The manufacturing sector’s share in India’s GDP has remained stagnant despite the government’s efforts to increase it, according to Asian Development Bank Country Head Kenichi Yokoyama, who added that India must do more to integrate with the global value chain in which it currently only plays a small part.
Mr. Yokoyama also highlighted problems with the inequality between Indian states, the inadequate investment in the infrastructure sector and the poor planning behind urban development. “The share of manufacturing in India’s GDP has been stagnant despite the government’s efforts in this direction,” said Mr. Yokoyama. “The heart of the global value chain resides in southeast Asia at the moment, and India plays only a small part in that.
We are working with the government to increase this. And, despite increasing per capita GDP growth, the challenge still remains of bridging the wide gap between the Indian states,” he added.
“We expect GDP growth this year to be 7%,” Sabyasachi Mitra, Deputy Country Director, ADB, said. “Next year, we expect it to increase to 7.4%. There is an upturn in the global economy, trade is picking up, and the capital expenditure has been front-loaded.”
Even lead indicators such as the index of industrial production, sale of commercial vehicles and indirect tax collections all point to higher GDP growth looking ahead, said Abhijit Sen Gupta, Economist at ADB.
“In the absence of a proactive urbanisation strategy, what is likely is ribbon development along the highways and haphazard development around the industrial areas,” Mr.Yokoyama said. “The strategy should instead be proactive instead of reactive.”
