Investment-driven growth will continue to be India’s guiding policy under Modi 3.0, Morgan Stanley has said in a report, raising hopes that the focus will remain on manufacturing which has already become a mainstay to attract foreign investment and providing jobs to the country’s youths despite the constraints of coalition politics.
“Prime Minister Modi focussed on the narrative of being on the path of a developed economy after the alliance parties meeting which nominated him as the OM candidate last week, implying growth will continue to be a top policy priority,” the multi-national investment bank and brokerage firm mentioned in a report.
FDI in manufacturing
While the government has been laying a lot of emphasis on attracting FDI, the results have started showing. In the period 2014-23, manufacturing activities in India pulled equity investments of nearly $147 billion, which is 55% higher than the $96 that came in 2005 and 2014.
Just three months ago, the ILO emphasised in a report that India needs to focus on manufacturing since it is the only sector that can provide the huge number of blue-collar employment that the country needs.
With brands such as Apple, India is trying to emerge as a manufacturing hub for companies trying to outsource their products from India. In the 19 months ending January 2023, this tech giant alone created more than a lakh of blue-collar jobs in the country.
With its production going on full-steam, it has so far generated employment for over 1.5 lakh youths, most of them being in the age group of 19-24.
Apart from mobile phones, sectors such as electronics, green energy, automobile and pharmaceuticals are high-potential sectors that can attract a lot of investment and generate employment.
Domestic giants
Domestic majors such as the Tatas and Dixon Technologies are just two examples of how Indian investors are making it big in the outsourcing sector.
The PLI scheme that links incentives with employment generation is said to have attracted investment of Rs 1.07 lakh crore till December 2023 that created employment for more than 7 lakh people.
The New York-based brokerage also said that India needs to crack a GDP growth rate of 8-10% every year to absorb its workforce. It also said that raising farm productivity and spending on infrastructure were also important in this matter.
‘No alternative’ to manufacturing
Significantly, Morgan Stanley’s observation comes barely three months after a report by the International Labour Organisation (ILO) that said that India had “no alternative” but to fall back on manufacturing for at least the next decade. According to a report jointly prepared by ILO and Institute for Human Development, this is the only way the country can hope to provide jobs to the 70-80 lakh youths who are added to the nation’s pool of job-seekers every year.
The report titled “India Employment Report 2024” highlighted the need for labour-intensive employment in manufacturing apart from emerging job-generating modern manufacturing and services sectors. The report also said that the MSME sector deserved greater focus.
The ILO report admitted the possibility of adverse impact of AI on jobs but mentioned that its impact could be more limited to back-office tasks. Many vibrant startups, tech developers and a robust digital infrastructure could all contribute to the creation of jobs, the report hoped.
Limitations of gig economy
The ILO report admitted that the digital economy and gig sector are generating jobs but also noted the relatively poor quality of employment.
“Digital platforms and the gig economy are creating many new jobs, but these jobs are largely temporary, informal, and non-standard work. Additionally, the ongoing demographic transition is poised to increase the demand for childcare and elderly care services,” the report reads.
Expert organisations such as Morgan Stanley and the International Labour Organisation have said that investment that generates manufacturing jobs can deliver employment in big numbers. Investment-led growth is also what Modi 3.0 assures. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
