Productivity growth is strong and is key for raising incomes and well-being. Farm consolidation, mechanisation and better storage and transport infrastructure are needed in agriculture. In manufacturing, labour and product market regulations should be reformed to enable firms to expand to an efficient size. Better access to quality health and education is also key to raise productivity.
- Continue expanding access to education and raise the quality of primary education and training systems.
- Simplify administrative and regulatory procedures for companies.
- Introduce simpler and more flexible labour laws that do not discriminate by size of enterprise and ensure equal work opportunities for women.
- Increase public spending on health care, with particular focus on preventive and primary care.
- Continue improving access to, and quality of, key public services such as electricity, sanitation and public transportation.
Source: OECD May 2017 Economic Outlook database
Aghion P., R. Burgess, S.J. Redding, F. Zilibotti (2008), “The unequal effects of liberalization: evidence from dismantling the license Raj in India”, American Economic Review 2008, Vol. 98:4, pp. 1397-1412.
Hsieh C.-T. and P.J. Klenow (2009), “Misallocation and manufacturing TFP in China and India”, Quarterly Journal of Ecoomics, Vol. CXXIV November 2009 Issue 4. India KLEMS Research Team (2014),” Productivity Growth in India under Different Policy Regimes: 1980-2012. Presentation made at the 3rd World KLEMS conference 2014, Tokyo, May 2014.
Hsieh C.-T. and P.J. Klenow (2014), “The Life Cycle of Pants in India and Mexico”, Vol. 129 August 2014 Issue 3, The Quarterly Journal of Economics.
Joumard,I., U. Sila and H. Morgavi (2015), "Challenges and Opportunities of India's Manufacturing Sector", OECD Economics Department Working Papers, No. 1183, OECD Publishing, Paris.
OECD (2014), OECD Economic Survey of India.
Productivity - enhancing institutions
The most relevant productivity-enhancing institution is the NITI Aayog (NITI stands for National Institution for Transforming India). It replaced the Planning Commission in 2015. The NITI Aayog is chaired by the Prime Minister.