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Rajat Gupta turns spotlight on manufacturing

BS Bureau in Kolkata | November 17, 2003 12:59 IST

India has to continue to focus on manufacturing for development even though the service sector will record phenomenal growth in recent years, Rajat Gupta, former managing partner of McKinsey & Company, said in Kolkata on Saturday.

Speaking at an interactive session at the Bengal Chamber of Commerce, he said the country has pockets of excellence in manufacturing sector and it will be prudent to continue investing in them.

Noting that Indian IT and BPO service offering would face resistance from the West, he said it will be all the more important to concentrate on manufacturing. There has been instances in the US of resistance and political consideration may come into play, he noted.

"There is a huge domestic market for goods as there is for service sector. Per capita consumption of many items is far below the level of developed nations. It indicates that domestic demand will grow and this should provide the impetus to manufacturing," he said.

In terms of job creation, Gupta felt, service sector was yet to catch up with manufacturing. "Number of IT job created during the spectacular run of service sector is not huge. BPO will not be sufficient either. There is opportunity in manufacturing and we should not let that go," Gupta said.

Talking about two other important parameters of development, education and public health, Gupta rued the fact that there has been real dearth of institution such as IITs in the country.

"The number of seat addition is very slow. We should have had more institutes like them," he said.

At the primary level, both in education and in health, government has to take the responsibility solely. At the tertiary level, he encouraged private companies to invest.

"They should come out for their own benefit. Public health and education are backbone of a sound economy. It is everybody's responsibility to sustain that," he said.

For instance, there would be dearth of quality manpower for the IT sector given growth projections.

"The school drop out rate of 40 per cent from government schools is really alarming," he noted.

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