Focus on job creation

Focus on job creation

The national elections in India are halfway through and by most accounts it seems that the next government will be formed by the NDA.

There are some optimists in the opposite camp who are banking on a slim chance of a ‘Third Front’ government supported by the Congress.

Whoever forms the new government, the latter will have to take enough cognisance of the fact that this country is a ‘young country’ in terms of the age profile of the population and that the young electorate has high economic aspirations.

The anger against the incumbent UPA government is regarding the economic slowdown – for a young generation that got used to 10-15 years of growth – exacerbated by the feeling that they have been cheated and looted by the corrupt rulers.

The dominant fraction of the Indian population today wants economic prosperity: more jobs, more money in the pocket, more availability of food and other goods of consumption, better services and better living standards. How will the country’s economy grow faster to fulfill these ambitions?

The nation’s GDP arises mainly from agriculture, manufacturing, mining and services sectors.

Between these, agriculture is the basis for the vast majority of our nation’s poor and vulnerable population.

About one-half of the labour force in India today is in agriculture. In contrast, agriculture’s contribution to the national GDP is less than 15 per cent.

The population of the country is increasing; the challenge before the government would be to feed this growing population.

To add to the woes, the farm yields and agricultural productivity are dropping due to soil degradation, increasing salinity of soil due to tremendous use of fertilisers, pesticides and excessive irrigation over the previous decades of green revolution.

An important issue before the next government would therefore be to increase the food production, optimise the food utilisation, and to ensure effective distribution so that food resources are available to the entire population.

Adequately feeding the increasing population, consisting of rising numbers of vocal youth, is one of the main challenges. Related to the above, is the problem of water availability.

Water resources are decreasing rapidly, mainly due to their misuse, short-sighted policies of the successive governments at the centre and in the states and also due to the climate change.

India needs to start respecting the nature and stop recklessly playing with it for short term political gimmicks and gains.

India needs to invest heavily into agricultural research, efficient and effective usage of agricultural resources, ecology and environmental sciences, rural infrastructure, better credit facilities for rural areas and other scientific and management inputs.

Manufacturing sector has taken a hit during the past several years in India. Index of Industrial Production has been negative during February 2014, at minus (-) 1.9 per cent.

India has fallen way behind other nations in Global Competitiveness. While the UPA 2’s policy paralysis and wrong policies where they existed have contributed heavily to this problem, the main problem seems to be more ingrained and more cultural.

Chinese, Korean, Indonesian, Vietnamese, Bangladeshi, Brazilian, El Salvadorian, Mexican and many more countries’ products and services are superior in quality to the Indian.

To aggravate the problem, Indian items and services do not necessarily have the lowest cost and therefore a competitive price.

Unless there is a sea change in the attitude to customer care and quality, a reversal in India’s fortunes of exports from this sector is not possible.

Industrial growth is not just a technical or policy issue. It has much to do with social reformation and our view of the world around us.

It is up to the next government to provide the necessary transformational leadership.
Employment generation

Moreover, from the Indian people’s point of view, an important product of industrial growth has to be employment generation on a large scale.

Aspiring, young and aware population has to be provided well-paying jobs. So far, the industrial GDP growth in India has not come from labour-intensive manufacturing.

It has been driven by less labour-intensive activities such as the IT and ITES industry, business process outsourcing, finance and banking, and construction and real estate.

The employment elasticity of industry i.e. per cent increase in employment for every one per cent rise in industrial GDP has been declining drastically.

From such ‘near jobless growth’, India has to go to a model of growth with job creation.

Perhaps, the next government may encourage small and medium scale enterprises so that they form a very large part of India’s manufacturing / industrial sector.

The government should take care that these units are dispersed evenly across the rural and small towns of the country.

The economic slowdown in the world is one major problem.

The technological developments are leading to a situation where the employment generation is more at the higher skills level.

The worldwide slowdown has merely exacerbated the already existing structural problem.

Can low skilled people be employed in an industry that is also competitive on a global scale?

Can there be a concerted national effort to enhance training and education and acquire the required skills?

Mining is another contributor to the GDP.

The mining activities in Goa, Odisha and Karnataka which had ground to a halt due to Supreme Court rulings, are slowly being revived now with the court relaxing the restrictions.

The point is: In India a considerable portion of mining has taken place illegally without license and by violating environmental norms.

What the next government needs to do is to encourage legal, environmentally sound mining projects.