Prof D. Mukhopadhyay
Undoubtedly, it is a matter of satisfaction that India has emerged to be the 5th largest economy on the globe, but that should not become a cause of self-complacence . Yes, days of the early 1990s seem to have been a nightmare owing to economic mismanagement prior to the era of the late P. V. Narasima Rao, the then Prime Minister of India, who conceptualised and implemented the dawn of a new economic age, known to be the ‘market economy’ . To recall the memory, India had to pledge her gold reserves to the United Kingdom to procure foreign exchange to meet the minimum requirements of foreign exchange in order to transact in the international market. Of late, India has been tagged as ‘Emerging Economy’ a notch above the league of the developing economies . The Republic of India is ambitious, which is quite obvious, to become ‘everybody’ from today’s ‘somebody’ latest by 2047. So, it is quite apt at this juncture to remember Robert Lee Frost and converge our ambition with reality by chorusing with Frost ,’…. And miles to go before I sleep’ and particularly, the manufacturing sector and agricultural sectors need more attention from the policy makers, strategy formulators and the executive organs of the national economy. Mother India has improved her performance in the manufacturing sector and service sector as well, but much more needs to be achieved. The locus standi of the Indian manufacturing and service sectors’ performance in terms of job creation and jobs sharing during last 30 years, 1991-2021, can be viewed from the following exhibit based on the data source of the World Bank.
Change in Job Creation/Sharing (%)
During 1991-2021
Countries Manufacturing Service
Sector (%) Sector (%)
India 15-25 22-31
China 21-28 19-47
Vietnam 08-33 17-38
Bangladesh 13-22 23-41
Indonesia 14-22 33-49
USA 25-19 73-79
World 22-23 35-50
It may be observed that India’s increase in job sharing in the manufacturing and service sector is 166.667% and 141.090% as on 2021 against the Base Year 1991 respectively, during the last 30 years, whereas, the same upward change in China is 133.333% and 247.36% respectively and a rise in the service sector is quite eye-catching, reflecting the magnitude of the shift from the manufacturing sector to the service sector is quite significant. Again, Vietnam’s performance in terms of rise in job creation and sharing in both sectors is quite an optimistic trend in terms of 412.50% and 223.53% respectively. Bangladesh has also been showing quite an encouraging picture, representing 169.231% and 178.261% in manufacturing and service sectors respectively in 2021 against 1991. In the case of Indonesia, there are 157.143% and 148.485% representing a rise in job sharing in the manufacturing and service sectors respectively and the same is observed to be at 76 %, attributed with a decline trend and a rise of 108.220% in the manufacturing and service sectors, in the USA, whereas the world as a whole, 104.545% and 142.857% rise in manufacturing and service sectors respectively could be noticed. Further, by and large, India’s upward change in job sharing both in manufacturing and service sector is above the world’s average. However, India should not only keep China in view but also Vietnam, Bangladesh and Indonesia’s rate of upward change in job sharing or creation shown at quite a higher magnitude than India. To be more specific, Vietnam’s rate of upward change in job sharing is the highest among all the countries shown in the above exhibit. It may be worth mentioning that Vietnam is the prominent destination of Foreign Direct Investment (FDI) and preferred to India.
The proximate reasons for Vietnam as a preferred destination of FDI and Foreign Portfolio Investors(FPI) include the quality of education, quick absorption of technology, transparency in the judiciary and public administration, speed in the bureaucratic process of clearance, strict social discipline and law and order system, prevalence of the rule of the law, minimal magnitude of corruption etc which are the factors taken into consideration by every investors while measuring the degree of risk involved in the incidence of parking their investment in any country. The US economy is, by and large, service-sector dominant and there is a 24% decline in the manufacturing sector and a rise by 8.220% in 2021 against 1991 respectively, evidence a kind of stagnation in economic performance in terms of job creation and sharing in the USA. The rate of change in job creation and sharing in China outperformed the USA. Again, it is interesting to note that the rate of change in job creation and sharing in Vietnam outperformed China. Therefore, besides, volume of economy, the magnitude of rate of change in job creation and sharing is also important for consideration and India should take into cognizance.
