Arvind Subramanian, now India’s Chief Economic Advisor, in 2014 diagnosed India as an instance of “precocious development:” it relied more on its relatively small pool of highly-skilled workers than its vast pool of low-skilled, but relatively cheap, ones. Subramanian, in agreement with economists like Dani Rodrik, argued that such a model was unsustainable, producing too few jobs to drive long-term growth.
Just last month Subramanian implied that India was altering its approach. But when Indian prime minister Narendra Modi visited the United States, he met primarily with representatives of the high-tech and financial services industries. According to his official schedule, he interacted with only one CEO from the low-tech, highly labor-intensive industries that could provide jobs for India’s rapidly expanding work force. (It happened to be a CEO from the paper industry.)
According to a report sponsored by the Indian government, producing paper is drastically more labor-intensive than producing electrical machinery.
Meeting CEOs from innovative companies like Facebook and Google helps project Prime Minister Modi as a forward-thinking 21st century leader. But Facebook could move its entire operations to India without making a dent in the number of underemployed and under-skilled workers. Prime Minister Modi may need to admit that India is less mature (but more precocious) than his U.S. agenda suggests. We examine this trend by the numbers:
The number of CEOs and business leaders Prime Minister Modi met in the United States during his visit in late September.
Number of the CEOs representing firms in high-tech industries.
The sole paper-manufacturing company represented among those that Modi visited during his recent U.S. visit was Visy.
Less than 1
The average number of workers needed to produce $15,000 worth of goods annually in the Indian high-tech industry.
The average number of workers needed to produce the equivalent $15,000 worth of goods annually in the Indian paper industry.
Indians entering the job market every month.
Sarah Watson is an associate fellow with the Wadhwani Chair in U.S.-India Policy Studies at CSIS.