Added on: 5/26/2013 3:35:51 PM
Slowing Manufacturing Growth in India - What this Means
Although experts anticipated a growing manufacturing growth in India, the latest economical numbers show that theopposite is true. Many investors started to leave India because of the laws,the lack of a strong infrastructure and the power shortages slowing down themanufacturing growth. The power supply is one of the biggest problems forslowing the manufacturing, many orders were cancelled. Adding to that thedisconnected roads and the lack of infrastructure, the manufacturing has slowedin India since January.
So, what caused this?
Looking at the economy in India, the labor force has shifted across different fields, from agriculture to manufacturing and frommanufacturing to services. This lead to an increase of productivity in the lastdecades. However, as labour moved from field to filed concentrating mostly onservices rather than agriculture and manufacturing, the overall consequence isa reduction in the anticipated growth and productivity.
India has mostly small scale industries, sothe competition with the big manufacturing companies from China for example, ishuge. The vast majority of Indian establishments have less than ten employees.This means that they are less productive in comparison with big manufacturersand the technology is outdated. Also as the industrial firms allowed smallcompanies with a low rate of productivity, this also contributed to the slowingprocess in the manufacturing sector.
Regarding migration in India, this isanother slow process that contributed to the decrease in manufacturing growth.Because of the multitude of dialects spoken in India, people move within arestricted distance and very rarely from state to state and from rural areas tourban ones. Also, as there is no bankruptcy law in India, the unprofitablebusinesses needing the government approval before making the employeesredundant and closing down the company.
As the state owned companies are still at alarge scale, and it is a proven fact that the privately owned businesses aremore profitable then the state ones, this could be another factor in slowingthe manufacturing growth in India.
In conclusion, elements like poorinfrastructure, lack of migration, the monopoly or state businesses are just afew elements that contributed to a decrease in the manufacturing growth inIndia.
aniket Replied on 3/31/2015 at 5:54 PM
Informative article-Thanks for sharing.