India’s Employment Growth: Capital-Intensive Sectors Lead the Way
India has seen significant employment growth in capital-intensive sectors compared to labor-intensive ones, according to a report by Goldman Sachs. The government has focused on promoting the assembly of electronics, machinery, and pharmaceuticals, leading to impressive export growth in these areas. Over the past decade, capital-intensive sub-sectors like chemicals and machinery have experienced major growth in exports and employment, reflecting India’s progress in building a robust export base for high-value products.
Despite this growth, labor-intensive sectors still hold a larger share of jobs, with 67% of manufacturing jobs in areas like textiles, food processing, and furniture. The government’s Production-Linked Incentive (PLI) schemes have primarily targeted capital-intensive industries but are now expanding to support labor-intensive sectors such as textiles, footwear, and toys.
The construction sector remains a major employment generator, providing jobs for about 13% of the workforce. It has the highest labor income share among broader sectors, making it significant for both employment and income improvement. The service sector, led by business services and retail trade, comprises 34% of total employment, with technology advancements and e-commerce transforming retail and creating new job roles.
India’s IT industry has also played a crucial role, reaching USD 245 billion in revenue by FY23 and adding about 1.9 million jobs over the last eight years, boosting the total workforce to around 5.4 million.
Doubts Revealed
Capital-Intensive Sectors -: These are industries that require a lot of money to start and run because they need expensive machines and equipment. Examples include chemicals and machinery.
Labor-Intensive Sectors -: These are industries that need a lot of people to work, rather than machines. They include sectors like textiles and agriculture.
Production-Linked Incentive schemes -: These are government programs that give financial rewards to companies based on how much they produce. The aim is to encourage more production and create jobs.
Service Sector -: This part of the economy provides services rather than goods. It includes jobs in IT, banking, education, and healthcare.
IT -: IT stands for Information Technology. It involves using computers and software to manage information, and it’s a big part of the service sector.
