Focus on skill development to achieve 'Make in India' goals: Economic Survey

Economic Survey 2014-15 has highlighted on the need to initiate skill development programmes to achieve the government’s objective of ‘Make in India’ campaign. As a prelude, the Survey states that, in order to bring about expansion and structural transformation, India should utilise its dominant resource of unskilled labour.
 
Economic Survey has made a distinction between registered manufacturing (formal sector) from the general manufacturing which covers informal sector as well. The survey has recognised that registered manufacturing as having “the potential for structural transformation” as registered manufacturing exhibits high productivity compared to other sectors of the economy.
 
However, the Economic Survey has observed that manufacturing productivity in India lags behind other nations, and all Indian states exhibit declining share of manufacturing in the state GDP. In addition, the Survey identified that registered manufacturing could not bridge regional disparities in India. In addition to this, registered manufacturing now in India has been identified as skill intensive which is not in line with the India’s comparative advantage in unskilled labour.
 
The Economic Survey has identified four factors for non-development of manufacturing as an engine of economic growth distortions in labour market, capital market & land market, and secialisation not in line with India’s comparative advantage in unskilled labour.
 
Certain subsectors of services – financial services and business services, exhibit higher productivity levels than registered manufacturing. However, these sectors being highly skill intensive (excluding construction) are out of line with the skill profile of the Indian labour force. They are unlikely to generate widely shared and inclusive growth. However, the survey observes that the service sector has the potential for domestic growth convergence across regions.
 
The Economic Survey suggested that Indian growth should balance the nation’s comparative advantage in availability of low skilled labour with skill development required by future generations to take advantage of lost opportunities. The registered manufacturing must be expanded to take leverage of India’s abundant unskilled labour. “While ‘Make in India’ occupies prominence as an important goal, the future trajectory of Indian development depends on both ‘Make in India’ and ‘Skilling India’,” said the Economic Survey.