According to the Economic Survey Report , 2023, India’s GDP touched $3.75 trillion reflecting a milestone from around $ 2.00 trillion in 2014, reflecting about 87.50% average growth rate during the last 9 years and India is expected to achieve her preconceived economic position in the world if the present growth rate continues uninterruptedly. India needs to closely watch and monitor her investments in an industrial conducive climate to boost up employment in all sectors of the economy. Lord John Maynard Keynes’s economic revival and sustainable strategy stands on the foundation of ‘investment-Employment-Income leading to consumption and saving depending, upon the propensity to consumption and saving part of the disposable income is readily available for capital formation and this macro economic approach for economic growth , development and sustainability is perhaps devoid of substitute even today. Further, India has inherited an agriculture based economy and the importance of the agricultural sector should not be diminished keeping in view the priority of food security of 142 billion Indians. Therefore, India needed to be balance between manufacturing, service and agricultural sectors in order to achieve 360degree economic growth resulting to welfare and well-being of every citizen of India. The manufacturing and service sector together offer 56% of jobs and the reaming 44% may logically be attributed to the share of the agriculture sector and other sectors .
The immediate challenge for the government is to offer a congenial investment environment and ensure that investors shall be facilitated all-round and the investors and entrepreneurs shall have a minimum business risks arising out beyond human control. Further, competition and competitiveness should be attached to the highest degree of weight-age for long-run sustainability and growth. It may be mentioned that Prof. Michael E. Porter, the renowned Harvard Professor of Strategy, prescribed long ago that product differentiation, cost leadership and focus are the basic constituents of enterprises’ competitiveness besides the ‘Five Forces’ Model ‘ for economic growth and sustainability in the economic environment driven by the theory market economy and India needs to up-skill her workforce with quality education of the standards and benchmark in place in the developed ecomies besides technogy savvy doability. Under the prevailing circumstances, the management accounting techniques such as target costing, life cycle costing, throughput accounting, beyond-budgeting, lean-manufacturing, six-sigma quality management technique, Kaizen Costing, blue-ocean strategy etc are indispensable for implementing and practicing in order to secure cost leadership and enhance competitveness in the market driven economic system for sustainabiity. Further, more and more research initiatives are called for in order to explore the need-based management approaches and balancing the economic activities in terms of ‘aggregate demand and aggregate supply’ for overall sustainability. It may be relevant to mention that the world economy was eclipsed by a catastrophic disaster by the attack of Covid Pandemic 2019, causing a severe imbalance between ‘aggregate demand and aggregate supply’.
The Indian leadership should keep watch over the Russia-Ukraine war and its consequences directly or indirectly on the national economy. India should explore more potential markets in South Asia, Middle East, Central Asia, Africa and South America. It is to not only create a market for Indian goods and services, but to continue her stake .Recently, Iran has tilted to procuring ‘Basmati Rice’ from other countries in stead of India due to exhaustion of INR currency as a consequence of US economic sanctions. Iran is secured market for ‘Basmati Rice of India . Similarly, India is also observed to be losing her dominance in tea and coffee products and other exportable aggro-products. It is mentioned elsewhere that India cannot afford to undermine her agriculture sector while concentrating on manufacturing and service sectors and what she needs is a harmonious balance between manufacturing, service and agriculture sectors and create an investors’ friendly climate for investment in the agriculture sector for its modernization and use of technology for optimizing output and minimizing cost through adoption of inclusive cost management approaches through out the length and breadth of the economy in order to accrue the benefits of cost competitiveness in both the domestic and international market. An overall inclusive macro economic management strategy is recommended for achieving the set goal. India needs to be adequately armed for international market share against China, Vietnam and the US, although Indonesia and Bangladesh are performing well and should also be watched.
(The author is a Bangalore based Educationist and Management Scientist)
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