SLIPPERY SLOPE
It was widely feared the consequences of demonetisation—which sucked out Rs 15.4 lakh crore worth of high value currency from the Indian financial system starting November 8, 2016— would be dire. It showed in the GDP numbers for the final quarter of 2016-17, when economic growth slowed to 6.1 per cent, despite a record foodgrain output. While the manufacturing sector’s output growth slowed to 5.3 per cent, compared to 12.7 per cent in the same period the previous year, the construction sector’s numbers slipped into negative territory. Demonetisation took its worst toll on the unorganised sector, which employs over 80 per cent of India’s workforce.
More than 50,000 migrant workers from Bihar were estimated to have returned to their home state after losing their jobs due to the currency crisis. Most of them—labourers, masons, cycle factory workers, textile mill employees and jewellery artisans—were forced to return home because their employers were unable to pay their wages due to restrictions on bank withdrawals. Economist Gurcharan Das estimated that for every percentage point drop in GDP, the economy would lose around 6 million jobs.
Now, the Centre for Monitoring Indian Economy (CMIE), a think tank that tracks business and
economic data, has put a number to the job losses in the aftermath. It says about 1.5 million jobs were lost in the first four months of calendar 2017. The estimated total employment during January-April 2017 was 405 million, compared with 406.5 million in the preceding four months (September-December 2016). These estimates are based on what CMIE calls consecutive ‘waves’ of consumer pyramids household surveys, which are all-India household surveys employing a sample size of 161,167 households, covering 519,285 adults. The most recent ‘wave’ was conducted over the four-month period from January to April 2017, and was the first complete ‘wave’ post-demonetisation. The figures are for total employment in the country, including the organised and unorganised sectors as well as the agricultural and non-agricultural sectors. The erosion of jobs happened even as the workforce (those over 14 years of age) swelled by 9.7 million to 960 million during January-April 2017. But, the number of employed shrank, indicating how critical it was for India to address the peculiar phenomenon of ‘jobless growth’.