Subject: Economy

India's economic trajectory has witnessed significant shifts in labour market dynamics, with labour force participation playing a crucial role in driving growth amid structural transformations and policy interventions.

Labour-Led Economic Growth Analysis

• The recent economic growth has been characterized by increased labour force participation, evidenced by India's substantial workforce of 56.5 crore people distributed across various sectors.
• Sectoral Distribution shows significant labour absorption:
  • Agriculture: Employs 45% of the workforce.
  • Services: Accounts for 28.9% of employment.
  • Construction: Provides 13% employment.
  • Manufacturing: Engages 11.4% of workers.

Challenges in Labour-Led Growth

• Labour Productivity Concerns:
  • 2.80% decline in labour productivity (2022).
  • Nine out of 27 industries showed declining productivity in FY 2023.
  • Manufacturing sector witnessed productivity drops in eight sub-sectors.

Sustainable Growth Pattern for Job Creation

Policy Interventions

• Implementation of labour-intensive schemes:
  • PMEGP (Prime Minister's Employment Generation Programme).
  • MGNREGS for rural employment guarantee.
  • ASPIRE for rural entrepreneurship promotion.

Sectoral Focus

• Manufacturing Push:
  • National Manufacturing Mission focusing on labour-intensive industries.
  • Focus Product Scheme targeting footwear and leather sectors.
• Service Sector Enhancement:
  • Tourism promotion for employment generation.
  • Hospitality sector showing 35% productivity improvement.

Strategic Recommendations

• Annual creation of 78.51 lakh jobs in non-farm sectors.
• Balanced approach between employment generation and productivity enhancement.
• Skill development aligned with industry requirements.
• Technology integration for productivity improvement.

The path to sustainable economic growth lies in creating a synergy between employment generation and productivity enhancement through targeted interventions like Production Linked Incentive (PLI) schemes and Skill India Mission, ensuring both quantitative and qualitative improvements in India's labour market.