India Inc relies more on capital than labour

India has a new workforce of around 1 million youth every month, but India Inc is getting more dependent on capital than on labour in Indian industries.

The reason could be the manyfold rise in the cost of labour, which has led to companies employing a fewer number of workers and diverting their attention to improve productivity, requiring an increase in the deployment of capital.

Data suggest that between 1980 and 2015, employment has grown at an average of 1.9% per annum, while for capital, this increase, at a compounded annual growth rate, is of 14%.

"One of the key reasons of such low growth in employment has been the increasing capital intensity of the Indian industrial sector," say experts.

While in early 1980s, the number of employees per factory was 80, it was decreased to about 60 in 2014-15, says the 'Annual Survey of Industries' done by the Central Statistical Organisation.

However, the total capital employed per factory has increased from less than Rs 5 lakh to over Rs 10 crore in these years.

(Image source Indian Start)