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Absence of Job creation will haunt Modi Govt. In 2019

By Lalit Sethi. Dated: 10/7/2017 3:14:11 PM

Ten million new jobs were promised in five years at the height of Mr. Narendra Modi's election campaign in 2013 and 2014. It was too good; it appeared to be incredible. But the promises were repeated vigorously alongside the narrative of crass corruption and scam upon scam in the bygone five years; governance had ceased, it was pointed out. Minimum government and maximum governance were elevating promises as well. Were these mantras a mirage?
Job creation was not to be an overnight job; it would take some years, not just months. It was the key to the government's promises and living up to them was vital, but as it discovered fairly early in its term, it was not easily done. Yet the early days would not threaten survival. There is a bonus of honeymoon time. There could be bumps on the way, up and down. Some successes, but the jumps were also wiped out quickly.
The Modi Sarkar may have had poor luck with world-wide recession accompanying at least two of its three years in office. The Information Technology was the worst affected and job losses within India and the First World were considerable.
The second blow came from President Trump's denial of visas to foreigners, of whom Indian techies were the worst hit. Even as he has climbed down, there may be blips on the road. It has been promised that 65,000 H1b visas are now to be given to American companies and a further 20,000 visas for US-educated Indians. Twenty thousand of all these could be fast-tracked in two weeks if companies pay more than $1,200 with each application.
Agriculture is a story with great ramifications. Waiver of bank loans or debts of one rupee per head in U.P. have become a joke, a sick joke. But the real problem is that the farmer is robbed at every step by the money lender, the purchaser at the farm mandi or market, the sugar miller, the raw cotton buyer or the vegetable, fruit or oilseed buyer.
Zamindari was legally abolished decades ago and the socialistic society was ushered in constitutionally; but zamindari is not dead; it has been fully revived as zamindars are lenders and the debtor often becomes slave labour for generations by surrendering his small land holding. There is no law to rescue the borrower from private sources at interest rates of 2 per cent per month. Like the axiom, king is dead, long live the king ~ so the zamindari. The zamindars are MPs, MLAs, Sarpanches and even Zila Parishad chiefs at times. They rule the roast. No government dare dislodge them; not even the Communist rulers.
Minimum government and maximum governance was one more promise with much buzz. All this talk was very catchy and exciting. Was it possible? Machiaveli and Chanakya stepped in; their edict: it is the duty of rulers and would be rulers to promise the moon, especially when the existing dispensation appears to be in a mess; it could be painted with a brush of tar? It was.
A new deal was offered to wipe the tears of every Indian, especially the downtrodden, the struggling and starving Indians, homeless, shelter-less and those with little apparel. It had been so from time immemorial; ruler after ruler in one country after the other had done so. There appeared to be a breath of fresh air, especially in the last few years. But was it credible? That is not the point.
The BJP nearly steamrolled the Congress in the summer of 2014 and reduced it from 230 plus in the Lok Sabha to 45 in the present House of the People. The Modi Sarkar was ushered in with his party winning 290 members in a House of 538; with National Democratic Alliance, it had 330. It was a near landslide.
It was honeymoon time; too early to put the house in order. A dose of Hindutva was dousing the flames of anger raised by critics. A new dispensation could live and flourish on new rhetoric.
Yet about 1.5 million jobs were lost between January and April 2017. It was estimated that total employment during the period was 405 million compared to 406.5 million during the preceding four months, September-December 2017, according to the Centre for Monitoring Indian Economy which surveys a sample size of 161,167 households with 520,000 odd adults. Yet these surveys could be too limited to be reliable even though they cover urban as well as rural landscape. According to it, jobs grew initially from 401 million to 403 million during May-August 2016 and then to 406.5 million in September-December 2016. From January 201, they fell to 405 million, including organised and unorganised sectors, and agricultural and non-agricultural sectors.
The workforce (people from age 14 plus) swelled by 9.7 million to 960 million during January-April 2017. But the number of employed did not grow, it was reduced. In view of rising population and youth dividend, the available work force continues to increase.
