Labour productivity growth declines in organised manufacturing: Report

There has been a slowdown in the labour productivity growth in the organised manufacturing sector, according to an analysis of Annual Survey of Industries data by India Ratings and Research. As such, capital has replaced labour much faster in recent years than in the past.

For instance, the ratio between fixed capital per worker was 26.5 in 2015-16 to 2017-18, against 20.5 in the previous five years, and 10.9 and 7.3 in the previous two sets of five years, respectively. However, output productivity of fixed capital also declined in recent years, compared to the earlier years. For example, output to a unit of fixed capital was just 2.4 in the latest three years (2015-16 to 2017-18), against 2.8 in the previous five years. The peak of 3.1 was during 2004-05 to 2009-10, when it rose from 2.6 in the previous five years.