India's manufacturing sector has reached a noteworthy achievement, with the Manufacturing PMI (Purchasing Managers Index) hitting 59.1 in March, marking its highest level in 16 years. This figure is far above the global average of 52.1, suggesting a substantial development. This index has been calculated based on a survey conducted among 500 manufacturing organisations. The notable increase in performance indicates robust expansion, since both production and sales are experiencing the most rapid growth since October 2020. No major country has been able to go from poverty to wealth without a robust manufacturing sector.
The concept of PMI was initially proposed in 1948 by the Institute for Supply Management (ISM), which is based in the United States. The Manufacturing Purchasing Managers' Index (PMI) is a comprehensive measure of the economic well-being of the manufacturing sector. It takes into account many factors such as output, new orders, new export orders, work backlog, output prices, input prices, suppliers' delivery times, finished goods stockpiles, and quantities. Considerations are made for purchases, stock acquisition, and anticipated future production. Typically, the Purchasing Managers' Index (PMI) is published prior to other economic indicators such as Gross Domestic Product (GDP) and industrial production. The PMI provides insight into the future direction of the economy and aids in forecasting manufacturing activity within the nation. The primary objective of PMI is to furnish pertinent data regarding the prevailing business circumstances to the organisation's key decision-makers, analysts, and procurement managers. S&P Global compiles PMI data for over 40 economies worldwide.
In March, the rate of new order growth reached its highest level in nearly three and a half years. The recent job flow from both domestic and foreign markets has been robust, indicating an increase in sales in Africa, Asia, Europe, and the Americas. The data indicates that new export orders had the most rapid growth in almost two years. There is evidence confirming the increase in demand in many countries like Australia, Bangladesh, Brazil, Canada, mainland China, Europe, Indonesia, the US, and the UAE. The most recent Purchasing Managers' Index (PMI) data were released one day after the National Statistical Office (NSO) statistics revealed that India's Gross Domestic Product (GDP) expanded by 8.4 per cent in the October-December quarter. Simultaneously, the manufacturing sector experienced double-digit growth for the second straight quarter in the third quarter.
Also Read: UP Budget 2024: To Reach $1-Trn Economy, Manufacturing Will Have To Increase By 5 Times, Services By 4 Times
The manufacturing industry is thriving in certain areas, particularly in pharmaceutical exports, which have shown a remarkable growth rate of 103 per cent during the fiscal year 2013-14. The value of pharma exports has increased from Rs 90,415 crore in 2013-14 to Rs 1,83,422 crore in 2021-22. In 2014, India's defence imports exceeded its defence exports by a factor of 40. However, due to the implementation of the Make in India initiative, the value of defence exports has risen to Rs 14000 crore within the financial year 2021-22. India, historically a country that imported more toys than it exported, has recently transitioned into a net exporter of toys. India currently holds the position of the second largest producer of mobile phones globally.
Nevertheless, according to the most recent South Asia Development Update Jobs for Resilient report by the World Bank, there has been no alteration in employment rates, although there has been a decrease in women's participation. According to the statement, India has the second highest proportion (44 per cent) of workers employed in the agriculture industry, following Nepal. This indicates that the construction industry is growing, but there is no corresponding increase in employment. The primary factor contributing to the stagnant employment levels is that the majority of enterprises are coping with their workload with the current workforce due to the sustained rise in production costs.
The employment ratio in South Asia, including India, was 59 per cent in 2023, whereas it stood at 70 per cent in other emerging markets and developing economy regions. Currently, South Asia is not fully capitalising on its demographic dividend. The ability of the manufacturing sector to provide employment opportunities for India's extensive unskilled workforce is actually somewhat restricted. India currently holds the title for having the highest population and the greatest population of young people in the world.
This young population is the foundation of modern India. By 2025, around 70 per cent of India's population will fall under the working age demographic. However, the uncertainty of whether they will secure a job remains a significant concern. The cultivation of skills among the younger generation is an essential requirement for the nation and serves as the basis for an independent India. Neglecting this imperative will result in the demographic advantage turning into a formidable obstacle. Skill India's lack of success can be attributed to various factors, primarily the inadequate training infrastructure and the minimal involvement of the business sector. The second concern pertains to the absence of a supervisory body that can ensure the high quality of these educational establishments. Currently, there is a significant disparity between the quantity of individuals who have received training and certification, and the quantity of those who have successfully secured employment.
On April 2, the World Bank increased its GDP growth projection for India by 20 basis points to 6.6 per cent for the fiscal year 2025. India has the potential to become the global leader in skills, but its current approach is insufficient. Periodic global skill gap analysis is necessary, and the hiring process for employment in India should transition from a focus on competencies to a focus on skills. Presently, there are a minimum of 20 distinct governmental entities administering skill development initiatives in India, lacking coordination and exhibiting significant overlap in their efforts. The recommendations provided by the Sharda Prasad Committee must be executed with meticulousness.
Furthermore, it is imperative for the market and industry to have a greater influence in shaping the curriculum and ensuring its relevance. The National Education Policy (2020) must exert sincere endeavours in this regard at a pragmatic level, which will also serve as the foundation for its assessment. Investing in skill development is crucial, particularly during a time when skill development is a significant worldwide problem. The current imperative is to allocate funds from the many 'Rewari Schemes' operating at both the national and state levels towards the development of the skill sector. Indeed, it is accurate that the government might lack the financial resources to fund all the programs. Consequently, it becomes imperative to identify prominent corporate entities and require them to allocate their Corporate Social Responsibility (CSR) funds specifically towards the development of skills.
The author is an associate professor at Atal Bihari Vajpayee School of Management and Entrepreneurship, JNU.
[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.]
India's PMI Is Growing, But Skills Yet To Match Up For Better Job Prospects
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12.04.2024
India's manufacturing sector has reached a noteworthy achievement, with the Manufacturing PMI (Purchasing Managers Index) hitting 59.1 in March, marking its highest level in 16 years. This figure is far above the global average of 52.1, suggesting a substantial development. This index has been calculated based on a survey conducted among 500 manufacturing organisations. The notable increase in performance indicates robust expansion, since both production and sales are experiencing the most rapid growth since October 2020. No major country has been able to go from poverty to wealth without a robust manufacturing sector.
The concept of PMI was initially proposed in 1948 by the Institute for Supply Management (ISM), which is based in the United States. The Manufacturing Purchasing Managers' Index (PMI) is a comprehensive measure of the economic well-being of the manufacturing sector. It takes into account many factors such as output, new orders, new export orders, work backlog, output prices, input prices, suppliers' delivery times, finished goods stockpiles, and quantities. Considerations are made for purchases, stock acquisition, and anticipated future production. Typically, the Purchasing Managers' Index (PMI) is published prior to other economic indicators such as Gross Domestic Product (GDP) and industrial production. The PMI provides insight into the future direction of the economy and aids in forecasting manufacturing activity within the nation. The primary objective of PMI is to furnish pertinent data regarding the prevailing business circumstances to the organisation's key decision-makers, analysts, and procurement managers. S&P Global compiles PMI data for over 40 economies worldwide.
In March, the rate of new order growth reached its highest level in nearly three and a half years. The recent job flow from both domestic and foreign markets has been robust, indicating an........
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