India needs 6.3pc labour productivity growth to attain 8pc hike in GDP: Ind-Ra

Sectors such as manufacturing, electricity, gas, water supply, transport, storage and communications contributed significantly to the overall labour productivity during FY00-FY16. The sectors that lagged are construction, agriculture and mining.

9th Jan 2020
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India Ratings and Research on Thursday said that the country will have to increase its labour productivity growth to 6.3 per cent to attain 8 per cent economic growth.


The labour productivity growth in FY19 was 5.2 per cent.


"India will have to raise its labour productivity growth to 6.3 per cent to achieve 8 per cent GDP growth. And to attain nine per cent growth, labour productivity growth will have to be raised to 7.3 per cent," India Ratings and Research (Ind-Ra) said in a statement.
GDP


This is 40.4 per cent higher than the level attained in FY19, it said.


Given the growth slowdown, this looks unlikely in the near term, but is not an insurmountable task, according to Ind-Ra.


"Such levels of labour productivity growth have been achieved in the past...India's labour productivity growth, like other nations, came under pressure in the aftermath of the 2008 global financial crisis, especially during FY11-FY15," it said.

However, it recovered thereafter and grew at 5.8 per cent during FY16-FY19, it added.


The challenge on the productivity front for India is two-fold, it said. "First, how to raise the overall labour productivity to a level that delivers the required GDP growth rate, and secondly how to lift the labour productivity in the lagging sectors so that growth is more evenly balanced and sustainable over the medium- to long-term."


Sectors such as manufacturing, electricity, gas, water supply, transport, storage and communications "contributed significantly to the overall labour productivity during FY00-FY16".

The sectors that lagged are construction, agriculture and mining.


As per the first advance estimates of the national income released by the National Statistical Office (NSO), the manufacturing sector output growth will decelerate to two percent in 2019-20, down from 6.9 percent in the previous financial year.


Likewise, the construction sector growth is estimated at 3.2 percent as against 8.7 percent in 2018-19.


(Disclaimer: Additional background information has been added to this PTI copy for context)


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