The Specificity of Indian Industrialisation

The experience of industrialisation in India is not a simple copy of the Western path. Comparative studies of different countries show that there is no single, standard model of industrial capitalism. India’s story shares some features with the West, but in many crucial ways it is distinct.

The Employment Structure: A Key Difference

One of the sharpest differences lies in what kind of work people do. In developed countries, the majority of workers are in the services sector, followed by industry, and less than 10% are in agriculture. India presents a very different picture.

In 2018–19, nearly 43% of Indian workers were employed in the primary sector (agriculture and mining). Only 17% were in the secondary sector (manufacturing, construction, and utilities), and 32% were in the tertiary sector (trade, transport, financial services, etc.).

The real problem becomes clear when you compare employment with economic output. The share of agriculture in India’s GDP has declined sharply, while the services sector now contributes more than half of the country’s economic growth. This creates a serious situation: the sector that employs the largest number of people (agriculture) is unable to generate sufficient income for them.

Formal vs. Informal Employment

Another major difference between developing and developed countries is the proportion of people in regular salaried employment. In developed countries, the majority are formally employed. In India, the picture is reversed:

• Over 52% of workers are self-employed.
• Only about 24% are in regular salaried employment.
• Approximately 24% are in casual labour.

Economists distinguish between the organised (formal) sector and the unorganised (informal) sector. One common definition states that the organised sector consists of all units employing ten or more people throughout the year. These units must be registered with the government to ensure employees receive proper wages, pensions, and other benefits.

In India, over 90% of all work — whether in agriculture, industry, or services — is in the unorganised or informal sector.

Social Implications of a Small Organised Sector

The tiny size of the organised sector has deep social consequences.

First, limited exposure to diversity. Very few Indians have the experience of working in large firms where they meet people from other regions and backgrounds. Urban living does provide some exposure to diversity (your neighbour in a city may be from a different state), but for most Indians, work still happens in small-scale workplaces. In these settings, personal relationships determine many aspects of work. If the employer likes you, you may get a raise; if you have a fight, you may lose your job. This is very different from a large organisation with well-defined rules, transparent recruitment, and formal mechanisms for complaints and redressal. …