Speaker: Dr. Jayan John Thomas, Associate Professor, IIT Delhi
There is a growing divide in Indian manufacturing - between the organized and the unorganized sectors, and between managers and workers within the organized sector. This divide has been accentuated by macroeconomic policies adopted by the country over the past two decades. On the one hand, employment in India's factory sector (which is broadly equivalent to organized manufacturing) increased remarkably, from 8.5 million in 2004-05 to 13.4 million in 2011-12. However, despite the acceleration in the growth of factory employment, growth of total (organized plus unorganized) manufacturing employment decelerated in India after the mid-2000s. The increasing use of automated technologies and imported components have reduced the potential for growth of manufacturing employment, especially in small firms. At the same time, there has been a rise in informalization of the workforce within organized manufacturing, with the growing share of contract workers in the factory sector. The stagnation in public and private corporate investment that began in India during the late 2000s continues even today. With the reduction in public expenditures on rural areas, rural demand has been adversely affected. All of these have contributed to the slowing down in the growth of manufacturing employment in the country.