India's economy leaves job growth in the dust
FOR the last two decades, India has had one of the world's fastest-growing economies. Even in recent years, when the global recession and complacent policymaking have slowed progress, growth has remained a healthy 5 percent to 6 percent.
Recent surveys of employment patterns in the workforce, though, point to the disturbing fact that rapid growth over the last decade hasn't been accompanied by a spurt in jobs. If anything, the word "jobless" needs to be used as a caveat prefacing the words "Indian growth story" to better understand the nature of this country's triumphs and failures.
Recent studies have shown that in the five years between 2005 and 2010 fewer than 3 million new jobs were added to the economy. This is worrying when one considers that about 12 million people join the workforce every year. The malaise is particularly serious in the manufacturing sector, which shed as many as 5 million jobs between 2004 and 2005 and between 2009 and 2010 and has been unable to absorb the (to some extent desirable) exodus from agriculture in India's modernizing economy.
Without large-scale job creation, India's growth becomes, lower down, a fiction to millions of people looking for structured work and unable to find it. The problem becomes more pressing when one factors in India's prospective demographic "bulge" in the coming decades, as everincreasing numbers of young people join the workforce every year before fertility rates fall and the population stabilizes around 2040 at about 1.5 billion. What some economists project as a ''demographic dividend" could turn out to be a period of crisis marked by steep unemployment and rising social unrest.
In a report in the Mail Today, SPS Pannu wrote: Planning Commission figures reveal that while in other emerging economies like China, Brazil and South Africa the manufacturing sector has grown much faster than the GDP, this has not happened in India where the share of the manufacturing sector in GDP has stagnated at 16 per cent.
This has had a negative impact on India's global footprint. For instance, China has succeeded in transferring as many as 150 million people from agriculture to the manufacturing sector and has a 15 per cent share in world trade while India has a mere 1.4 per cent share.
The Planning Commission is of the view that "India has not been able to fully leverage the opportunities provided by the dynamics of globalisation that resulted in a dramatic shift of manufacturing to developing countries over the last decade."
The economic survey for 2012-13 prepared by the country's chief economist Raghuram Rajan also states that India is creating jobs mainly in low-productivity construction and not formal jobs in manufacturing, which typically are higher productivity. And a recent piece by Gaurav Choudhury and Zia Haq in the Hindustan Times drew on some of the same data: Spinning new jobs, therefore, is critical for India's long-term socio-economic equilibrium. Large corporations are important, but as many experts point out, they are, in a sense, incidental. The future lies in the estimated 40 million small, micro and medium enterprises that are spread across the dank tanneries of Mumbai's Dharavi slum township, in the room-sized waste-recycling units of outer Delhi and elsewhere in the country. Put together, these grubby factories contribute towards half of India's factory output, 45% of exports and employ more than 60 million people (India's high-profile service sector employs no more than 40 million).