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Regional Disparities in Employment Intensity of Indian Industries: A State-level Analysis

Abstract The pace of industrialization plays a crucial role in the economic growth of any country. It provides high employment opportunities to the labor force, diminishes the cost of production, upsurges the saving, and raises the demand for goods and services in the economy. Furthermore, it helps in relocating surplus labor from the agriculture sector. This study is an attempt to find the states in India wherein the industrial sector generates more jobs. It further unearths the decomposition of industrial output and the regional concentration and dominance of industrial activities in India. To accomplish the objectives, the study utilizes the secondary data collected from the Annual Survey of Industry. The period of the study is from 1980–1981 to 2013–2014, and it encompasses 18 major states in India. The findings of the study suggest that a weak relationship exists between employment and output of the industrial sector for the majority of the states during the study period. The decomposition results show that there exists a large degree of regional disparity in industrial growth across the states, which is mostly driven by labor productivity and not by an increase in the supply of labour. Therefore, in order to boost the industrial sector, the states lagging in industrial development should give more emphasis on state-specific industrial policy to attract more investment and create more infrastructure.