- The Indian economy is performing quite exceptionally compared to some of the most advanced and developed nations, which would be equivalent to an understatement. While these established are struggling to stay afloat courtesy of the changed geopolitical scenario wrought about by the pandemic-induced economic meltdown and the ongoing conflicts between the countries, the Indian economy has shown remarkable resilience to tide over the crisis. Not only the Indian economy has managed to clock a welcome GDP growth but also has shown consistent performances in negating the economic pundits who were hell-bent on raising concerns about the viability of overcoming challenges of a diverse nature.
PC: OEM News
- Due credit should accrue to the Union Finance Ministry and the Reserve Bank of India for initiating fiscally prudent measures from time to time that have played a huge role in where our economy is headed right now. Mind you, the Lok Sabha elections are just a couple of months away, and the finance minister recently presented a vote on account before the ensuing full-fledged budget. Some salient features during her speech deserve a thorough dissection. Let’s delve into it. The FM is right on investment in sunrise sectors. However, that has a fallout on the job market prevalent in the country. Note that the trends in the Indian economy’s investment pattern have sparked debate. A recent interview with a daily by the finance minister also made for interesting reading.
- She mentioned that the public focus has been on traditional sectors while investment has flowed into sunrise areas such as AI and material research. Of course, here observation is supported by a decade-long trend in the National Statistical Office’s data on investments. Between 2011-12 and 2021-22, the pattern of investments by private non-financial corporations underwent two important changes. In nominal terms, investment in the plant and machinery declined from 18.4% to 13.8% of the overall national investment. Investments classified as intellectual property products grew from 5.9% to 9.7% of the total during the decade. An absolute level of incremental investment in nominal terms in IP was greater than in plant & machinery.
- Yes, technological evolution has brought IP to the forefront. This is a good development but with a catch. Technology-driven growth in manufacturing in a country where many workers have limited skills has led to distortions. The percentage of the workforce in manufacturing declined from 12.1% to 11.4%. Some of them seem to have gone back to agriculture where the proportion of the workforce during the same period increased by 1.7 percentage points. The decline in employment intensity was sharper in the informal sector. This needs to be spruced up by expanding the scale to move people stuck in low-wage farm employment. Remember, there’s no substitute for improving human capital requiring sustained effort at all levels.