Jobs & growth: Good news and bad news

Our potential for decades of high growth demands the creation of millions of high-quality jobs in labour-intensive industries

Our aspiration is to become a developed economy by 2047. A "developed", or high-income, country has a per capita gross domestic product (GDP) above $14,000, about five times higher than our current level of $2,700. Getting there demands a 2 per cent higher rate of growth (8.5 per cent) for the next quarter-century than we are achieving now (6.5 per cent). Growth and jobs are linked. As countries develop, the most dramatic growth driver is the movement of people from low-productivity agriculture into higher-productivity occupations in manufacturing and services. When a farmer's child migrates and goes to work for Zoho in Chennai, Zomato in Pune, or Tata Electronics in Bangalore, the jump in family earnings directly shows in GDP. More income multiplies through the economy as the family begins to consume everything from holidays to processed food.

Consumption has been our driver of GDP growth for the last 30 years. Equally, when we see reverse migration from cities to villages, economic growth suffers.

Over the last four years, we have added 20 million jobs in agriculture and informal rural self-employed services. We need to see decades of migration from low-productivity rural occupations to higher productivity urban ones; the reverse trend we have recently seen reflects a failure of development.

Last month's Economic Survey tells us that of our total workforce of 565 million, 46 per cent work in agriculture, 11 per cent in manufacturing, 13 per cent in construction, and 29 per cent in services such as trade, hotels and transport. Agriculture employs 46 per cent but produces 18 per cent of our GDP. We do not need so many in agriculture.