Growth momentum in India may turn out to be a “jobless growth scenario” in the next 3 years, if the manufacturing sector
fails to pick up, said brokerage house Kotak Securities.
According to Kamlesh Rao, MD and CEO of the firm, job opportunities in the services sector — a key contributor of employment — are expected to reduce in the current economic scenario. “The services sector, which fuels job growth, will definitely go down. And so, the manufacturing sector
is needed which can create job opportunities”, he said. He was responding to questions asked over merger of public sector banks, and other such proposals.
The merger of SBI with associates had resulted in restructuring of the workforce, but such fears have been allayed among other public sector firms in banking and insurance sector. In a reply to Lok Sabha last December, Pon Radhakrishnan, Minister of State for Finance, had said the services sector had contributed 53.9 per cent to the country’s gross value added at current prices, during FY18.
The manufacturing sector, on the other hand, accounted for 16.7 per cent of the GVA.
The brokerage firm said the government needs to attract foreign direct investment in manufacturing to make India a global hub, and that the move may entail improvement in ease of doing business along with land and labour laws in the country.
“The trade war between the US and China presents India with a huge opportunity to develop its manufacturing vertical. The global situation might bring the markets down, but it’s an opportunity at the same time,” he said.
Rao feels the government needs to act on reforms in the next two fiscal quarters to keep growth momentum in the country, as well as the bourses, going.
He opined that the IBC resolution process needs to be fastened and steps needs to be taken to solve the liquidity situation of non-banking financial companies. Increase in financialisation and conversion of savings into investments have also been suggested by Kotak Securities.