Manufacturing Sector in India

1909 WordsDec 18, 20128 Pages
ARTICLE ON MANUFACTURING SECTOR IN INDIA Manufacturing key to growth above 6.5%, says RBI http://www.tribuneindia.com/2012/20120806/biz.htm#1 India needs to focus more on manufacturing in order to achieve GDP growth more than 6.5 %, Reserve Bank of India has said. The manufacturing sector has the scope for creating jobs for millions of people who leave other sectors such as agriculture, RBI Governor D Subbarao said in his keynote address here at Centre for Economic and Social Studies yesterday. His remarks assume significance in the backdrop of dwindling contribution of manufacturing sector to the GDP. India 's economic growth rate slipped to 5.3 % in the fourth quarter of 2011-12, the lowest in nearly nine years, following…show more content…
Other emerging economies have higher share to GDP such as Thailand, at 40 %, and in China, around 35 %. India is facing the unemployment problem largely because of lack of proper growth in manufacturing sector. In an economy at this stage development, a large chunk has to come from manufacturing. In the next 1520 years, India will see the largest migration in history that has ever happened from rural to urban areas. To feed the growing population, we have to increase our food productivity. Second, today 55 % of employment is still in agriculture, of which a large part of it is disguised unemployment. To increase agricultural productivity, we have to reduce this; where, then, will these people go? So India needs manufacturing to grow. It is also clear that manufacturing has to grow a couple of percentage points higher than that of GDP, to be able to increase its share and create the jobs. Keynesian theory: When we talk about Keynesian model, we have learned that government intervention is necessary for the economy to grow when the market fails to bring itself to equilibrium. The manufacturing sector has been stagnant for a long period now. The Indian market is huge enough with potential talent to provide it a good base for R&D growth. On the basis of the recent trends in terms of investments in particular
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