When it comes to manufacturing, size does matter. And this is the mantra that the Chinese policymakers have adopted to such devastating effect that they have left competitors like India far behind. A recent study by the ADB (Asian Development Bank) and analyzed by LiveMint, has revealed that -micro enterprises that employ less than five people account for 61% of manufacturing employment in India as compared to just 8% in China.
Now, combine this tiny piece of statistic with another one which says that on an average, labour productivity in micro-enterprises is just one third of that existing in small enterprises (establishments that employ less than 50 people) and it becomes clear why India lags China in manufacturing. Not only this, there is enormous wage differential between micro and small and large enterprises, thus giving rise to huge inequality.
Clearly, if India has to become a force to reckon with in manufacturing and foster an environment of more equitable income distribution, constraints that prevent larger enterprises from taking shape like restrictive labour laws, red tapism and many others will have to be removed on a priority basis. Otherwise, the huge demographic advantage that we have is in danger of grave under utilisation.
No comments:
Post a Comment