An Under construction Community Bunker at Village Hari Pur in Jammu District of Jammu and Kashmir. Around 14000 Bunkers are under construction under project of Government of India across India-Pakistan border for the safety of border population by Pakistan shelling across International border and Line of Control. EXPRESS PHOTO BY PRAVEEN KHANNA 07 02 2019. Labour productivity is crucially dependent on businesses investing in knowledge and innovation even as the governments bring about structural reforms that enable such investments to bear fruit. (File/Express Photo by Praveen Khanna)
An analysis done by India Ratings and Research of Annual Survey of Industries data on India’s labour productivity growth in the organised manufacturing sector shows a disappointing trend.
During the high economic growth phase between 2004 and 2008 (just before the global financial crisis hit), India’s labour productivity grew by over 14 per cent every year. But between financial years of 2011 and 2015, this rate fell to just half of that (7.4 per cent) and continued its deceleration to just 3.7 per cent between financial years of 2016 and 2018.
What is labour productivity and why does it matter?
Broadly speaking, productivity is a measure of the efficiency with which resources, both human and material, are converted into goods and services. Besides land and capital, labour productivity plays a crucial role in deciding the rate of economic growth. Indeed, India Ratings report points out that globally labour productivity growth alone accounted for about two-thirds of the gross domestic product (GDP) growth during FY01-FY10, leaving only one-third to labour/employment growth.
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Labour productivity is crucially dependent on businesses investing in knowledge and innovation even as the governments bring about structural reforms that enable such investments to bear fruit. According to Indian Ratings, “a lot needs to be done quickly both on the policy front as well as companies’ level because productivity is the most powerful engine of driving and sustaining manufacturing growth, and making the sector globally competitive”.
What else does the study reveal?
There are two other crucial results from the analysis. One, that between financial years 2001 and 2018, the capital intensity — that is, fixed capital used per worker — in India’s organised manufacturing has been rising.
Two, notwithstanding this rise in capital intensity, the output intensity — that is, the value of output per fixed capital — has actually declined over the same period.
In other words, while more and more capital is being used per unit of labour, it is not yielding commensurate level of output growth.
Udit Misra is Senior Associate Editor at The Indian Express. Misra has reported on the Indian economy and policy landscape for the past two decades. He holds a Master’s degree in Economics from the Delhi School of Economics and is a Chevening South Asia Journalism Fellow from the University of Westminster.
Misra is known for explanatory journalism and is a trusted voice among readers not just for simplifying complex economic concepts but also making sense of economic news both in India and abroad.
Professional Focus
He writes three regular columns for the publication.
ExplainSpeaking: A weekly explanatory column that answers the most important questions surrounding the economic and policy developments.
GDP (Graphs, Data, Perspectives): Another weekly column that uses interesting charts and data to provide perspective on an issue dominating the news during the week.
Book, Line & Thinker: A fortnightly column that for reviewing books, both new and old.
Recent Notable Articles (Late 2025)
His recent work focuses heavily on the weakening Indian Rupee, the global impact of U.S. economic policy under Donald Trump, and long-term domestic growth projections:
Currency and Macroeconomics:
"GDP: Anatomy of rupee weakness against the dollar" (Dec 19, 2025) — Investigating why the Rupee remains weak despite India's status as a fast-growing economy.
"GDP: Amid the rupee's fall, how investors are shunning the Indian economy" (Dec 5, 2025).
"Nobel Prize in Economic Sciences 2025: How the winners explained economic growth" (Oct 13, 2025).
Global Geopolitics and Trade:
"Has the US already lost to China? Trump's policies and the shifting global order" (Dec 8, 2025).
"The Great Sanctions Hack: Why economic sanctions don't work the way we expect" (Nov 23, 2025) — Based on former RBI Governor Urjit Patel's new book.
"ExplainSpeaking: How Trump's tariffs have run into an affordability crisis" (Nov 20, 2025).
Domestic Policy and Data:
"GDP: New labour codes and opportunity for India's weakest states" (Nov 28, 2025).
"ExplainSpeaking | Piyush Goyal says India will be a $30 trillion economy in 25 years: Decoding the projections" (Oct 30, 2025) — A critical look at the feasibility of high-growth targets.
"GDP: Examining latest GST collections, and where different states stand" (Nov 7, 2025).
International Economic Comparisons:
"GDP: What ails Germany, world's third-largest economy, and how it could grow" (Nov 14, 2025).
"On the loss of Europe's competitive edge" (Oct 17, 2025).
Signature Style
Udit Misra is known his calm, data-driven, explanation-first economics journalism. He avoids ideological posturing, and writes with the aim of raising the standard of public discourse by providing readers with clarity and understanding of the ground realities.
You can follow him on X (formerly Twitter) at @ieuditmisra
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