India may not be able to grow simply by recruiting its many unskilled people to manufacture goods cheaply, the latest ICRIER paper said.
It recommended that the conventional wisdom to focus on labour-intensive industries to create more jobs needs to be re-examined.
“Not only has the capital intensity of production been increasing sharply, but recent economic growth has benefited industries which rely more on skilled workers and capital as opposed to unskilled or low-skilled workers. Given these trends, the prospects for labour-intensive industrialisation appear bleak,” said the paper released by the Delhi-based think-tank.
“Unlike China and its neighbours, India may not be able to climb the ladder of development simply by recruiting its many unskilled people to manufacture goods cheaply.”
Increasing automation and rise in capital intensity of production has raised much concern about the ability of the manufacturing sector to create jobs for India’s rapidly rising largely low-skilled and unskilled workforce, it noted.