The Economic Impact of Flexible Work Arrangements on Labour Productivity and Regional Economic Growth: An Indian Perspective

Abstract

This research endeavors to analyze the scope of the economic impact caused by Flexible Work Arrangements (FWAs) on the labor productivity and GSDP of five Indian States: Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Delhi for the years 2020–2025. The Ministry of Labour & Employment, CMIE, NSO, PLFS, and RBI provided secondary information which was utilized along with primary data to assess economic performance before and after the implementation of FWAs through percentage change analysis, correlation, and trend evaluation. The findings demonstrate an increase in labor productivity and GSDP with greater gains in Karnataka and Delhi where digital infrastructure and services enabled higher adoption of flexible work arrangements. Gujarat also exhibited remarkable growth associated with the gradual adoption of hybrid work models in the manufacturing sector. This sectoral analysis indicates that the services and IT sectors experienced the most gains, while the agricultural sector was stagnant in terms of productivity growth. The above findings suggest that FWAs have the ability to spur economically inclusive growth when adequate technological, policy, and organizational systems are in place along with supportive frameworks. Additionally, the study also aims to fill the gap found in researching the long-term sustainability, the role of FWAs in the informal economy, and the socio-economic impact on the working population.