Critical To Ramp Up Factory Output

Contraction in manufacturing data coupled with falling investment numbers pose stiff challenges to the health of Indian economy.

- Ashish Sinha

India’s manufacturing sector accounts for approximately 16-17 per cent of gross domestic product (GDP) and provides a significant multiplier to the economy in terms of output and employment creation. Each additional dollar generated by the sector has the potential to create 2-3 jobs in the economy. Globally, India is the sixth largest manufacturing nation and the sector has been growing at 6-7 per cent annually. To achieve the target of achieving $1 trillion by 2025, manufacturing growth needs to almost double to about 12.5 per cent annually, something both ruling party and the opposition unanimously agree. However, achieving this target is a tough task in the current scenario.

For Surja Singh, a 46-year old trucker from Faridkot district in Punjab, ferrying goods in his truck is no longer a viable business due to falling truck rentals. Consistent slide in the sales of consumer durables, FMCG and general merchandise over the past several 1uarters coupled with rising cost of diesel, among other facts, is also making the trucking business a big challenge. Move a 1,500 km from Punjab, Bhola Paswan, a 34-year-old employee at a prominent car dealership network in Jharkhand is fearing job loss in the coming months. “More than half of the vehicle sold in rural markets are on finance. Now credit seems to have dried out leaving more unsold inventory in the showrooms. Poor sales means very soon our salaries will be impacted,” says Paswan.