I would like to thank the organisers for inviting me to share my thoughts on a topic which has great relevance for sustained growth of Indian economy. I would be sharing my views with all of you during this session on, “India’s Economic Transformation” and its changing contours over the years.
However, due to labour mobility, wages in the non-tradable sector may rise as well and as productivity growth in the non-tradable sector is normally lower (and more similar across countries) than in the tradable sector, wage increases in excess of productivity growth would tend to put upward pressure on unit labour costs and ultimately inflation.