Fact Sheet for Growth and Development

Start-ups • India ranks third in Start-up Ecosystem with 1 lakh recognised 'Start-Ups' and around 117 unicorns. 50% of DPIIT recognised Start-ups are
from Tier II & Tier III cities.
• India’s 4000 deep tech start-ups attracted $1.6bn investment in 2024 – which is a 78% increase year-on-year. (NASSCOM’s Report)
Important Case Studies
• WE-HUB: India’s first State-led Incubator to promote women entrepreneurship in Telangana
• Gujarat State Venture Capital Fund
• Examples of Deep-Start ups in India: Space launch vehicles (Skyroot), Satellites (Pixxel, Dhruva), Defence (Ideaforge), EVs (Ola, Ather) etc.
Total Factor Productivity • TFP growth accounted for about 20 per cent of India’s aggregate GDP growth between 2011 to 2019.
(TFP) in India • India’s ICOR is around 4.5 while ICOR in developed economies is around 2.5 to 3.5
Labour Market Indicators • Sectoral Share of Employment: Agriculture (46%); Industry (24%); Services (30%). Decline in share of Employment in Manufacturing from 12%
to 11% in last 5 years.
• Category-wise Employment: Self-Employed (58%); Regular/Salaried (22%); Casual Workers (20%)
• Unemployment rate: Decrease from 6% (2018) to 2% (2024)
Trends in LFPR • All-India: 60%; Male LFPR: 79%; Female LFPR: 42%.
• Increase in all-India LFPR from 50% (2018) to 60%.
• Increase in Female LFPR from 23% (2018) to 42%.
Informalization of • 90% of workers are informal workers.
Workforce • Share of Informal workers in Organised sector: 51%
• Share of contractual workers in Organised Manufacturing: 40%.
Gig Economy Around 7 lakh workers constituting 1.5% of India’s Workforce (NITI Aayog)
Case Studies- India
• Amazon’s Silent Station & Saheli
• Myntra’s partnership with Fashion designers for skill building
• Law passed by Rajasthan and Karnataka
Case studies- Global
• California in US has granted gig workers more labour protections.
• Indonesia: Small amount of the fee is automatically deducted on booking bike taxis for accident insurance
• Employment Tribunal in UK has declared Uber Drivers as Employees.
 Hindu, June 2025 Business Standard, April 2025

Mains 2021 Mains Practice Question

Explain the difference between computing methodology of India’s Gross In the context of increasing criticism over the validity of Gross
Domestic Product (GDP) before the year 2015 and after the year 2015 (10 Domestic Product (GDP) data, examine the issues associated with
Marks). GDP estimates in India. (10 Marks)

1 Changes in GDP Computation Methodology (2015) 2 Problems in GDP Estimation ( Arvind Subramaniam’s GDP Mis-Estimation)
• Change in Base Year • Shift from Volume-based to Value-based estimates
• Change in Default GDP • Presence of Shell firms in MCA-21 Database
• GDP Computation • No Direct Measurement of Informal sector
• Sector-wise Estimates: GVA at Basic prices • Discrepancies in GDP Measurement between Production and Expenditure
• Economy: GDP at Market Prices method
• Change in Database from ASI to MCA-21 Database • Lack of frequent revision to Base year.
• Inclusion of R&D Expenditure

3 Way Forward
 PIB, Oct 2024 Mint, Dec 2024

Mains Question for Practice

Critically analyze the recent employment trends and patterns in India's Labour market, with a focus on female Labour Force Participation Rate. (15 Marks)

1 Sectoral share in Employment 4 Unemployment Rate

Agriculture: 46%; Industry: 24%; Services: 30% Decrease from 6% (2018) to 2% (2024)
Problems:
5 Trends in Labour Force Participation Rate (Usual Status Approach)
All-India: 60%; Male LFPR: 79%; Female LFPR: 42%.
Positives:
• Increase in all-India LFPR from 50% (2018) to 60%.
2 Category of Workers • Increase in Female LFPR from 23% (2018) to 42%.

