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The growth
performance of the Indian economy during the last two decades has
been fairly steady even though the economy may struggle to achieve a
six percent growth this year. Paradoxically, at the current rate of
growth, we will be swamped by millions of unemployed within a space
of ten years. In a report on the Indian economy, McKinsey have
identified three main barriers to growth : over-regulated product
markets, distortion in the land markets and widespread government
ownership of businesses. Together, these factors pull GDP growth
down by four percent. By overcoming these factors, it is likely that
the sluggish economy can be made to zip ahead at 10% for the next
decade or so. Under such conditions the employment generated could
be four times higher than with the current policy mix. Is this a
panacea?
The
construction sector is rated as a priority sector for achieving a
turn around in the economy. A closer look at the construction sector
could be revealing. The honourable Prime Minister has constituted a
Group of Ministers to consider various issues pertaining to rural
and urban housing and come up with specific action plans within a
month. A decision has been taken to convene a National Housing
Conference involving state Chief Ministers, Finance Ministers and
Housing Ministers to address legal and fiscal issues. The Prime
Minister emphasized the importance of giving thrust to housing to
kick-start the economy (HT 18th September 2001).
There
is some good news on the employment situation. While the overall
growth of rate of employment stagnated and during 1994 – 2000 has
only been 1%, the growth rate of employment in the construction
sector has been a staggering 6.9% (NSSO Survey). The other star
performers are the transportation and allied services sector (7.3%),
and finance and real estate (4.0%).
The
per capita consumption of cement in the country is increasing
slowly. As compared to the 80 kg per capita consumption in 1989-90,
the present consumption in 2000-01 is 99 kg and rising. Documented
successes of rural industrialisation in Bihar and growth in use of
concrete blocks and concrete tiles is a clear pointer to the
mechanism by which cement consumption is likely to grow in the rural
areas. This is something to cheer for the cement industry plagued by
over capacity and shrinking profits. The Cement Manufacturers
Association has also reported that cost effective techniques of
building construction also result in higher consumption of cement;
achieved through partial pre-fabrication (in the recently
published monograph "Cement in Service of the Nation").
Altogether,
growth in the construction sector requires increasing investment to
build more factories, roads, shopping malls and houses with
simultaneous measures to increase productivity. The latter needs
technology, knowledge and learning as critical elements for
increased productivity of labour and capital. The construction
workers can become more efficient by acquiring skills and learning
on the job, using new tools and by designing work processes in a
better manner. It would be in the self interest of the contractors
and construction agencies in the public and private sector to
convert the massive potential of the work force into a skilled and
highly productive resource.
The critical element
is however, access to technology; capable of enhancing the
availability of diverse products and services. This task will need
to be pioneered by the private sector in collaboration with research
and development centres. Private sector players can assume the
responsibility of becoming suppliers of crucial information to large
numbers of small scale entrepreneurs. The push approach, which is
extensively used for marketing of cement, can be effectively
directed at the distribution intermediaries to channelise new
building products. Productivity led growth after all is about
organizing people and technology to work harder and smarter; to
ensure one and one equals eleven. q
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