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Unit-3 Growth and Structural Change

In this unit, we shall examine the theoretical and empirical evidence that explains the process of economic development by way of a certain pattern of structural change.

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Is there any cause for concern in the nature of structural change in the Indian economy?

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Written on Jun 26, 2019 1:22:34 PM

The cause for concern is the lack of proportionate shift in the share of employment along with the shifts in the share of GDP. The sectoral shares of workforce and the shares of GDP are almost in the same proportion, indicating uniformity in the spread of high productivity levels across the sectors to the entire economy. This also suggests less of income disparities across the sectors. In contrast, Table 3.3 for India shows that while there is a drastic decline in the share of agricultural sector in GDP, its share in workforce is still very high (57 percent in 2004-05). This indicates a low productivity and low income agriculture sector. In contrast, there is substantial increase in the share of ‘services’ sector in the GDP with relatively very little increase in the share of employment. The high productivity and high income levels of service sector aggravates inter-sectoral income inequalities. Thus, the structural transformation in the case of Indian economy appears to be following its own path, unlike the developed economies, creating structural distortions.