Answer to Question #211382 in Political Science for Yoooo

Question

1. Elaborate on the problem of ‘Stunted’ growth in light of the discussion on structural transformation of the Indian Economy. 

Answer 1

Stunted’ Growth in India

The economy in India has been significantly accelerating since the 1980s, but farming has not. There is a continuous increase in rural communities and the labor force and gradual movement from rural to rural districts. Despite the increasing productivity gap between non-farm and agriculture, small-scale rural and urban mobility and sluggish farming, urban-rural consumerism, incomes, and differential inequality have not increased. The rapidly growing rural non-farm economy, which currently produces the highest employment in India, has become a significant driver of the urban-rural spill. Rural non-farm autonomy is particularly dynamic, with farm households diverging into the sector to boost income (Binswanger-Mkhize, 2013). Farm size is continuing to fall as labor is being depleted in rural regions, and agriculture will continue its feminization trends, while part-time agriculture is becoming the main farm structure.

Indian economic growth has had respectable economic development throughout the previous two or three decades. However, the unfortunate aspect is that the Indian economy has changed extremely slowly. There is a broad difference between farmers and non-agricultural labor productivity. Labor integration capability has been poor, and formal employment opportunities have been decreasing in the economic system, and labor contracts have become progressively informal. This fact fuels the scenario with a fast population increase in rural areas. In rhythm with increasing incomes, agriculture is not growing, and agricultural labor in rural areas is not absorbed (Binswanger-Mkhize, 2013). Therefore, the predicament is a symptom of fast economic expansion, with the slowing structural change has brought urban unemployment to rural non-agricultural workers.

It might be that manufacturing companies have a more significant impact than services enterprises due to labor legislation, the absence of finance available, and poor infrastructure. Because production depends more on intermediary inputs, pro-labor legislation integrated with input restrictions control has significantly lowered productivity development in the manufacturing industry than in the services industry (Nguyen, 2017). These regulations and the lack of available finance lead to improper combinations of factors in industrial enterprises but have considerably fewer effects on service companies. However, it was also suggested that the dramatic expansion of the services sector might be linked to the demand for input from the rising industrial sector, but not as rapidly. Therefore, whereas studies in India ascribe sluggish production to tight labor legislation and inputs, others suggest that strong development in services stems from increased manufacturing demand (Herrendof et al., 2014). However, despite the existing substantial and growing productivity gap between industrial productions, we still lack an explanation why the labor market continues to move in the manufacturing industry.

The double economic framework is fundamental since its growth experience has been an emerging market over the last twenty years. In such economies, labor transfer from the traditional to the contemporary economic components is essential for structural change. When economies are wealthier and have their primary dualistic nature, intersectoral transfers of labor continue but are exclusively connected to product development, without the implications of dualism being overcome. It is, however, more appropriate for the analysis of industrialized countries, which overcame or is less significant the above-mentioned structural duality (Nguyen, 2017). The economic side of the Transformational Modification in these more developed economies solely involves labor transfer and relocation in otherwise homogeneous sectors, which are essentially productivity differences.

 

 

References

Binswanger-Mkhize, H. P. (2013). The stunted structural transformation of the Indian economy:

Agriculture, manufacturing and the rural non-farm sector. Economic and Political weekly, 5-13. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,serif; background:white">https://www.jstor.org/stable/23527235</span>

Herrendorf, B., Rogerson, R., & Valentinyi, A. (2014). Growth and structural transformation.

In Handbook of economic growth (Vol. 2, pp. 855-941). Elsevier. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,serif; background:white">https://www.sciencedirect.com/science/article/pii/B9780444535405000069</span>

Nguyen, M. H. (2017). Structural transformation and the livestock revolution in Vietnam:

current situation and future scenarios for the dairy sector (Doctoral dissertation, Montpellier SupAgro). <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,serif; background:white">https://agritrop.cirad.fr/589954/</span>