How Modi government can fulfil the promise of jobs
The state of any economy begins and ends with jobs. New jobs create income which generates consumer demand that spurs investment to increase capacities to meet the demand.
Politicians always worry about unemployment, especially with automation causing jobless growth. The problem is acute when there is no social security net, as in a country like ours. Yet India should count itself fortunate, with its much-vaunted demographic dividend. India’s working age population (15-64) will hit 1.1 billion in 2050 while China’s will decline to 750 million by then.
India needs to create 16 million jobs (roughly the population of the Netherlands) annually for the next 15 years so as not to have this dividend turn into a disaster.
Now look at the reality: according to the ministry of labour and employment, India was generating between 800,000 and 1.25 million jobs a year from 2009 to 2011 and around 300,000-400,000 jobs every year thereafter. The number went down to 155,000 in 2015 and 231,000 in 2016. Following a change in methodology, the fourth quarter of 2016 generated 122,000 jobs. At the current run rate, the figure for this year will likely close well short of 500,000 jobs. The Labour Bureau has yet to release numbers since January 2017.
Prime Minister Narendra Modi’s 2013 campaign promised 10 million jobs a year. Since coming to power in May 2014, about 823,000 jobs have been created as against the requirement of an estimated 16 million a year. Though he has taken steps in the right direction with his campaigns of Make in India, Skill India, Start-up India and creation of institutions like Mudra Bank, they haven’t delivered. This has to be the government’s topmost priority as it is well aware that joblessness has enormous social consequences.
For this cover story on the jobs crisis, our second in two years (The Jobs Famine, May 2, 2016), India Today turned to a galaxy of experts for solutions across sectors. In the short run, they say, only rural infrastructure programmes for roads, housing and toilet construction can be implemented. This is possible by emulating China, and developing infrastructure through massive public expenditure on railway stations, metros, ports and national highways. Besides, the government needs to focus on each employment generating sector separately. For example, the textile industry, the largest direct employer after SMEs and agriculture, at 49 million, has been allowed to wither. Our apparel exports have stagnated while Bangladesh and Vietnam have overtaken us.
The government is rightly betting big on affordable housing by aiming to make 20 million homes for the needy by 2022, but the proof will be in timely execution.
Over 70 years, India’s job creation has been riding on the waves of new industries. If the 1960s and ’70s were about the textile industry, the ’90s and 2000s were about IT/ITeS which overlapped with the rise of telecom, retail and automobiles. This decade is about financial services (insurance, banking/ NBFCs) and e-commerce. While these industries have created jobs, thanks to better technology and higher automation, they employ fewer people now.
Sectors such as education, healthcare, hospitality and tourism have not got the attention they deserve. They all need policy changes to spur growth and realise their massive employment potential. By chasing manufacturing aggressively, the government has been barking up the wrong tree.
Last, and most important, there needs to be a re-energising of small and medium companies, which have been hit by demonetisation and GST. They provide a quarter of all jobs.
In the cover story, written by deputy editor MG Arun and senior editor Shweta Punj, with additional reportage by editor (research) Ajit K Jha, the good news is that Modi government seems to have understood the challenge of lack of jobs. Between 1991 and 2013, the size of the working-age population in India increased by 300 million, while the employed rose by only 140 million - less than half the new entrants.
India is sitting on a time bomb. And it has a short fuse.
(India Today Editor-in-Chief's note for cover story, Jobs: A Grave Crisis; October 16, 2017.)