Productivity in the Indian economy

The growth of an economy depends upon the increase in output due to (a) the accumulation of the varying amalgam of quantities of factors like land, labour and capital, and (b) the increase in the efficiency in production of the above factor mix. India and China cannot depend too much upon new and growing supplies of agricultural land and other natural resources since they are already old countries; a large popu lation which is also growing at a high rate is not therefore by itself an asset as the large and growing labour component cannot automatically be transformed into the status of a productive factor, without a simultaneous augmentation and growth in the capacity to produce wage-goods. Exclusive dependence upon capital accumulation necessitates reduct ions in consumption. Such reductions are, however, difficult when the bulk of the masses are already below the poverty line and redistribution from others involves stiff resistance. It is understandable therefore that these countries have to depend upon improvements in the productive efficiency of the composite factor quantity as an important source of growth.