GS3 PYQ (Mains Answer Writing): Labour Intensive Techniques | Indian Economy for UPSC CSE PDF Download

Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports. (UPSC MAINS GS3 )

A key lacuna in India’s growth has been slow growth of manufacturing in labour-intensive sectors and concentration in capital intensive manufacturing sectors like auto parts, chemicals, software and pharmaceuticals. None of these sectors employ low-skilled workers in large numbers.

The movement of workers out of agriculture into export oriented manufacturing industry has been especially slow due to requirement of a certain level of skill which is absent amongst most labourers – resulting in jobless growth. Lack of ease of doing business in India due to labour market rigidities, tax uncertainties, impediments to entrepreneurial growth have further hindered the expansion of a labour-intensive export manufacturing in India.
Measure to Promote Labour-Intensive Exports

• Ease Labour Law regulations such as wide-ranging and complex laws, mandatory contributions by low-paid workers, and lack of flexibility in part-time work etc. The government’s decision to rationalise around 38 Labour Acts by framing 4 labour codes is a positive step in this regard to encourage exporters to hire more labour.
• Promoting Labour-Intensive Sectorslike apparel sector, leather and footwear also have high export potential.
• Uninterrupted and Cheap Power Supplyfor labour-intensive manufacturers, who operate on low profit margins and for whom high electricity costs can be a make or break issue.
• Promoting the Role of SMEsas labour intensity of SMEs is four times higher than that of large firms by providing adequate state support. MUDRA Bank should be promoted for this.
• Skill developmentto fill the gap of semi-skilled and skilled workers that manufacturers in India face frequently.
• Poor credit availability for MSME: MSME are largely responsible for labour intensive exports, however, our credit structure is biased in favour of large corporates which are capital intensive, who not only get credit cheaply, but also very easily.
• In addition, trade is necessary for vertical FDI, and trade costs are high in India, because of inefficient infrastructure, burdensome regulatory environment, and poor trade facilitation. India’s labor laws hobble labor-intensive manufacturing.

Further, the tax rationalisation under GST as well as the push for Entrepreneurship under Start-Up India and Stand Up India can also provide a suitable and favourable environment for labour-intensive exports.

Topic covered - promotion of labour intensive techniques.