, exchange rates, wages and structures of employment in industrialised countries. over the medium term, it is felt that outsourcing will grow rapidly and may also cover high - end research and development activities. in manufacturing, china has emerged as a leader and india is catching up rapidly. though agriculture is heavily subsidised in major industrialised countries, such subsidisation would be difficult to sustain from a fiscal point of view, since many of the countries concerned are poised to meet the mounting pension liabilities not to speak of burgeoning health care costs of maintaining the deteriorating demographics. one sector where the industrialised economies continue to show considerable strength and dominance is the financial sector, partly attributable to the confidence factor in financial markets that favours the industrialised economies and traditional international financial centres. it is essential for india to carefully monitor the developments in both real and financial sectors, and to frame the policies in tandem with the global developments so that global integration continues to be a positive sum game for all countries. while the economic integration of india with the global economy will continue to take place, a successful integration, with due regard to the interests of a vast majority particularly, the poor in our country would be possible only through sound public policies – evolved and redesigned from time to time. given india ’ s demographic advantages, the quality of labour force ( in terms of relevant skills which need to be sustained, reoriented and upgraded in a globally competitive era ) and the physical health of the workforce become crucial. education and health, therefore, provide the link between supply and demand for labour through increases in productivity. in this context, there is universal recognition of the need to improve both productivity and output in the agriculture and related activities to meet the objectives of growth and employment. there will have to be a massive shift of the workforce from agriculture to nonagricultural avocations and we should be prepared for a large - scale migration of the workforce to the tune of 10 million per year, from rural to semi - urban and urban areas. the quality of urban infrastructure even in the metropolitan cities, as noted earlier, is not conducive to globally competitive economic activity. the inevitable large scale redeployment of the migrating workforce would, therefore, need institutional arrangements, be they in public or private sector, for skill - imparting and skill up gradation. in these two matters relating to the workforce, some supply - led approaches appear to be in order

of employment generation in the rural sector and enable these sectors to emerge as the main source of growth and employment in rural areas. all these measures will promote competitiveness of the agricultural sector, which is so necessary in the current global context. as regards social sector indicators, notwithstanding some progress in regard to education and health, india is still far behind its east asian neighbours. our social indicators are lower even in comparison with the levels achieved by these countries twenty five years ago, when they first began to grow rapidly. the social indicators also show disturbing gender gaps, large rural - urban differences and wide variation across states. although the literacy rate has improved encouragingly from 52. 2 per cent in 1991 to 64. 8 per cent in 2001 and the overall number of illiterates in the country declined from 329 million in 1991 to 306 million in 2001, there are at least seven major states with more than 15 million illiterates each, accounting for nearly two - third of total illiterates in the country. concomitantly, given india ’ s comparative advantage in services, it is important that the quality of secondary and higher education in the country is improved so that adequate skills are developed to realize the benefits of the knowledge economy. as regards health, the combined government ( centre plus states ) expenditure on health as a percentage of gdp has stagnated at around one per cent of gdp over the last decade and a half. total public expenditure on health in india remains even lower than many other developing countries such as brazil ( 3. 4 per cent ), thailand ( 2. 1 per cent ), sri lanka ( 1. 8 per cent ), china ( 1. 9 per cent ) and malaysia ( 1. 5 per cent ). low public expenditure in india is to some extent compensated by private expenditure which at 4. 0 per cent of gdp is comparatively higher than all of these countries except brazil ( 4. 9 per cent ). however, low public expenditure is a cause for concern for the vast majority of the population and primary health care remains of poor quality, unavailable and inaccessible. the infant mortality rate in india is almost double that of china ( 63 in india versus 37 in china ) while the maternal mortality rate at 407 is manifold as compared to china ’ s 56. hospital beds ( per 1000 population ) at 0. 7 for india are less than one - half of other developing economies such as china ( 2. 4 ), thailand ( 2. 0 ) and malaysia ( 2. 0 )