In your opinion, what are the underlying characteristics that allow a sector to transform an economy and durably raise living standards? Which sector in India has the potential to transform India‘s economy and why? Examine
Answer: To transform economy and thereby raise living standard of peoples are interplay of various policies, plans and different sectors. There is no one sector (be it primary, secondary or tertiary) which alone can transform the economy and as consequence raise living standard of people. However, we can say that one sector has higher potential to contribute than others.
There are number of characteristics, a sector should possess to transform economy. But primarily, it should have
- Skilled labour – Skill is important for an industry to survive and grow. It is also important for research and development.
- Adequate Industry and industrial infrastructure – economy must have adequate industrial infrastructure and industry.
- Ability to generate employment: it must have ability to generate sufficient employment of various kinds along with capacity and ability to absorb skilled, semi-skilled and unskilled labours.
- Surplus production : High productivity and Product quantity to meet domestic need and produce surplus for exports
- Agencies in tandem with appropriate law and policies : World standard product qualities to challenge competition in world market
- Expandability. – a sector must be expandable and have expansion prospects –
- Scalability and adaptability. It must have ability to change according to need of hour and sustain.
From India’s point of view, secondary sector i.e. manufacturing can take the lead in transforming India. Given the combination of Indian economy where large fraction of people employs in agriculture sector even it neither have infrastructure nor space to accommodate peoples. Ironically, service sector contribute higher in GDP which has generated less employment relatively. Many would argue about service sector potential to transform the economy alone. But to keep in mind, it is the higher stage of economy which absorbs only (highly) skilled people. In a country like India, where literacy rate is still low in compare to developed country, service sector won’t do much.
So, manufacturing sectors appear stronger in comparison to others two. India will have advantage of Demographic dividend for at least next 2-3 decades. But most people are either semi-skilled or unskilled. Agriculture sector is already over-employed and service sector needs skilled labours. So industries only provide opportunity for employment generation at large scale.
India‘s industry has been mostly laggard till now, due to constraints ranging from policy making to lack of capital and Infrastructure. But, now with government policies focusing of generating investment through FDI and developing infrastructure, Industries can improve upon their quality and quantity and expand. This will give impulse to export. Make in India programme can give it the boost. Expansion of industry, particularly agro-based industries also give impetus to agriculture which is still employing around 60% of India’s population
To conclude, it can be said that transforming economy requires cumulative efforts of all the sectors in coupled with policies and plans. India to transform its economy also need to focus agriculture sector so that it give strong base other sector to grow. Transforming an economy is not one-shot job or overnight process. It is built over the advantage of one sector over other.