In the face of demonetiation of high value currency, people left towns and cities when small and medium industrial units closed and went back home to the villages where they had a shelter and did not expect to find jobs soon as the closed units remained locked up. Did they realize that jobs were scarce and they could not spend on travel, only to return disappointed? Young people seeking jobs for the first time are said to be the worst hit.
While the number of people employed fell by 1.5 million, the number of people who declared themselves unemployed fell much more - by 9.6 million. As a result, the labour force fell by 11 million. This substantial fall in the denominator is responsible for the fall in the unemployment rate.
The unemployment rate during September-December 2016 was 6.8 per cent (29.6 million unemployed out of a labour force of 436 million). in January-April the rate fell to 4.7 per cent (20 million unemployed out of a labour force of 425 million).
Significantly, 9.6 million drop in the unemployed count is close to the addition to the work force. Is it like saying that almost the entire new work force of January-April 2017 did not present itself for employment? Was it a seasonal phenomenon? It was not. September-December is a busy season as the kharif crop is harvested during this period and most festivals fall during these months.
The 2016 crop was good and should have kept employment levels high. January-April is a relatively lean season. On the back of this, could demonetisation have had a full impact during these months while it was partial during September-December quarter?
Did the demonetisation of November 8, make it evident to the new labour force that there was a grave scarcity of jobs? Was it evident from the drop in the labour participation rate to 46.9 per cent from January until October 2016?
In November 2016, it was still the festive season, yet job creation diminished to 44.8 per cent. Was it the immediate impact of demonetisation? The drop in labour participation is in line with CMIE's observation that new investments have been falling. For a developing economy like India, a drop in labour participation rate is a sign of an economic slowdown.
At another level, according to Indian Express, not even a tenth of 3million young people who had received or were undergoing training under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in earlyJuly received job offers. Actual placements could be fewer. Was this seen as a failure of the Narendra Modi government's flagship skills training and certification scheme?
Job creation requires a vibrant economy; investment and consumption fuel the demand for labour, skilled and unskilled. Did this happen between 2004-05 and 2011-12 when an estimated 52 million non-farm jobs were claimed to have been created, nearly half in construction and the rest in the services and manufacturing sectors.
The question is whether this scheme ~ seeking to impart industry relevant skill training to 10 million youths over four years (2016-2020), largely through private accredited "training partners" and with the Centre paying the entire expenses on fees ~ is required at all.
The Skill Development Minister, Mr. R.P.Rudy, lost his position in the Council of Ministers because there was little or no return on budgetary allocations and spending of Rs.12,000 crores. Was the Minister replaced because he was too visible in the party circuit with his wife and featured in social supplements of two major newspapers of Delhi? Will his successor find his budget trimmed or will the Ministry be abolished sooner or later? It was the Prime Minister's pet project; yet it has come to grief.
One untested opinion is that the focus should be to ensure minimum standards in schools, colleges, polytechnics and industrial training institutes (ITIs). But where are the teachers in schools? Leave alone the numbers, those in service or on contract or what is called guest teachers, do they get their wages paid even in months?
How are they to teach children from malnourished families? Where are the classrooms, leave alone the new mantra of toilets everywhere? It is in this scenario that just 43 per cent of class VIII students in rural government schools can divide three digits by one digit and only 45 per cent are able to read simple sentences in English, according to the NGO Pratham's Annual State of Education Report for 2016.
The training of broadband and mobile handset repair technicians, machine operators, customer care executives, air hostesses or beauticians could be left to the private sector, says the Pratham report. The Rs 12,000-crore outlay for PMKVY, mainly towards training modules of 150-300 hours duration, could possibly improve the infrastructure and course content in 2,284 government ITIs. Are skills and practical training acquired on the shop floor? The private sector looks for people ready and trained and employable from day one. It takes no responsibility for training and imparting practical skills, which should be its duty as part of the probation period or even setting up training workshops to meet their requirements from tax deductible expenditure. But it is completely in the denial mode. The top executives must get high salaries and perks from day one or even be trained if the selected candidates have the potential for senior positions.
Lalit Sethi is a Journalist of long standing and a commentator on Political and Social Issues.
—[IFS]