look news india
MUMBAI: To achieve sustainable economic growth and create jobs, India must prioritise development of services sector over manufacturing sector, former Reserve Bank of India (RBI) governor Raghuram Rajan said while addressing the annual conference of the World Bank.
He argued that the manufacturing sector is not the only option for India's economic success. The manufacturing sector is facing challenges due to limited export growth and inability to compete in the US.
India is facing fierce competition from countries like China, Vietnam, Indonesia and Mexico. He said these countries are benefiting from cheaper labour and more capital than India. It is difficult to climb the manufacturing ladder politically and economically.
The service sector is adding more value to value chain activities than the manufacturing sector. The value addition of the manufacturing sector has been low.
India should give priority to improving education and health services. He suggested decentralisation and local empowerment to get good results in this area.