Jobless Growth: Alarming situation : Columns

K. Gopalakrishnan

With the Centre mainly focussing on issues like cow slaughter, creating tension all over and dividing the nation on communal lines, the burning issues are totally ignored. The mainstream media too concerned about emotive and sensational issues even the disturbing fall in the GDP growth in the last quarter of the financial year did not get the desired attention. The Jan-March figure fell to 6.1 per cent compared to 7 per cent in the previous year.

Though there could be many reasons virtually everyone pointed to demonetisation. One was reminded about what former prime minister, Dr. Manmohan Singh warned in the Rajya Sabha during the discussion on demonetisation. There were expectations that the economy would outperform in the fiscal gone by anticipating spur in consumption with the implementation of the 7th Pay Commission and a favourable monsoon. The Centre’s calculation that demonetisation would provide surplus revenues with the unearthing of black money in huge amounts was proved wrong.

In fact the Reserve Bank of India is yet to provide the final figures of demonetisation. Another promise to the nation was that it will bring down terrorist activities and stone pelting by the crowds in Kashmir valley. The last few months have proved otherwise. The impact of demonetisation in the organisation is yet to come out and one hopes that it would not be adverse. It is the farmer who contributed maximum though he hardly gets justice. However many economists assure that the impact of demonetisation will affect only one more quarter and 2018 may emerge with high growth rate with better monsoon and more reforms.

One has to carefully watch the priorities of the Centre. If it continues to concentrate on divisive issues and communal politics with an eye on the forthcoming elections to the state assemblies within a year or so, growth rate may not be positive. It has to concentrate on announced policies like Make in India, Skill development, Start-ups. Slogans alone cannot work. They have to be translated into action. They have to be implemented with commitment and sincerity. Ideal approach would be to handle development in cooperation with the Opposition, keeping out politics from this national task.

It is of course difficult in a country where elections are held at different levels every year on issues unrelated to development in practise.Not that India has performed badly. It has had a fairly reasonable growth rate for decades. Even today with the decline India’s growth is the second largest in the last quarter. In the financial year India has retained the position of the country with the highest growth rate.

But there is an alarming feature. Though the economy is growing remarkably in comparison the growth rate of jobs is abysmally low. If not checked immediately it can have dangerous consequences. Simply put development will be meaningless if it is unable to offer jobs. With more and more people leaving agricultural sector and seeking occupation outside, the situation would be alarming in the coming years.

To be fair this is not a feature due to the policies of the NDA government. During UPA rule too, the situation was almost the same. Since 2004 high growth rate has not ensured matching increase in jobs. Jobs offered were rather low. Statistics reveal a lot. During 2001-2011 the growth rate of labour force grew (2.23 per cent) was significantly higher than the growth rate of employment(1.4per cent) several folds lower than the growth of the economy.

Report of Census 2011 reported that the average growth rate of the economy was 7.7 per cent per annum when it was only 1.8 per cent for employment. National Sample Survey Office (NSSO) data (66th round) in 2011 revealed that between 2004-05 and 2009-10 only 1 million jobs were added per year in a period when the economy averaged a growth of 8.43 per cent annually. A report by the HDFC on India’s tapering job growth says that “employment elasticity” in the economy is now close to zero – for every one point rise in GDP jobs grow only 0.15. Fifteen years ago it was 0.39. Most of the studies show that there is steady decline and is now heading towards disturbing levels.

A Sector wise study shows that the emphasis under the liberalised regime is on capital intensive projects and not labour intensive sectors. During the planned development Nehruvian model the emphasis was on labour intensive projects to take advantage of India’s vast labour force. Agricultural sector has 45 per cent of India’s work force contributing 15% to the GDP. Service sector is the biggest contributor to the GDP but employs less than 30 per cent of the work force. Same is the case with another capital intensive industry –IT.

The reasons for the present state are many. With liberalisation the engine of growth was knowledge intensive service sector with some segments of capital intensive manufacturing companies. Labour-intensive manufacturing sector did not become the engine of growth. Widespread labour saving measures kept out labour. Public sector which employed a large number of workers were closed down or sold to private investors which too led to employment losses due to economy measures. Contraction of labour intensive segment of the formal manufacturing sector and stagnation in manufacturing output too took its toll. Above all in the recent years private investments declined substantially.

The situation can be changed only through governmental measures like tax concessions for labour intensive companies, a check on ruthless labour saving automation, allowing investments in small scale sector through suitable change in laws as today there is hardly any investments in this sector. Perhaps a serious study is required on the problem to improve the situation.

Allowing the situation to continue can also have serious political problems. Already unemployed youth is attracted to movements like reservation for Patels in Gujarat, for Jats in the Hindi belt and Marathas in Maharashtra. These could be serious political groupings threatening the very system or creating law and order problems damaging to the economy. They are prone to violence too.

The Centre should look into these serious problems and come out with immediate measures. The policy on development and reforms need to be revisited and come out with measures for the betterment of the poor. The very first step should be to resolve the problems in the agricultural sector and put an end to the farmers’ suicides. Prescribing what to eat or read or wear is the anti-thesis of democracy. Jobless growth is no growth. In fact it is a crime. For in such a growth only the rich thrive.