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BIG STORY DECEMBER 06, 2024 | The Indian Eye 5

slowdown in GDP growth, we main- ing in all zones, simplifying building
tain our view of a pause by the RBI bye-laws to reduce costs and delays,
next week given elevated inflation and and exempting worker housing from
an uncertain global environment.” GST and other commercial property
Sujan Hajra, Chief Economist charges.
& Executive Director at Anand These measures, the report ar-
Rathi Shares and Stock Brokers, also gues, would make it easier for the pri-
weighed in on the GDP data, explain- vate sector to invest in worker housing.
ing that the 5.4 per cent growth in Q2 According to an ASSO-
fell short of both their own projection CHAM-Egrow report, by 2047, do-
(6.7 per cent) and the street’s esti- mestic manufacturing and services
mate (6.5 per cent). sectors are poised to drive India’s
He said, “This weakness in the economic transformation, employing
numbers was largely due to discrep- 67 per cent of the workforce and con-
ancies; net of these, GDP growth re- tributing over three-quarters of the
mained at a healthy 7.5 per cent. On GDP. The report identifies significant
the production side, weaker growth opportunities for businesses in manu-
was observed in the industrial seg- India faces a significant challenge, with 46 per cent of its workforce engaged in agriculture, facturing, services, and MSMEs (Mi-
ment, while the services sector, where cro, Small, and Medium Enterprises).
we had expected 8 per cent growth, contributing only 18 per cent to the GDP (Agency) India’s nominal GDP is projected
recorded a healthy but slightly lower to grow from USD 3.5 trillion in 2023
expansion of 7.1 per cent. Agricul- analysts remain cautious, with most ductivity. This shortfall also hampers to USD 22.8 trillion by 2047, with an
ture, on the other hand, expanded at projecting that India’s growth will be India’s ability to compete globally in annual growth rate of 7.5 per cent.
a strong pace, as reflected in the ad- somewhat lower than initially fore- manufacturing exports, limiting job The services sector is expected to
vanced estimates for Kharif output. cast, given the recent data trends. creation and economic growth. dominate, increasing its contribution
“While we are not revising our Meanwhile, according to a foun- The report highlights that exist- to GDP from 54.2 per cent in 2023 to
full-year growth projection of 7 per dation for economic development ing worker housing is often informal, 60 per cent by 2047.
cent thus implying a 7.9 per cent report, India faces a significant chal- consisting of unauthorized slums or Manufacturing is set to witness
growth in H2, we will closely mon- lenge, with 46 per cent of its work- substandard settlements that fail to modest growth, accounting for 18 per
itor the momentum going forward. force engaged in agriculture, contrib- meet the scale and quality needed. cent of GDP, while agriculture’s share
We believe that growth in the second uting only 18 per cent to the GDP. These poor living conditions dis- is projected to decline significantly to
half (H2) will be driven by continued Manufacturing stands out as the only courage workers from relocating clos- 10 per cent. These changes reflect In-
strength in agriculture, which is ex- sector capable of absorbing unskilled er to industrial clusters, perpetuating dia’s ongoing transition from an agri-
pected to boost rural demand further labor at a scale necessary to drive the the labor supply challenge. culture-based economy to one driven
and increase in capital expenditure economy forward. Private sector solutions to ad- by services and manufacturing.
(capex) from both central and state Jobs in manufacturing and ser- dress this gap are hindered by reg- Employment trends also high-
governments. Additionally, moder- vices are 3-6 times more productive ulatory obstacles. Inflexible zoning light this shift. The services sector is
ation in the industrial sector’s base than agricultural work, underscoring regulations restrict the construction expected to employ 52.3 per cent of
should support stronger growth, es- the sector’s potential to transition the of worker housing, cumbersome the workforce by 2047, compared to
pecially with the complete monsoon workforce into higher productivity building bye-laws inflate costs and just 24.3 per cent in 2000.
season,” he added roles. delay projects, and high operational In contrast, agriculture’s share
Hajra stated that, however, cer- Industrial clusters, which act as charges, including GST and commer- of employment is anticipated to drop
tain headwinds could impact our hubs for manufacturing jobs, require cial property rates, deter investment. sharply from 59.4 per cent to 22 per
outlook. Risks include the potential more labor than surrounding towns To address these challenges, the cent. Manufacturing employment is
impact of Chinese imports (“China and villages can supply. report recommends a series of re- projected to rise from 10.9 per cent in
dumping”) and policy uncertainties However, the lack of adequate forms to unlock manufacturing po- 2023 to 15 per cent in 2047, showcas-
following the US elections, both of worker housing near these clusters tential. ing opportunities for businesses in in-
which could dampen a revival in pri- has emerged as a key barrier, lead- It calls for mixed-use zoning dustrial growth and technology-driv-
vate sector investment. ing to labor shortages and lower pro- regulations to permit worker hous- en production.
Despite the slowdown in Q2, In- MSMEs, which currently con-
dia’s economy grew by 6.7 per cent in tribute 30 per cent to GDP and 45 per
Q1, which was also below the RBI’s cent to exports, hold immense poten-
forecast of 7.1 per cent. As a result, tial for growth through formalization,
many global rating agencies, includ- technology adoption, and productivi-
ing S&P Global Ratings, have revised ty enhancement.
their growth forecasts for India. The government’s emphasis on
The IMF and World Bank have formalizing the sector creates op-
pegged India’s 2024-25 GDP growth portunities in areas like financial
at 7 per cent, while the RBI had ear- services, skill development, and tech
lier forecast a growth of 7.2 per cent. integration.
The RBI remains optimistic Foreign Direct Investment
about the medium-term outlook, stat- (FDI) will play a crucial role in In-
ing that the slowdown observed in the dia’s economic transformation. With
second quarter is behind the economy. the government focusing on gross
Private consumption, which is ex- fixed capital investment, the contin-
pected to drive domestic demand, is uation of business-friendly policies
showing signs of recovery, bolstered Manufacturing is set to witness modest growth, accounting for 18 per cent of GDP (Agency) and incentives is expected to attract
by festive season spending. However, foreign investors.

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