Bet on human resources for Viksit Bharat by 2047
Long-horizon fiscal plans are a development must. India should lay greater emphasis on education and healthcare to avert the risk of being let down by a rigid labour-market profile
It was in 1867 under the British Raj that India adopted a fiscal year starting 1 April, when James Wilson was finance minister. Not only was the date arbitrary, so was annual accounting, drawn as it was from agriculture. Although other institutions traceable to early farming—like patriarchy— have been challenged, the idea of an annual reckoner has endured for centuries with little resistance. Even so, both longer and shorter cycles have had advocates. Stints to elected office span half a decade for the same reason that central planners came up with five-year plans: It’s seen as the least time it takes to make a big difference. Market-oriented or not, an economy’s path is guided by variables that can take as long as seven years to vary—and adjust. Similar logic backs business gurus who insist a CEO needs a span of many years for anything more than a tactical strategy to play out. Hence the Hindi term “quarter se quarter tak,” a snarky reference to market pressure on companies for shiny quarterly results. Long horizons matter— which is why the Viksit Bharat goal set by Prime Minister Narendra Modi assumes significance. It focuses Indian minds on how India can best emerge as a developed country by 2047 to mark a century of freedom.
As finance minister Nirmala Sitharaman said at a Mint summit on Saturday, we expect to have a billion citizens in the middle-income bracket by then. Our labour market, meanwhile, has been under debate for the pivotal role it will be expected to play, one way or another. Not only must our economy grow at an annual average of about 8%, this growth needs to be inclusive enough to uplift the bulk of our population by 2047. A broad look at our current profile of jobs would put the big asks in context. Despite postpandemic improvements detected by official surveys, we have low participation in the overall labour force (especially of women), too few formal job-holders amid too many self-employed, and weak wage escalation amid a sticky problem of joblessness (mostly among the youth) that has only shown a modest recovery from covid. The past half decade also saw a classic old exodus of workers from farms—our biggest employer—to low-skill service and construction jobs suffer a setback, while new factories have only just begun picking up the slack. It’s a far cry from a rich economy’s HR profile, but exactly how far we lag is hard to ascertain. Data offers a glazed view, at best, and labour trends have been hit by shocks like India’s 2016 noteban and 2020 lockdown. A gloomy view of how we’re placed emerges from the India Employment Report 2024 released by the Institute for Human Development and International Labour Organization. Among other statistics, its 2022 figure of four-fifths of our jobless being youth— with more educated than illiterate folks unable to find work—has evoked gasps. But its frailties must not be missed. Oddly, the time-frame of its study runs from either 2000 or 2005 to 2022. Since it lacks evenly spaced data-points and ends in a covid-hit year, its trend portrayals lack a reliable basis. Even its dismal take on how our educated youth are doing can be challenged.
Given the value of long-horizon projects, it’s sad that India’s labour records are too patchy to offer us a snapshot we can take as a testament of reality. What’s hard to deny is that our market remains rigid, we risk facing a ‘middle-income trap’ at some point, and our 2047 goal may elude us if we under-invest in education and healthcare. All said, this needs a fiscal fix. Like infrastructure, it can’t be left to market forces.