Review 1

by Sumesh Bhat

We have re started our Economic Analysis& Review [ E A R ] to all the viewers instead of special group in order to receive more views on the Analysis and Reviews we are forming on Current situations

Topic- Foreign Direct Investments (FDI):

Our country hit an all-time high of US$ 41 billion in FY16. Analysis indicates that services continued to attract the largest investments, riding on the wave of e-commerce and start-ups.

However the employment generating manufacturing segment has remained a laggard. Large manufacturing sectors such as construction development, automobiles and drugs and pharmaceuticals recorded a decline in FDI flows in FY16.

This is worrisome as India is already battling chronic unemployment. India's unemployment rate grew from 6.8 per cent in 2001 to 9.6 per cent in 2011, according to Census 2011 data. If numbers from Labour Bureau's quarterly employment are to be believed, then the job creation dipped to its six-year low in 2015. Most of the job creation that has taken place during the year has been on account of the IT/BPO sector. The unemployment problem in India has been compounded by poor industrial growth, low agricultural production due to two consecutive drought years and streamlining of costs by manufacturing firms. Moreover, increased mechanization of operations in labour intensive industries has led to a fall in jobs.

But if India wants to benefit from the demographic advantage, it needs to create the enabling environment for manufacturing business. Although the government has been making concerted efforts to attract investments in manufacturing through its 'Make in India' campaign, the same is yet to yield results due to political complacencies.