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India needs to raise labour productivity growth to 6.3% to achieve 8% GDP growth: Ind-Ra

09 Jan 2020 Evaluate

Underlining labour productivity growth of 5.2% in FY19, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that India will have to raise its labour productivity growth to 6.3% to achieve 8.0% GDP growth. As per the agency, to attain 9.0% GDP growth, labour productivity growth will have to be raised to 7.3% and this is 40.4% higher than the level attained in FY19.

Ind-Ra further said that given the growth slowdown, this looks unlikely in the near term but is not an insurmountable task, adding that such levels of labour productivity growth have been achieved in the past (labour productivity growth FY05-FY08: 8.5%). it said that India’s labour productivity growth, like other nations, came under pressure in the aftermath of the 2008 global financial crisis, especially during FY11-FY15 (5.0%). However, it recovered thereafter and grew at 5.8% during FY16-FY19.

Besides, India Ratings believes the quantity of labour along with the non- information and communication technology (ICT) capital will continue to contribute significantly to the GDP growth due to the demographic composition. But, any decline in the contribution of quality of labour and ICT capital is a matter of concern.

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