FM has the right to invest in the Sunrise field.But it affects the job market
Trends in investment patterns in the Indian economy have sparked debate. In a post-Budget interview to TOI, FM said that while public attention is on traditional sectors, investment is flowing into rising sectors such as AI and materials research.
IP, investment magnet | Her observations are supported by ten-year trends in investment data from the Office for National Statistics. From 2011-12 to 2021-22, investment patterns by private non-financial companies underwent two important changes. In nominal terms, investment in plant and machinery fell from her 18.4% to 13.8% of total national investment. Investments classified as intellectual property products increased from 5.9% to 9.7% of the total over this ten-year period. Nominally, the absolute level of increase in investment in intellectual property (IP) was greater than in investment in plant and machinery.
Impact on the job market | Advances in technology have put intellectual property at the forefront. This is a good development. However, it has some negative effects on the job market. Technology-driven manufacturing growth is creating distortions in a country where many workers have limited skills. According to GOI employment data, from 2017-18 to 2022-23, the share of the manufacturing workforce declined from 12.1% to 11.4%. Some of them appear to have returned to farming, with their share in the labor force increasing by 1.7 percentage points over the same period.
Long-term phenomenon | The employment intensity of investments in India has been declining for decades. It follows a global pattern. According to a study by Azim Premji University, after adjusting for inflation, the number of jobs created for every Rs 1,000 crore of investment fell between 1994 and 2015. In the factory, an investment of Rs 1 billion created 33 jobs in 1994, but by 2015 this had declined. For 8 jobs.
Small is not the answer | The decline in employment intensity was more pronounced in the informal sector. In the family business unit, in 1994 he invested 1 billion rupees and created 4,615 jobs. In 2015, the same investment created just 702 jobs.
Double effort | Two solutions must be run at the same time. There is an urgent need to find solutions by removing constraints that prevent labor-intensive companies from scaling up in sectors such as clothing. It would provide an easier entry point for people stuck in low-wage agricultural employment. In the long run, there is no substitute for improving human capital. It requires sustained effort at all levels.
This article was published as an editorial opinion in the print edition of The Times of India.
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