India is often cited as the next major economic powerhouse – perhaps even overtaking China. This is based on India’s recent record in moving up the international GDP league.
However, look just below the surface and you will see that this impressive growth has largely been fuelled by widening employment participation. India has been very good at creating jobs. It has been significantly less successful in creating productivity. India’s GDP per worker is very low. This is OK for growth in certain sectors but limits India’s ability to compete in some sectors – and in overall terms.
India knows it has to improve and increase skills – and is trying to find ways of doing just that. But this is much trickier than simply employing more workers. It is, however, essential to securing and sustaining long-term growth in productivity.