RBI governor Subbarao roots for jobs in manufacturing sector

Who will absorb millions of young jobseekers pouring from farmland to top notch universities in future?

Certainly not the services sector, whichtoday dominates the country's GDP with a 65 per cent share. "We need tofocus on manufacturing," remarked RBI governor D Subbarao, doubting India's twodecades of services-led growth model.

"To reap the demographic dividends, weneed to find jobs for 150-200 millions who will be thrown out of the farmsector," suggested Subbarao in a seminar on Monday. But this task is easier said than done.

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The traditional manufacturing model isalready under threat from China.From toys and mobile phones to dairy products and high end power equipment,Chinese workers are already giving Indian entrepreneurs a run for their money.

To translate Subbarao's thoughts into realaction, Indianeeds to focus on high end manufacturing. That's where India lackscapabilities, a long term approach and a will to do it. That could only happenthrough innovation or an innovation-led manufacturing model. There are no bigsuccesses so far. Imagine Indian entrepreneurs competing with Boeing andAirbus, or manufacturing metro coaches in the style of Bombardier and Siemens.

Indiahappily rules in ancillary business, like making select aircraft components(and by the way we are not talking about engine components) or manufacturingfew low end products.

What the RBI governor is articulating ispossibly right for India,but that approach also requires a long term focus both from the government andprivate sector to give it shape. If that takes place, the share ofmanufacturing will certainly improve from its teens, and contribute to greaterjob creation in decades to come.

Like many say, the current century iscertainly of India'scentury. Indiahas highly skilled engineers and also a deep entrepreneurial culture. Indianbusinessmen are already acquiring the biggest corporations of the world. Sowhat's keeping Indiafrom taking the lead?

All over the world, the skill base iseroding, especially in Europe and North America.Germany, the UK and the US built their economies onmanufacturing and later, after they had become developed countries, began toshift to services-led economies.

India's evolution from developing to developed economy could either be byway of maintaining its current services-led model or it could follow the US and UK's of the world by focusing onmanufacturing.

Subbarao has cast his vote.