The market for skilled labour is scorching hot in India. A Mc­Kinsey report indicates that wages for project managers have risen by a compound annual growth rate of 23 per cent since 2000 (albeit from a low level). These are indeed the wages of success. But should India worry?

Rising wages reflect, in no small measure, productivity increases as Indian manufacturing and services become globally competitive. Short-term concerns about inflation are thus mitigated. But the wage increases also reflect India's unique pattern of development, which has created a relative scarcity of skilled labour. This prompts concerns about the medium term: the rising fortunes of the skilled sector may limit the vitality of industries that employ the unskilled and uneducated. It is a conundrum that one might term the "Bangalore bug", after the country's high-technology centre.