Blame it on big bills

While there is cause for satisfaction at the overall 7 per cent growth of the Indian economy, the jobs scenario is far from comforting and should worry the Narendra Modi government which had come to power on the promise of cutting down on joblessness. According to a recently-released report of eight key sectors of the non-farm economy, compiled by the Labour Bureau of the Central government, jobs increased by a paltry 1.1 per cent in 2016. That this is happening despite various new initiatives is particularly unnerving.

The Labour Bureau’s 2016 report also raises alarm on underemployment with growing number of workers not finding work for full year. Only 61 per cent of the workforce was found to have year-round jobs with 34 per cent working only six to 11 months even though they were willing to work for 12 months. The report also revealed that 68 per cent households in the eight non-farm sectors were earning less than Rs 10,000 per month. Other figures in the survey were no less disconcerting. Gross credit given to industry grew by just 6.7 per cent in the past three years, the index of industrial production inched up by a mere 6 per cent and growth in gross fixed capital formation slipped to an alarmingly low 0.6 per cent in January 2017 from 6.1 per cent at the same time last year.

The one big failing over three years of the Modi government is its inability to create new jobs. This stands out even more starkly considering the BJP vociferously vilified the UPA's ten years as a period of jobless growth. Also, PM Modi did promise voters 10 million new jobs every year.

In 2015-16, only 135,000 jobs were created across eight key sectors-manufacturing, construction, trade, transport, hotels and restaurants, IT and BPO, education and health. Evidently initiatives like Make in India, Skill India and Start-Up India have failed at any significant generation of employment.

And despite their effervescent praise of the government, big corporates have shied away from investments. Peaking at roughly 16 per cent of GDP in 2007-08, corporate investment has since fallen to under 10 per cent. A November 2016 analysis by the National Institute of Public Finance & Policy states that for a sustained 8 per cent growth, private investment needs to rise well above 25 per cent of GDP.
Another big criticism has been the failure to develop a more market-oriented approach. The government has consistently slipped on its disinvestment targets, and now, with the stock market touching new highs, it would have been a good time to finally deliver on its minimum government agenda. The government's policy advisory body, Niti Aayog, has suggested strategic disinvestment in 12 public sector units. Lastly, India is poised to take a big leap with many positives working in its favour, but it could all be frittered away if the government loses focus from job politics to cow politics.

If the NDA is judged on this metric alone, it has proved to be an utter failure. Indeed, this is borne out by its own data provided by the labour ministry. Just one comparative data point tells us the story of the sheer decline in organised sector jobs. During the three years from 2009 to 2011, when India’s GDP was still growing at an average 8.5%, the organised sector was producing on average 9.5 lakh new jobs every year. Bear in mind, even this was seen relatively as ‘jobless growth’. In the last two years, 2015 and 2016, the average employment generation has plummeted to less than 2 lakh jobs a year. This is less than 25% of the annual employment generated before 2011.

In 2015, when fresh employment generated in these 8 sectors collapsed to an all time low of 1.5 lakh jobs, the government was so alarmed by the development that it decided to review the methodology for data gathering. It expanded the scope of the organised industry from just eight manufacturing sectors to include some key services industries such as education, health and restaurants. This was clearly done to bump up the employment growth figures because the manufacturing sector was showing a very poor growth trend