Economy · Sub-pillar 4.3

Productivity and structural change

Moving workers from low-productivity activities into manufacturing and modern services, raising output per worker, and balanced growth across states and regions.

What is productivity and structural change?

Productivity and structural change is sub-pillar 4.3 of the 47 BH framework for a developed Bharat by 2047, the third of nine sub-pillars under the Economy pillar. It asks whether workers are moving out of low-productivity activities into manufacturing and modern services, whether each worker produces more over time, and whether growth is shared across states and regions rather than concentrated in a few.

Why it matters for 2047

Incomes rise, in the end, for one reason: each worker produces more. A farmer with a small plot and a hand tool, however hard she works, cannot earn what a factory worker or a software engineer earns, because the value of what she makes in a day is lower. Development is the movement of people from the first kind of work to the second.

Every country that became rich did so by shifting its workers out of agriculture into industry and services while raising productivity in all three. India has done this more slowly than East Asia did, with fewer workers passing through manufacturing on the way, and more going straight into low-paid services and construction.

Where growth happens matters too. A country whose richest state produces five times as much per person as its poorest is really several economies, and the gap shapes migration, politics and fairness. 47 BH tracks the spread of income across states, not only the national average.

Where India stands

  • 43.0%

    of India's workers aged 15 and over were still in agriculture in 2025, against 12.1% in manufacturing, 12.9% in trade, hotels and restaurants and 5.8% in transport and communications, according to the Periodic Labour Force Survey.[1]

  • 14.8%

    of gross value added came from manufacturing in 2025-26, barely changed from 14.7% in 2022-23 despite output growth of 10.7% that year, on the new 2022-23 base series; the government's stated aim is 25% by 2035.[2][3]

  • 5.6x

    is roughly the gap between the richest and poorest large states: per capita income in Telangana was Rs 3,87,623 in 2024-25 and in Bihar Rs 69,321, according to figures compiled from the Reserve Bank's state statistics.[4]

  • 7.3%

    was India's real GDP growth in 2025-26, among the fastest of any large economy, according to the Reserve Bank's annual report.[5]

India is growing fast and from a low base: 7.3% in 2025-26 kept it among the fastest-growing large economies, and manufacturing output grew faster still at 10.7%. [2][5] Yet manufacturing's share of the economy has stayed close to 15% for years, and the stated goal of a quarter of GDP by 2035 is a long way off. [2][3]

The structural shift is the slow part. More than four in ten workers are still in agriculture, which produces a far smaller share of output, so farm workers earn far less per head than the rest; only one worker in eight is in manufacturing. [1] Growth has gone disproportionately to services, which create fewer jobs for workers without higher education.

Between states the gap is stark: a person in Telangana or Karnataka produces more than five times as much as a person in Bihar, and Uttar Pradesh and Jharkhand are not far above Bihar. [4] A note on the numbers: GDP figures moved to a new base year (2022-23) in February 2026, which changes shares and growth rates slightly; state per capita figures are at current prices and depend on each state's population estimate in the absence of a census.

On the 47 BH report card

Every 15 August, 47 BH reports how far India has come on each sub-pillar. For this sub-pillar, the headline indicators are:

  • Share of workers in agriculture, manufacturing and services (PLFS).
  • Manufacturing share of gross value added (MoSPI National Accounts).
  • Ratio of per capita income between the richest and poorest large states (Reserve Bank of India, Handbook of Statistics on Indian States).

Two lenses on productivity and structural change

City and village

47 BH asks whether a worker leaving a farm finds a factory or a modern service job in the nearest town rather than only casual work in a distant city, and whether the industrial districts of the west and south are matched by new ones in the north and east. Structural change that happens only in a few metros empties villages without developing the regions they are in.

Learn, avoid, protect

Learn
What can India learn from the East Asian economies that moved tens of millions into labour-intensive manufacturing, from its own southern and western states, and from countries that spread industry across regions through infrastructure and skills rather than subsidies alone?
Avoid
Which mistakes should it avoid, such as protecting incumbents in the name of industrial policy, chasing capital-intensive showcase factories that employ few people, or letting the laggard states fall so far behind that migration becomes the only exit?
Protect
What of its own should it protect, such as its world-class services exporters, the clusters of small manufacturers in towns like Tiruppur, Surat and Ludhiana, and the single national market that GST created?

What this sub-pillar does not cover

Each topic has one home in the framework. These related topics sit elsewhere:

Questions about productivity and structural change

How many Indians work in agriculture?

43.0% of workers aged 15 and over in 2025, according to the Periodic Labour Force Survey, compared with 12.1% in manufacturing. [1]

What share of India's economy is manufacturing?

14.8% of gross value added in 2025-26 on the new 2022-23 base series, up from 14.7% in 2022-23, according to a government reply in the Lok Sabha in August 2026. Manufacturing grew 10.7% in real terms in 2025-26. The National Mission on Manufacturing aims for 25% of GDP by 2035. [2][3]

Which Indian states are richest and poorest per person?

Among large states, Telangana (Rs 3,87,623) and Karnataka (Rs 3,80,906) had the highest per capita net state domestic product in 2024-25, and Bihar (Rs 69,321), Uttar Pradesh (Rs 1,08,572) and Jharkhand (Rs 1,16,663) the lowest, according to figures compiled from Reserve Bank of India state statistics. [4]

How fast is India's economy growing?

Real GDP grew an estimated 7.3% in 2025-26, according to the Reserve Bank of India's Annual Report 2025-26. [5]

Why does 47 BH care about where growth happens?

Because a country whose richest state produces five times as much per person as its poorest is several economies in one, and the gap drives migration, strains the federation and tests fairness. Balanced growth is part of what development means.

Sources

  1. Ministry of Statistics and Programme Implementation, "Press note on Periodic Labour Force Survey Annual Report, 2025", March 2026. https://www.mospi.gov.in/uploads/latestReleases/latest_release_1774607827733_3e8964a9-268b-4cc9-ad65-cfc8a9e32f08_Press_note_AR_PLFS_2025_23032025_V2.1_26032026_final.pdf
  2. Government reply in the Lok Sabha on manufacturing GVA, 12 August 2026, as reported by ANI; based on MoSPI National Accounts Statistics, base year 2022-23. https://www.aninews.in/news/business/manufacturing-gva-grows-107-in-fy26-govt-cites-reforms-to-strengthen-sector20260812173715/
  3. Ministry of Finance, "Union Budget FY 2026-27: Manufacturing Sector Driving India's Next Growth Phase", Press Information Bureau, 12 February 2026. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2226828&reg=48&lang=2
  4. Reserve Bank of India, "Handbook of Statistics on Indian States", per capita net state domestic product at current prices, 2024-25, as compiled on Wikipedia's list of Indian states by GDP per capita. Source tables: rbi.org.in. https://en.wikipedia.org/wiki/List_of_Indian_states_and_union_territories_by_GDP_per_capita
  5. Reserve Bank of India, "Annual Report 2025-26", May 2026; growth estimate as summarised by Drishti IAS, 5 June 2026. https://www.drishtiias.com/daily-updates/daily-news-analysis/rbi-annual-report-2025-26

47 BH cites every figure so that it can be checked. If you find an error, it will be corrected openly and the date below will change.

All sub-pillars of Economy

Back to the Economy pillar  ·  47 BH home