For a sustainably higher growth path, India mustn’t just mobilize more labour and capital but deploy them more efficient
The long-run growth arithmetic shows that from 1990 to 2023, India’s output per worker grew at a median rate of 4.71% per year. On paper, this is a strong performance. But the decomposition shows something critical: TFP contributes only 1.19 percentage points, while capital deepening contributes 1.91 percentage points; the residual part, which measures labour-quality shifts, structural changes and also measurement noise, adds less than 2 percentage points.
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