In­dia's econ­omy leaves job growth in the dust

The Pak Banker - - OPINION - Chan­dra­has Choud­hury

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).

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.