HOW PRODUCTIVITY INCREASED ECONOMY OF THE COUNTRY RELATED TO MANUFACTURING SECTOR

GROUP MEMBERS
Danish Saiyyad(137) Nitesh Solkar(158) Ravi Shankar(134) Shariq Shaikh(151) Shriprakash Tiwari(169) Vidit Trivedi(170)

CONTENTS
Productivity Definitions Labour productivity Economy Importance of manufacturing sector in India Example-Automobile industrys contribution

DEFINITIONS OF PRODUCTIVITY

Ratio of output to inputs in productions

Efficiency of production

Cost efficiency

More profitable Measures GDP(GROSS DOMESTIC PRODUCT) Source of economy growth Statistical information

TYPES OF PRODUCTIVITY

Labour productivity

Multifactor productivity

LABOUR PRODUCTIVITY

India compares favourably with other low cost countries in productivity adjusted labour cost It increases with the production management technique and many companies have doubled their productivity in last five years

Government of india has earmarked nearly Rs 10 billion for human resources skill development

IMPACTS OF LABOUR PRODUCTIVITY

Low productivity Low Income Low standards of living

Poverty and unemployment

High productivity

Improved labour efficiency

Higher income and higher standard of living

Economic growth

Labour Productivity 12.5 12 11.5

Real Wages 8.5

ln Wages in rupees

8 7.5 7 6.5

ln Lp

11 10.5 10 9.5

1960 1969 1978 1987 1996

Year ln LP

1960 1968 1976 1984 1992 2000

Year ln Wage

Em ploym e nt 9.2 9 8.8 8.6 8.4 8.2 8 7.8 7.6

ln EMP in number

Cointegration Test for labour productivity

1960 1969 1978 1987 1996
Ye ar ln EMP

APPLICATIONS OF PRODUCTIVITY MEASURES

Individual level Group level Department level Corporate level National level Global level

ECONOMY

Economy consist of1.

Production
Distribution Consumption of limited goods and services

2.

3.

MAJOR SECTORS OF ECONOMY IN INDIA

Agricultural sector Industrial sector Service sector

PRODUCTIVITY ON ECONOMY

At national level, growing productivity

Leads

to a higher standard of living Holds inflation in check Enhances international competitiveness

The annual GDP growth is partially due to

Growth

in productivity Growth inflation

IMPORTANCE OF MANUFACTURING SECTOR IN INDIA

Helps in modernizing Agriculture:The backbone of indian economy Supports eradication of unemployment and poverty Contribution of manufacturing is about 17% of GDP

Provides employment opportunities to millions of people Increases the countrys income by exporting manufactured goods

Improves the countrys infrastructure

IMPACT OF PRODUCTIVITY IN MANUFACTURING

Productivity improvement leads to:

Better ways and working condition to the employees Higher dividend to shareholders
Lower prices to customers

Better environment Increased tax revenues to the government

Reduces Inflation

DRIVERS OF PRODUCTIVITY GROWTH

Investment Innovation

Skills
Enterprise Competiton

AUTOMOBILE INDUSTRYS CONTRIBUTION

Key driver of a growing economy like India Main reasons for development in productivity are

Market

linked exchange rate Well established financial market Stable policy governance work Availability of trained manpower

LINKAGE

Increase in production of heavy vehicles

Aided movement of raw materials leading to better productivity Enhanced productivity led to increase in demand for more raw materials

Increase in demand of 2-wheelers and 3wheelers led to

Higher production Increase in purchase power of middle class over due course of time led to increase in productivity

High manufacturing required additional manpower High demand for man power raised employment levels and wages

Cumulative effect strengthened the economy

THANK YOU