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The World Bank has ad­vised In­dia to raise its ef­forts at em­ploy­ment gen­er­a­tion since eco­nomic growth it­self can not solve the loom­ing jobs chal­lenge. In­dia, it said, will have to grow 18 per­cent per year at the cur­rent em­ploy­ment gen­er­a­tion rate to catch up with other com­pa­ra­ble economies.

The World Bank (WB) has ad­vised In­dia to raise its ef­forts for em­ploy­ment gen­er­a­tion since eco­nomic growth it­self can­not solve the loom­ing jobs chal­lenge. In­dia, it said, will have to grow 18 per cent per year at the cur­rent em­ploy­ment gen­er­a­tion rate to catch up with other com­pa­ra­ble economies in terms of pro­vid­ing jobs to its pop­u­la­tion over 20 years.

The im­pos­si­bil­ity of eco­nomic growth alone solv­ing un­em­ploy­ment prob­lem could be gauged from the fact that the WB has pegged In­dia’s eco­nomic growth at 6.7 per cent for 2017-18, a tad higher than 6.6 per cent pro­jected in the lat­est gov­ern­ment es­ti­mates. The WB pro­jected the growth at 7.3 per cent for the cur­rent fi­nan­cial year and 7.5 per cent for the next fi­nan­cial year. In­dia’s gross do­mes­tic prod­uct (GDP) growth plum­meted from 8.2 per cent in 2015-16 to 7.1 per cent in 2016-17.

The re­port said the same the­sis holds true for other South Asian coun­tries. “These (growth) rates are im­plau­si­bly high, im­ply­ing that rapid growth alone will not be enough. If South Asian coun­tries are se­ri­ous about in­creas­ing em­ploy­ment rates, more jobs will need to be cre­ated for ev­ery per­cent­age point of growth,” said the re­port.

The WB re­leased its bi-an­nual South Asia Eco­nomic Fo­cus re­port for Spring 2018 ti­tled Job­less Growth? in Wash­ing­ton on Sun­day, a few days ahead of IMF-WB spring meet­ings. In its pre­vi­ous South Asia eco­nomic fo­cus re­ports, it had fo­cused on back­lash of glob­al­i­sa­tion, tepid in­vest­ment growth, and fad­ing global tail­winds in the South Asian con­text.

In In­dia, the work­ing age pop­u­la­tion in­creases by 1.3 mil­lion peo­ple in a month and the coun­try must cre­ate 8.1 mil­lion jobs a year to main­tain its em­ploy­ment rate, which has been de­clin­ing, based on em­ploy­ment data an­a­lysed from 2005 to 2015, largely due to women leav­ing the job mar­ket.

In­dia would need at least 7 mil­lion jobs a year even if it sets an ‘un­am­bi­tious’ tar­get for job gen­er­a­tion, about 8.5 mil­lion jobs a year if it in­tends to keep em­ploy­ment rate con­stant, and 13.5 mil­lion jobs a year if it in­tends to catch up with com­pa­ra­ble economies, said the re­port. Keep­ing its eye on South Asia, the WB re­port said there is an ad­di­tion of 750,000 jobs in In­dia per per­cent­age point of GDP growth. In Pak­istan, 200,000 jobs are added for 1 per cent up­swing in GDP growth, while the fig­ure is 110,000 for Bangladesh. Prior to the re­port, the WB con­ducted a sur­vey. Ac­cord­ing to the sur­vey, re­spon­dents said bet­ter in­fras­truc­ture, af­ford­able hous­ing, and greater in­te­gra­tion with global mar­kets should be the top pri­or­i­ties to gen­er­ate more jobs per per­cent­age point in­crease in GDP growth. Against the back­drop of an uptick in global growth in the cur­rent year, the re­port pre­dicts that global de­mand and thus, the ex­ports from emerg­ing economies would mod­er­ate in the up­com­ing years to 2020.

It also notes that the 6 per cent growth in In­dian ex­ports in 2016-17 was lower than what the WB ex­pected in its Jan­uary up­date.

Ex­ports growth is key to em­ploy­ment growth in In­dia, economists and pol­icy plan­ners have ob­served time and again.

“With the In­dian econ­omy go­ing through struc­tural changes and tech­nol­ogy chang­ing the idea of our fu­ture ev­ery day, the re­port does not por­tray a re­al­is­tic pic­ture for In­dia's growth,” Ila Pat­naik, an econ­o­mist and a pro­fes­sor at the Na­tional In­sti­tute of Pub­lic Fi­nance and Pol­icy, said.

De­con­struct­ing the de­bate on un­em­ploy­ment, it says fe­male em­ploy­ment rate dropped by 5 per cent per year in In­dia in 2005-2015, whereas male em­ploy­ment rate de­creased “very lit­tle”.

Labour force par­tic­i­pa­tion rate is de­fined as the num­ber of per­sons look­ing for a job as a pro­por­tion of the work­ing age pop­u­la­tion (age group 15-59). In 2015-16, the labour force par­tic­i­pa­tion for males was 75.5 per cent, while that for fe­males was a mea­gre 27.4 per cent.

The na­tional sam­ple sur­veys in In­dia in­di­cate that fe­male labour force par­tic­i­pa­tion has re­duced, while the cen­sus data says it has re­mained con­stant, notes the WB re­port. This in­con­gruity in data, the re­port said, makes it dif­fi­cult to as­cer­tain em­ploy­ment es­ti­mates and prospects for not just In­dia, but all South Asian coun­tries.

The re­port notes that “faster eco­nomic growth leads to ei­ther more jobs in the ag­gre­gate, or to a re­al­lo­ca­tion of jobs away from self-em­ploy­ment”, but it also ob­served that this cor­re­la­tion is the weak­est for In­dia.

Though In­dia has grown faster than be­fore past 2005, the re­port says that job growth has rather re­duced in the ref­er­ence pe­riod 2005-2015.

“A fur­ther ac­cel­er­a­tion to 7.5 per cent by FY19 and FY20 is de­pen­dent on a sus­tained re­cov­ery in pri­vate in­vest­ments, which is ex­pected to be sup­ported by pol­icy mea­sures that im­prove the in­vest­ment cli­mate,” is said in its for­ward­look­ing out­look for In­dia.

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