BFSI Summit 2026: Economists Urge Shift Toward Labour-Intensive Growth

Economic Strategy and Employment

At the Business Standard BFSI Insight Summit, economists Sajjid Z. Chinoy and Soumya Kanti Ghosh emphasized that India must pivot toward labour-intensive manufacturing to harness its demographic dividend. They argued that current economic growth trends favor capital-intensive production, which creates fewer jobs per unit of output.

Key Challenges

• Automation and AI: Technological advances and AI pose significant risks to both factory and service-sector employment. Chinoy noted that capital-intensive sectors often fail to drive equivalent growth in wages or widespread employment.
• The Skilling Gap: Ghosh highlighted that current training initiatives are insufficient, with only 30.7% of informal workers receiving formal training.
• Informal Labour: A large portion of India’s workforce remains in self-employment or agriculture, which hinders the transition to high-productivity roles.

Recommended Policy Framework

To sustain development, the economists proposed:

• Prioritizing Labour-Intensive Sectors: Focusing on industries like apparel, footwear, and leather goods that generate high employment per unit of investment.
• Education and Reskilling: Scaling up vocational training to directly link workers with formal employment opportunities.
• Social Safety Nets: Implementing temporary protections to assist workers during industrial transitions without removing incentives to seek work.

Chinoy warned that failing to create 8-9 million jobs annually could risk squandering India’s demographic advantage, potentially leading the country to 'grow old before becoming rich.' The experts concluded that India must balance AI adoption with investments in sectors that can absorb the vast, growing workforce.