Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
In News:Low- & high-skilled jobs: Gap rising as manufacturing stagnation continues
What are the implications of India shifting directly from agriculture to services? Suggest measures taken by the government to address these issues and aid in balancing the economic shift.
India’s direct transition from an agrarian economy to a service-oriented one, often termed “premature deindustrialization,” has multifaceted implications encompassing both positive and negative aspects that impact the economy and society.
Positive Implications
- Economic Growth: The services sector has become a significant driver of economic growth, contributing nearly 53.89% to India’s Gross Value Added (GVA) and accounting for almost half of the national economic value, which enhances overall national income.
- Employment Opportunities: The growth of the service sector, especially IT and finance, has created many jobs in urban areas, leading to an increase in well-paying white-collar jobs with better working conditions compared to traditional agricultural work.
- Global Integration: The growth of the services sector has integrated India more closely with the global economy, attracting foreign investment and boosting exports, particularly in IT and ITES (Information Technology Enabled Services).
- Increased Productivity: Services typically offer higher productivity levels compared to agriculture, contributing to improved living standards for those employed in this sector.
Negative Implications
- Rural-Urban Divide: The services sector is predominantly urban-centric, which can exacerbate disparities between rural and urban populations, leaving those reliant on agriculture at a disadvantage.
- Decline in traditional industries such as apparel and footwear, which provide livelihoods for millions of low-skilled workers.This has led to a consistent decline in the creation of low-skilled jobs across the country.
- Lack of Industrial Base: A strong industrial base is essential for sustainable economic development and self-sufficiency. India’s premature deindustrialization may limit its long-term growth potential.
- Underemployment Issues: While agriculture’s economic contribution has declined, many individuals still depend on it for their livelihoods; the slow growth in manufacturing has not created enough jobs to absorb the workforce transitioning from agriculture.
- Skill Gaps: The rapid growth of the services sector requires specialised skills that many workers lack, resulting in a significant skill gap that must be addressed through education and training initiatives.
- Vulnerability to Market Fluctuations: Over-reliance on the services sector, particularly IT and outsourcing, makes the economy susceptible to global market fluctuations and changes in foreign policies affecting trade.
- Neglect of Agriculture: The shift may lead to underinvestment in agriculture, which remains crucial for food security and the livelihoods of a substantial portion of the population.
Government Measures to Address These Issues
- Investment in Mechanisation: The government promotes agricultural mechanisation and irrigation to enhance productivity.
- Support for Food Processing: Policies facilitate the establishment of food processing units to reduce post-harvest losses and enhance value addition
- Developing the manufacturing sector by Make in India Initiative,Production Linked Incentive (PLI) Scheme,PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks,d setting up of 12 industrial smart cities under the National Industrial Corridor Development Programme (NICDP) etc
- Skill Development: Government initiatives like Skill India aim to equip the workforce with the skills required for the service sector and other industries.
- Social Safety Nets: Government programs like the National Food Security Act and MGNREGA provide social safety nets for vulnerable populations.
While the shift to services has brought significant benefits to India, it is important to address the challenges associated with this transition to ensure sustainable and inclusive economic development.
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