ASI 2024-25 reveals rising capital intensity alongside employment growth in registered manufacturing. Examine whether Indian manufacturing is becoming more labour-absorbing.

Labour absorption is the capacity of a sector to create jobs as it grows and invests. In ASI 2024-25, total fixed capital rose 10.54% and persons engaged rose 7.19% to about 2.10 crore [1]. Measured per worker, the data show that registered manufacturing is absorbing more labour, but only modestly.

Evidence of rising labour absorption

• Capital per worker barely rose: fixed capital per person engaged went only from ₹23.61 lakh to ₹24.34 lakh, about 3% [2]. New investment went to more workers rather than replacing them.
• Factories grew in machines and people together: persons engaged per factory rose from 92 to 96 [2].
• Job growth picked up: employment grew 7.19%, up from 5.92% in 2023-24, even though GVA growth slowed from 11.89% to 9.59% [1][3]. This cuts against the "jobless growth" story.
• Demand for labour is firm: emoluments rose 12.08%, faster than headcount [1].

Limits to the claim

• Weak productivity: nominal GVA per person rose only about 2.2%. Growth came mostly from adding workers, not from each worker producing more.
• Price effect: the growth figures are at current prices, so part of the rise is inflation.
• Capital-heavy leaders: basic metals, motor vehicles, chemicals, pharmaceuticals and food products produce over 45% of GVA [1]. Labour-intensive sectors such as apparel and leather are not driving the growth.
• Partial coverage: unincorporated manufacturing (ASUSE) employs about 3.4 crore workers, more than ASI factories [4].
• Fragile series: one year is not a trend. The OSH Code, 2020 raises the factory threshold from 10/20 to 20/40 workers [5], which may break ASI's sampling frame.

Way forward

• Direct PLI and MSME support towards labour-intensive sectors such as textiles, footwear and food processing.
• Pair hiring with skilling and technology upgrades so that productivity rises along with jobs.
• MoSPI could publish ASI on both the old and new factory definitions during the Labour Code transition, and connect ASI with ASUSE.

Overall, ASI 2024-25 suggests that capital deepening has not crowded out jobs, which is a welcome sign for a labour-surplus economy. For this to last, labour absorption must come with productivity gains and more labour-intensive industries. That is the path to the "decent work and economic growth" goal of SDG 8.