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Create conditions for faster growth of productive jobs

india Updated: Apr 11, 2014 00:06 IST

Hindustan Times
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In an increasingly inter-connected economy, cities, history shows, are the hotspots that drive growth.

A McKinsey Global Institute report suggests that the districts that have seen the sharpest increase in the rate of urbanisation are all from either Southern or Western India.

If the speed of urbanisation is tapering off in the Hindi heartland, it perhaps reflects that growth has remained concentrated in a few areas of North India.

This isn’t the kind of development a middle income country like India ideally would be hoping for.

Cities matter to India because of the present stage of development. Our future growth has to come from industries, which have to be generated from our cities and towns.

Reaching to backward areas is not just a question of handing out food and money.

Less than 15% of India’s national income comes from agriculture, but about 50% of the country’s total labour is rural labour.

It is, therefore, not at all surprising that this labour is extremely poor. The solution to this could be two-fold. First, invest hugely in increasing agricultural productivity to increase per capita rural income.

But this would not be enough. The country also needs industry, which is small; not in size and scale, but scattered across small towns and even in non-towns where the opportunity exists for creating new towns.

Large corporations that are visibly and aggressively global are important.

While large industry is creating jobs, too many such jobs are informal. On the other hand, employment growth in services has been slow in recent years. India’s challenge is to create the conditions for faster growth of productive jobs outside of agriculture.

Industrial townships, some of which have eventually led to the growth of very large cities, show how jobs can be created and income multiplied even in areas that are far away from the state capitals.

That jobs and employment opportunities have become a central theme during the Lok Sabha elections bear testimony to how the aspirational rural youth would rather have a good road connecting to the nearest town than promises of more welfare entitlements.