing productivity in India lags behind other nations. The Survey points out that all Indian states exhibit declining share of manufacturing in the State GDP. In addition, the Survey identifies that registered manufacturing couldn’t bridge regional disparities in India. Also, registered manufacturing now in India has been identified as skill intensive which is not in line with the India’s comparative advantage in unskilled labour.

The Economic Survey identifies four factors for non-development of manufacturing as an engine of economic growth — distortions in labour, capital, land and specialisation not in line with India’s comparative advantage in unskilled labour.

Citing an example, it notes that certain sub-sectors of services — financial services and business services, exhibit higher productivity levels than registered manufacturing. However, these sectors being highly skill-intensive (excluding construction) are out of line with the skill profile of the Indian labour force. They are unlikely to generate widely shared and inclusive growth.

Hence, the survey redrafts the question of manufacturing versus service. It posts that the real question should be whether India wants to concentrate on non-skilled labour-intensive sectors or the development of skill-intensive sector.