My Views

Thursday, September 02, 2010

Manufacturing is not a good bet for India

Our industrialists keep harping for greater concessions for manufacturing sector. While I accept that we should have a strong manufacturing sector so that we are not unduly dependent on imports, we should examine what is the scorecard of manufacturing sector in our country in creating prosperity in the country. My arguments are:

1. Manufacturing creates wealth but for a few persons only.
2. Manufacturing is a poor pay master. Wage levels in Manufacturing hover near the minimum wage levels for a large number of employees. Number of permanent employees in Manufacturing who get good wages are going down progressively.
3. Manufacturing Sector is a poor pay master for Executives also. Even Engineering graduates are not prefering to join the sector.
4. Leaving aside Public Sector and a few large corporations, the investment in development of employees of manufacturing sector is in general low. Little development that may be available does not cause the people to catapult to a different standard/ level of living. Only incremental improvements are visible.

My conclusion is that higher GDP growth in manufacturing is not leading to proper distribution of wealth in society. Hence from the point of view of social development, we as a country should not place a larger bet on manufacturing than what is already provided.

I am open to debate on the topic.