Unlocking India's Potential: Enhancing Labour Productivity for Sustainable Growth

Image Source: EY

As India strives for sustainable and inclusive economic growth, enhancing labour productivity has emerged as a critical strategy. Labour productivity is the most significant determinant of long-term economic growth, with a 1% increase in productivity translating to an equivalent rise in GDP per capita. This growth is essential for addressing challenges like asset price inflation and funding the net-zero transition.

Key Highlights:

Productivity Growth: India has achieved impressive annual productivity growth of 5.6%, driven largely by capital investments. However, there is still room for improvement, as India's capital stock per worker remains lower than that of China and Central Europe.

Human Capital Development: Investing in human capital through education and skills development is crucial for enhancing productivity. India aims to become the "Talent Capital of the World" by focusing on foundational competencies, job-specific expertise, and future-ready capabilities.

Labour Market Reforms: Flexible labour laws and initiatives like the e-Shram portal are vital for creating jobs and attracting investments. These reforms help formalize employment, ensuring better job security and benefits.

Inclusive Growth: The government is promoting inclusive growth through initiatives in education, healthcare, and infrastructure. Enhanced female labour force participation and digitalization are bridging employment gaps and fostering economic progress.

By prioritizing productivity and human capital development, India can achieve sustained economic growth while ensuring that benefits are shared equitably across society.

Source: Financial Express, Nextias, Economic Times