Why productivity is important in Indian economy
now Indian economy is 5th biggest and 3 trillion dollars economy, but if we look the potential of India these number seems less.India is the 2nd most populated and having huge number of youth that mean India has huge labour power. but the productivity of goods and service in Indian economy is very less as compare to other nations which are smaller than the India in the term of land and population.this situation land extra burden on the primary sector which is already struggling with the financial issues.if India increase its productivity of goods and service it can play a major role in the global value chain and become a supplement of china.now the question is what is productivity?
productivity described as the ration between the input and output of goods and services in the production system.
in other words we can say that productivity determined that to find a desirable output how efficiently factors like labour and capital is being used.
Why productivity is important ?
in the following aspect we will understand why productivity is important -
1. economic growth -
we can say that productivity of goods and services is directly related to economic growth of that country. without productivity a country can not sustain its export,and cant earn foreign currency and without foreign currency a country can not sustain in this time of globalisation. as we know that India imports lots of goods which need foreign currency so it is very important for India to maintain its productivity
2. increment in productivity beneficial for all -
If company produce more that mean government will gets more tax and can use this money in public welfare.
3. position of India in global value chain -
as a huge landmass and huge population India has the potential to be the worlds factory, so it is important for India to increase its productivity to became a hub of manufacturing in the world.
Reasons for India's low productivity
1. Small size of companies
in India the size of companies is smaller than the size of companies in other countries,because of that Indian companies can not invest in new techniques due to which input cost of product increases.
2. lack of skilled labourers -
according to a data in 2020, 34% of total problems of companies is related to non skilled labourers which increased to 60% in 2022.
 |
way forward
India should increases its productivity if India wants to be a 5 trillion economy. there are some steps which can help India to increase its productivity.
- make skill development programme more effective
- infrastructure improvements
- help companies to increase their size.
- make policies more market friendly.