India: The Coming Rise in Labour Productivity

2004

Raghbendra Jha

In 2000 the proportion of the Indian population in the working age group (the 15-64 age bracket) was 60.9 per cent. The UN’s Population Division has projected that this ratio will surpass the proportion of Japanese in this age group by 2012 and climb to over 66 per cent in 30 years. At that point in time it will be poised to overtake China’s population in the same age group. This is a very significant projection.

At the same time a quiet revolution is taking place in nutritional status in India. Table 1 (based on the author’s computations) reports on the proportion of the rural population in India that is nutritionally deprived. This assessment is based on the assumption that all persons are working according to one of three work norms – sedentary, moderate and heavy. These three norms imply different minimum calorific requirements with the ‘sedentary’ norm being the lowest and the ‘heavy’ norm being the highest. Results are reported for three time periods – 1987-88, 1993-94 and 1999-2000 for the rural sector where almost 70 per cent of India’s population (of 1,027,015,247 according to the 2001 census) resides. This table indicates the sharp decline in nutritional deprivation that has occurred, particularly in rural India. By all accounts, an at least comparable decline has occurred in the incidence of under-nutrition and its severity in India’s urban sector. Further, during the period 1991 to 2001 the literacy rate climbed from 51.54 per cent to 65.38 per cent in the aggregate; and from 63.3 per cent to 75.85 per cent for males and from 38.79 to 54.16 per cent for females, according to figures from the 2001 Census of India.

Table 1 Calorie Deficiency in Rural India

Sedentary Work Norm

 

1987-88

1993-94

1999-2000

Proportion of rural population below minimum norm

0.55

0.28

0.11

Moderate Work Norm

Proportion of rural population below minimum norm

0.69

0.38

0.188

Heavy Work Norm

Proportion of rural population below minimum norm

0.87

0.59

0.441

Clearly India’s labour force is undergoing rapid structural transformation: the proportion of the working population is rising; the labour force is less nutritionally deprived and increasingly literate. These changes imply substantial quality improvements in the Indian labour force. Economic theory and international experience suggest that this will lead to sharp rises in labour productivity and an upward shift in the trend long run rate of growth of the Indian economy.

WATCHPOINT: This rise in labour productivity will depend, in part, on the success of legislation – particularly an exit policy- to make the labour market more flexible. A substantial move in this direction is to be expected from the new government that will be installed after the parliamentary elections to be held at the latest by October 2004.

 

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