India’s economic growth is leaving its people behind

The employment has lagged behind growth in GDP implying that the two have not moved in commensurate terms from FY15 to FY19, a rating agency said.

The employment has lagged behind growth in GDP from FY15 to FY19, implying that the two have not moved in commensurate terms during the period, a rating agency said. In fact, there has been a slowdown in growth in the last 2 fiscal years after a sharp recovery in FY17, CARE Ratings said. While headcount or employment was 2.5 per cent in 2015-16, 4.1 per cent in 3.9 per cent and 2.8 per cent in the following years, the GDP grew at a CAGR of 7.5 per cent during this period. The study is based on a set of nearly 2,000 companies across all sectors.

Talking about sectors, negative growth has been seen in terms of employment for the core industries, the report said, adding only crude oil maintained the employment to a certain level. The slowdown in GDP growth and challenges on the NPA side for banks have negatively impacted these industries, CARE Ratings also said. “A similar picture is witnessed for the heavy investment industries where growth has tended to be negative for power and capital goods and only 0.4 per cent for infrastructure,” it added.

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However, a different pattern was seen with consumer-oriented industries. A fall in employment was seen in the case of agricultural and durable goods, while there has been a rise in FMCG and textiles albeit at a lower than sample average of 3.3 per cent, the report added. “The financial sector’s performance has by far been the most impressive with banks, NBFCs and insurance witnessing impressive growth. The highest growth was in the NBFC segment which has added more from 2016-17 onwards as the sector also witnessed sharp growth in business,” it added.

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