• Self-Employed Workers: 58% Factors driving increase in Female LFPR Increase in Female LFPR- Challenges
• Regular/Salaried Workers: 22%
• Casual Workers: 20% • Better capture of Labour data under PLFS
• Decrease in childcare Burden due to
Positives Negatives decline in Fertility rate
• Decrease in Time Poverty due to
provision of basic amenities
• Increase in Skill sets and credit through
NRLM Ex: Lakhpati Didis
3 Quantity of Jobs • Promotion of Entrepreneurship through
Stand-up India, Start-up India etc.
Employment Gap: Need to create 20 million jobs every year. But current • Growth of Gig Economy
employment creation is 4 million jobs (Eco Survey)
Employment elasticity is around 0.1. Strategies
 Mains 2024
Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?
(Mains 2024, 15 Marks)

Mains Question for Practice

Although designed to safeguard interests of employees, labour regulations in India unintentionally restrict job creation. Give arguments in support of this
statement (15 Marks)

Provisions Problems
Differential Treatment of Manufacturing and Services Under-developed Manufacturing Sector + Discourage Foreign Investment in
Manufacturing
Problems in number of working Hours: Lower Daily working hours (10.5 hours) Lower Productivity of workers + Lower Earnings
Higher overtime wages: Overtime wages is twice the normal wages. Encourage Capital Intensive Manufacturing + Discourage Production + Reduced
Profits
Restrictions on Women Employment: Employment of women only between 6 AM to 7 Lower Female LFPR (42%) as compared to Male LFPR (79%) + Gender Gap in Wages
PM + Prohibition on women employment in certain activities
Lack of Flexibility in hiring and Firing under Industrial Disputes Act Promote Dwarfism in Manufacturing + Informalisation of workforce
Restrictions on Utilisation of Floor Space: Higher Floor space per worker (3.38 Sqm) as Inefficient Utilisation of Land + Hinder Job Creation
compared to other countries.

Easier Provisions for Labour Strikes: No Prior Notice + Mass Casual Leave + Lower Penalty Loss of Jobs + Closure of Industries such as Nokia

Recent Initiatives of State Governments:

 ET, Aug 2024
Print, Nov 2024

How has globalization led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the
development of the country? (Mains 2016, 12.5 Marks)
Mains Practice Question
Examine the reasons for growing informalisation of workforce in India. Also, enumerate the steps taken by the Government to reverse these trends. (15 Marks)

1 Growing Informalization of Workforce 3 Implications of Informalization

• 90% of workers are Informal workers
• Share of Informal workers in Organised sector: 51%
• Share of contractual workers in Organised Manufacturing: 40%.

2 Reasons for Growing Informalization

• Demand-Supply Mismatch:
• Poor Literacy level and Skill sets of the agricultural workers
• Shift of workers from agriculture to Construction sector 4 Implications of Informalization
• Mismatch between Skill set and Demand of formal sector jobs
• Employment Linked Incentive scheme
• Under-Developed Manufacturing sector
• Skill India Mission
• Increased preference to hire contractual workers (Case Study: Wistron)
• PM Internship Scheme
• Rapid growth of Gig Economy
• Code on Social Security
• Social Security benefits for unorganised workers
• Change in Definition of MSMEs
 Money control, Mar 2025 Live mint, June 2025

Mains Practice Question 3 Case Studies

Although beneficial, the emergence of Gig Economy in India has its share of
India
concerns and challenges. Discuss (15 Marks) • Amazon’s Silent Station & Saheli
• Myntra’s partnership with Fashion designers for skill building
• Rajasthan and Karnataka Laws
Global
4 Benefits (Use Case Studies) • California in US
• Democratization of Jobs: • Indonesia
• Promote Micro-entrepreneurship: • UK
• Delineation of Job Role:
• Boost job creation in the service sector 2 Growth Drivers of Gig Economy
• Enhance customers' experience: Demand-Side Factors
• Enhance Skill Sets of Workers:
Gig
5 Concerns and Challenges Economy

Misclassification of Gig workers

Issue of Accessibility
Skills Mismatch:
No Guaranteed social security benefits.
Lack of Operational Freedom: Supply-side Factors
Greater control by Employers through opaque algorithms

6 Strategies (NITI Aayog’s Recommendations)

• Launch Platform India Initiative
• PSL Loans to Gig Workers
• Skill Certificates
• Social security
1 Present Status
• RAISE Framework 77 lakh workers (1.5% of the total workforce in India)