Official estimates proves thatcurrently Indian economy is facing troubles in agricultural sector, factory output and joblessness.
Radical solutions are needed to address this issues and to revive the economy.
What is the status of Indian industries?
Exports have fallen by and large, and the recent cheer over monthly data is premature.
Organised manufacturing slowed to 1.2 per cent in the June quarter against 5.3 per cent in the preceding quarter.
Construction which is the second largest employment generator in India is undergoing its biggest slowdown since 2008.
Agriculture sector which sustains 50% of the population constitutes less than 12% of the GDP.
What are the troublesome areas of agricultural growth?
Majority of the youths belonging to farming households in India were not interested in pursuing farming as an occupation.
A large share of landless and marginal farmers preferred exploring livelihood options in cities.
Farm loan waiversare not being an effective solution, as many experts have pointed out, akin to only a temporary symptomatic relief to a deep-rooted problem.
Interventions on increasing agricultural productivity is only part of the solution, as it is often a supply surplus in perishables that induces price crashes leading to poor or no recovery and trapping the farmer in debt.
Many Farmersare facing a fragmented supply chain with grossly inadequate access to either infrastructure, the market, credit or proper insurance.
The inflation targeting mandate of the macroeconomic policy dispensation (RBI and finance ministry) is also problematic for farmers.
What are the worsening areas of industrial growth?
Manufacturing -During 2015-16, MSMEs made up almost as much as 50% of total exports.
According to latest estimates, MSMEs contributed 37.33% of total manufacturing output in the country.
Real estate -Latest CMIE data shows a stalling rate of 12.7% constituting projects worth Rs.1.27 trillion in realty sector, which is the mainstay of construction in urban India.
This is corroborated by flat cement output for some time now, as well as low capacity utilisation of about 65% in FY 2017.
Service sector - There are unprecedented layoffs in IT sector recently, and it is estimated that the hiring prospects are going to be bad until the first quarter of 2018.
And then there is the potential impact of artificial intelligence on relatively low end service sector jobs.
Job creation - Some reports suggest that the MUDRA initiative aimed at creating microenterprises across India’s villages, towns and cities has proven to be a dark horse.
There are no rigorous evidence about MUDRA’s impact on job creation and incomes.
What needs to be done?
A specific push for value chain up gradation including food processing, packaging, etc. by cooperatives or farmers groups / producer companies can be explored.
To create mass employment in industry, the manufacturing sector needs to take the lead and perform.
Farmers can be easily absorbed in manufacturing without much additional skilling, and with an export-oriented thrust.
Government-backed infrastructure projects such as ‘Housing for All’ reflect some hope for construction sector job creation nonetheless.
There is a positive spike in youths enrolled in formal higher education, the economy has to be ready to offer young people jobs 1 million every month.
