Indicating slowdown in labour productivity growth in Indian organized manufacturing sector, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that labour productivity is the most powerful engine of driving and sustaining manufacturing growth, and making the sector globally competitive.
Ind-Ra further noted that longer and sustainable labour productivity growth is dependent on investments in innovation, knowledge, and intangible capital by businesses, and governments’ commitments towards structural reforms and therefore, it believes a lot needs to be done quickly both on the policy front as well as companies’ level.
As per the report, labour productivity in Indian organised manufacturing sector grew at an average annual rate of 3.7% during FY16-FY18 (FY11-FY15: 7.4%, FY06-FY10: 10.3%, FY01-FY05: 9.6%). However, it fell to 2.6% and 2.9% in FY17 and FY18, respectively. During the high growth phase of FY04-FY08, labour productivity grew 14.2%.
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