Unemployment and Economy

India has been experiencing dramatic demographic shift with now youth accounting for half of population. Next 15-20 years are going to be “Golden Period” to reap the benefits of “Demographic Dividend.”

Census 2011 indicated the most of youth are in underdeveloped regions like UP, Bihar, MP, Orisha etc. of country which is both alarming and opportunistic. Alarming/threatening because this will further exuberate the existing social tension and opportunistic in sense that we have lot of potentials to utilise local physical resource & tap potential human capital for development of regions. But this will require increased focus on skill development and education.

Creation of sustainable employment opportunity for youth is main priority for the nation. Only then we can fully embrace the demographic dividend and utilise youth power in nation building otherwise it will prove to be demographic disasters. Sustainable employment is not providing manual job under government scheme like MNREGA (it’s a waste of human potentials without any generation of assets for future use) but creating jobs of endurable/permanent characters in Agriculture, Industry and services sectors of which besides using youth power will help to reap the benefits of globalisation by producing for the world (‘Made in India’) & serving the world (‘Served from India’). For this we need to focus on the reforming education at all level to inculcate the elements of creativity and curiosity. At the same time we need to focus on the skill development along with education to make youth employable and employer (Entrepreneurs).

EMPLOYMENT GENERATION IN AGRICULTURE: Since 50-60% of workforce is still employment in agriculture we can only ensure sustainable and inclusive growth by integrating agriculture with wider economy. There is need for multi-dimensional approach to develop agriculture and allied sector. On one hand there is need to increase public spending in agriculture with focus on the creation of additional Irrigation facilities, R&D to create more productive varieties of crops and technology for public use, development of robust extension services (for providing technical assistance to farmers on new technologies adoption etc.), creation of marketing support system by way of strengthening and developing cooperatives in marketing of agri products. To create new quality jobs, we need to promote value-addition in agriculture by setting food processing & other agri-allied industries in rural areas. This will have multiplier or domino effects and act as connecting link between two main sectors agriculture and industry (also Bharat & India).  The building of warehouse, factories will in turn create job during the construction, maintenance and operation phase. This will also ensure that farmers are involved in development process as proper supply chain will give them fair price of agriculture produce and avoid distressed sale immediately after the harvest. Involvement of Co-operative sectors could ensure that real beneficiaries of program like Farm to Fork Programme (rather than FDI in retails) are farmers rather than traders, middle man and foreign companies. Even if FDI is allowed, it would provide a more level playing field to farmer and village folks.

EMPLOYMENT CREATION IN INDUSTRY: Lack of supportive ecosystem has virtually de-industrialised the country or we could say Industrialisation/Manufacturing never took off in meaningful way in country.  The share of Industry in GDP is merely 15% stagnant from last 20 years (In China Manufacturing accounts for 35% of GDP) even after so called liberalisation of economy. We have not been able to reap the benefits of our domestic market leave alone globalisation potential or global market.

On the contrary we are “Exporting our Jobs to China” or “Weakening India and Enriching China” due to sustained efforts to create manufacturing base in India:

  • India ran a trade deficit of $1 billion with China in 2001-2.
  • The capital goods imported from China alone amounted to $150 billion + (in last 7 years). India imported from China three times more than it exported to it.
  • The India-China trade deficit increased by 34 per cent to reach $12 billion in the first five months of the year 2013(with total trade of $26.5 billion during the same period).

Beside the export of job this has serious security, strategic and geo-political implications. Firstly import of the telecom, power, and IT& Computer hardware equipments from strategic rival (and country with which we fought a bitter war in past) like china exposes us to vulnerabilities during the time of crisis with serious national security implication (think of ripple effect of sabotage in power and telecom infra during the times of national crisis or even during normal times). Secondly what we are doing in effect is making strategic rival china economically stronger and creating more jobs in china than creating jobs for our domestic youths. Also the trade deficit with China weakens the Indian Rupee and Indian economy and strengthens the Chinese economy – which again does not serve the geo-political interests of India.

 Manufacturing is sine-qua-non for creating sustainable employment generation opportunities. We have largest workforce in world and technological ability then why can’t we become leaders in quality manufacturing (or rather just in manufacturing!)? We need single minded focus on implementation of National Manufacturing polity which aims to create domestic capability and competence in industries where there is a huge domestic demand like telecom, Hardware, power equipment etc along with creating basic infrastructure for making manufacturing a competitive enough to survive in global competition. This will have ripple effects on employment creation, making economy competitive and growth of economy as whole on sustainable basis for long term creating avenues to accommodate bourgeoning youth in development process (or reap benefits of demographic dividend.)

On the Need for Alternative Vision or Approach:

There is dire need to project the alternative vision of development which is not focused on the subsidy rather on the concept of enterprise with focus on creating enabling environment and basic infrastructure.

What we as a country have done during the last 10 years: Just spend away (or through away) bonaza from growth investing little in roads (& other basic infrastructure) and other areas that could foster its development and competitiveness ensuring long term sustainability of growth to bring the people out of poverty rather than making them dependent on government for perpetual time to come. In name of inclusive growth we have ensured poor are excluded from growth as there is no sustainable employment generation or source of livelihood for them!

In case of Agriculture: The public investment on the agriculture in term irrigation and other essentials infrastructure has come to halt and also no new R&D investment which got translated in the benefits to farmers has been seen in last 30 years. On other hand we are dolling out money on subsidies to Fertiliser companies without taking into consideration the long term impact of unbalanced use of fertilisers which will results in barren, salty and acidy land and resultant reduced productivity and problem of food scarcity ( which National Food Security Bill is not going to address) in coming years.

If we invest in infrastructure besides creating employment during the construction, maintenance and operation (it’s not just construction but whole range of industries involved in backward and forward linkage with construction sector get a boost be it cement, construction material/chemicals , machinery equipments, Banking/finance, IT, service industry like security guards etc. ). Better infrastructure like Good Quality National and Rural Roads creates base for other industries to flourish, helping farmers to reach the Mandi on time to sell agricultural produce, making it easier for people to commute and take advantage of growing economy by participating in national growth story, making it possible for people from rural hamlets to take advantage of health and education facility (yes, it does help to reduce child and maternal mortality!). If there is good infrastructure in terms of adequate supply of power, good transportation network (for mobility of goods and people) it would make manufacturing competitive as they no longer need to invest in non-essential captive power generators and we could create more jobs in process of making India a manufacturing hub for world.

Creating a Manufacturing/ Industrial base has implication for Macro-economy, Current Account Deficit (CAD) & Depreciation of rupee beside job creation.

Whether India will be able to seize this opportunity or would it rather ignore it ( like another lost opportunity) will have serious implications for India.


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