India's jobs nightmare PDF Print E-mail
Monday, 13 June 2016 04:21
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Need to create 2mn a month, doing just a fraction


Prime minister Narendra Modi came to power on the promise of greater prosperity through greater jobs growth but, as the data shows, he’s not just lagging, but lagging very badly. According to a Kotak Institutional Equities report, citing data from the National Skills Development Council (NSDC), while NSDC had estimated that 18% of India’s work force would be employed in agriculture by 2022—compared to 56% right now—it has now scaled down that target to 38%, which means NSDC feels that just 25 million will be able to get off the farm by 2022. Naturally, that has implications for poverty alleviation. If the 158 million persons that NSDC originally thought would leave the farm sector had done so and got employed in either manufacturing or services, their incomes would have gone up—now, their future depends on how agriculture does and, going by the last few years, they may barely be able to keep their heads above poverty.

Getting 158 million persons off the farm and also providing to those joining the work force for the first time means India needs to create roughly two million new jobs every month, or double the popular estimate of the jobs India needs to create—that one million number comes from absorbing just the new entrants, not taking people off the farm. It’s difficult to say just how well India is doing since jobs data is not readily available, but the Labour Bureau does compile data for a few sectors and, in the eight sectors for which it has data, a total of just 0.7 million jobs were created over two years. In the textiles sector, for instance, a total of 0.3 million jobs were created over two years according to the Labour Bureau data—according to the NSDC’s original projections, the sector was to create 1.2 million jobs a year, a figure which was later revised downwards to 0.7 million. In the case of automobiles, just 19,000 jobs were added in two years against the original annual target of 2.5 million and even the new target of 0.4 million—with greater automation in all sectors, things are only going to get worse.

All of which means a sea change in policy is required. In agriculture, instead of relying on wheat and rice, the policy has to encourage more fruits and vegetables and, more important, a lot more processing since that is where the value addition is—like it or not, this is where the FDI in retail angle comes in and this is where all the reforms suggested by the Shanta Kumar committee are relevant. Labour-related issues have to be addressed on a war-footing and if the centre feels too scared to do it, at least the big BJP-ruled states have to be encouraged to change their laws, since it is clear labour laws are restricting employment growth. Sector-specific policies need to be cleared—in the textiles sector, apparel firms wanted to be free to hire-and-fire as long as they guaranteed a minimum of 200 days of work a year at R200 a day—double MNGREGA!—but while the UPA ignored this, the NDA has to relook it. Since exports are a vital component of the jobs story, the exports policy has to be relooked—you cannot have a situation where SEZs are still not being given the tax sops promised; indeed, it is to be hoped NIMZs that are an important part of the industrial strategy don’t face the same set of issues.


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