Southern States should benchmark themselves against the world: CEA V. Anantha Nageswaran

Southern States should benchmark themselves against the world: CEA V. Anantha Nageswaran

Sub : Eco

Sec: National economy

Context: Chief Economic Adviser (CEA) V. Anantha Nageswaran emphasized that Southern States should benchmark themselves against global standards rather than just India.

The region leads in several economic parameters when compared to the rest of the country.

Contribution to India’s Economy

• Southern States contribute over 30% of India’s GDP.
• Tamil Nadu and Karnataka are standout performers with high compounded annual growth rates in Gross State Domestic Product (GSDP).
• The region’s annual growth rate in real terms is 6.3%, compared to a little over 5% for the rest of India.
• Per capita GDP growth:
  • Southern States – Over 5%
  • Rest of India – 4.2%

Labour Force and Economic Sectors Performance

• Southern States perform better in Average Labour Force Participation Rate.
• Higher share of Gross Value Added (GVA) across various sectors:
  • Real estate, agriculture, manufacturing, and services.
• Southern States account for:
  • 37.4% of total factories in India.
  • 37% of operational factories.
  • 25.6% of fixed capital investments.

Scope for Improvement in Productivity

• Although 33% of the workforce engaged in manufacturing is in South India, its output share is only 26%.
• Indicates the need for productivity improvements in the manufacturing sector.

Skill Levels and Need for Upgradation

• CEA categorized skill levels into four tiers:
  • Basic skills (Level 1)
  • Intermediate skills (Level 2)
  • Associate and professional skills (Level 3)
  • Higher-order professional skills (Level 4 – medicine, engineering, geology, etc.)

Observation:

• Tamil Nadu and other Southern States have a high presence of Skill Level 2.
• However, they lag in Skill Levels 3 and 4 (associate and professional skills).

Need for Future Skill Development

• The 21st-century economy will be driven by high-value manufacturing and artificial intelligence (AI).
• Southern States must enhance Skill Levels 3 and 4 to remain globally competitive.