Employment generation is the elephant in the room

Through his 10 years in office, Prime Minister Narendra Modi has been trying to address this problem by encouraging ‘micro-entrepreneurship’. Even the interim budget reflects that, but even if government schemes pick up pace, it would take a long time to make a visible difference.

While we may be gung-ho about the GDP growth numbers there is no denying that Prime Minister Narendra Modi has a ‘jobs’ problem in his hands. While the February 1 Interim Budget addresses many issues, it skirts around the elephant in the room — employment generation.

The founder of a ‘temporary work’ provider once said that there is no dearth of jobs in India but there may not be enough jobs at the salaries that people may expect. The statement can be modified to say there are enough jobs but not the kind of jobs that people want, which is primarily salaried permanent employment, preferably in the government (sarkari naukri) that comes with tenure security, and pension.

As technology evolves, there is bound to be a reduction in the human workforce, both white- and grey-collared as well as manual labour. With increased automation, the employment intensity in manufacturing declines. This is true not just for large industries but also for medium and small-scale enterprises (MSMEs). Digitisation, AI, and Industry 4.0 are going to accelerate this process. The employment multiplier of activities that were traditionally labour-intensive activities such as construction, go down with the introduction of modern methods and materials. 

Through his 10 years in office, Modi has been trying to address this problem by encouraging ‘micro-entrepreneurship’ — changing the paradigm from ‘job seekers’ to ‘job givers’. Even this budget has provisions such as Mudra loans, Vishwakarma and Lakhpati Didi schemes to incentivise this process. But it is easier said than done, and even if it picks up pace it would take a long time to make a visible difference.

Coupled with this is the problem of skills. Successive governments have tried to promote skill development with little success. The Modi government has not been very different despite greater emphasis in this area. The problem is rooted in our aversion to vocational training and obsession with academic qualifications. No wonder we have qualified engineers and graduates queuing up for clerical and lower-order jobs in the Railways.

The problem is complex and there are no easy solutions. Doling out government jobs is going to put a huge economic burden on the nation for the long term besides reducing the efficiency of the system in the form of low productivity, and an idle workforce that will eventually lead to leakages and corruption.

There is a larger issue of income distribution and reducing inequality. This means putting more money into the hands of the population at the bottom of the pyramid. For a long time we have depended on doles as a placebo, but that cannot continue forever (no matter how vociferously Leftist developmental economists prescribe direct cash transfer as a panacea) if India has to move towards becoming a developed nation by 2047.

One hears politicians raising the bogey of reverse migration. This, per se, cannot be viewed as a retrograde development — if the rural economy and Tier 2 and 3 cities/towns take off. It will also ease the pressure of over-urbanisation in large cities. The economic activity generated around the Ram temple in Ayodhya is a recent example. Therefore, the emphasis on tourism (including spiritual tourism) can be a unique model for India that can be a powerful income generator in the hinterlands. An increase in rural income through value-added agriculture, tech-enabled farming, and modern supply chains (for which farm laws were essential and will hopefully be executed soon) can check the exodus from villages. Thrust on the blue economy and aquaculture can augment the same trend.

Politicians and economists are not doing anyone a favour by attaching a stigma on migration or working abroad, including those queueing up to work in Israel’s construction sector. The political morality of the proposition apart, export of manpower is not new. Kerala’s economy has been built with money repatriated from West Asia over the past many decades. In a globalised world, the mobility of people will be the new order, especially with the ageing demographics of many countries.

That said, there is no long term if we don’t survive the short term. That partly explains the government’s massive thrust on infrastructure or the railways minister announcing recruitment plans. Continuing the MNREGA, albeit in a more cost-effective form, is part of the same plan as is the Agniveer Scheme.

But in the long haul, we need a change in mindset. That will come through creating aspiration among youngsters by which they realise the future is theirs to seek and for that no job is taboo. The Finance Minister’s mention of India’s sporting successes was not without a purpose. Youngsters now understand that even sports can be a career option. We must look ahead with new lenses, shedding the povertarian spectacles of the past. 

(Sandip Ghose is a current affairs commentator and marketing professional. X: @SandipGhose.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.