India’s economy has returned to high rates of growth, according to the latest figures. In 2015-2016 the GDP growth rate reached 7.6%, up from 5.6% in 2012-2013. The challenge continues to be to ensure that economic growth translates into better labor market conditions.
The vast majority of workers in India are in temporary informal jobs. Although there has been a shift out of agriculture, construction has absorbed more workers than other sectors in recent years. What is more concerning is that most of the new jobs being created in the formal sector are actually informal because the workers do not have access to employment benefits or social security. In addition, notable disparities in the labor force participation rates of men and women persist.
Having begun to slow in 2011, India’s GDP growth rate touched a low of 5.6% in 2012-2013. However, recent years have seen a strong recovery; GDP growth reached 7.6% in 2015-2016, up from 6.6% in 2013-2014. The growth rate in per capita income has also increased, from 5.8% in 2014-2015 to 6.2% in 2015-2016.
Figures on real gross value added (GVA) reveal that the return of these higher growth rates has been spurred by strong industrial growth. In 2015-2016, growth in agriculture and related activities was estimated at just 1.2%, while growth in the industrial and services sectors reached 7.4% and 8.9% respectively. In line with the aims of the Government of India’s “Make in India” initiative, manufacturing has grown rapidly, at 9.3% in 2015-2016.
In India, a large proportion of the workforce is still dependent on the agricultural sector (48.9% employment share in 2011-2012). At the same time, its share in gross value added has fallen rapidly, from 18.4 percent in 2011-2012 to 15.4% in 2015-2016. The Indian economy is dominated by the services sector, which accounted for 53.4% of GVA in 2015-2016.
Contribution of Different Sectors to Gross Value Added in 2015-2016
|1.||Financial, Real Estate & Professional Services||20.9%|
|2.||Trade, Hotels, Transport, Communication, and Services related to Broadcasting||18.2%|
|3.||Agriculture, Forestry & Fishing||17.0%|
|5.||Public Administration Defence and Other Related Services||15.0%|
|7.||Electricity, Gas, Water Supply and Other Utility Services||2.5%|
|8.||Mining & Quarrying||2.4%|