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Niti Aayog in favour of shifting workforce from agriculture to industry to accelerate growth

11 Jul 2017 Evaluate

With a view to accelerate economic growth, Niti Aayog vice chairman Arvind Panagariya has said that India need transition of the massive workforce out of agriculture into industry and services, and encourage small enterprises to grow big. He added that underemployment is probably the biggest economic challenge India face. He also said that at the aggregate macro level, bringing about rapid growth is most critical as no major success in poverty alleviation is likely to happen without it.

Panagariya said that if they set the output per worker in agriculture equal to one, then output per worker in industry is 5 and that in services 3.8. In other words, even at the current productivity levels in each sector, moving one percentage-point workers out of agriculture into industry can increase the Gross Domestic Product (GDP) by 1.5%. He said that if India wants to increase total expenditures on education, health and infrastructure then the country has only two options, either cut expenditure on something else or increase the GDP. Unfortunately, ability to cut the expenditure on items other than education, health and infrastructure is extremely limited, therefore raising the GDP is the only practical option.

Pointing that the underemployment is probably India’s biggest economic challenge, Niti Aayog vice chairman said enterprises are excessively small and they have remained so. He further said that they must specifically look for policies that keep the enterprises small. Micro must grow into small, small into medium and medium into large. He added that the level of per-capita income limits the scope for redistribution.


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