JOIN USFor Prime Minister Narendra Modi, the year 2016 is too crucial. If the economic growth is not sustained and if not enough jobs are generated, then we have to stop thinking about the so-called ‘achhe din’. The focus now should exclusively be on creating jobs.
Seen globally, India continues to be poverty-ridden with not enough employment for the youth. The fact that India is ranked below even countries like Laos, Zambia and Sudan is perplexing.
When the NDA government came to power in May 2014, we looked forward to Modi’s pledge of driving us on the manufacturing bandwagon. Alas! That is nowhere seen.
Indeed, when he took over, expectations were flying high. So much so that economists had to point out that the economy he has inherited is extremely bad and it will take a couple of decades to put it on the tracks.
Modi was told, rather categorically that there is a natural investment cycle and to reach the goal of higher economic growth it will take at least two years. Had these prophecies been taken into account, the situation wouldn’t have been this bad as the government now finds itself in.
Not that the economy has not turned the tables. The consumer demand is still precariously low. The corporate sector today is burdened with high-interest loans.
To make things worse, various sectors of the economy are passing through bumpy times. Resultantly, India Inc is neither investing much nor retains the work force. This is the reason why the consumer demand is near to the ground.
Banks are in a very bad shape because loans and advances are not being recovered. The situation has come to such a pass that owing to the grave NPA situation, banks have stopped issuing loans to new investors.
As there are no new investments, there are no new employments. And, not surprisingly, the job scenario is becoming increasingly dreadful. So, for the Modi government the time is running out. If it wants to create at least a crore jobs, there should be a 2% annual growth of the economy.
Manufacturing gone
But the moot question is: how to generate jobs. According to some experts, the era of manufacturing is gone.
The manufacturing sector has now turned fully auto-matic and computerisation is the new mantra. Consequently, this sector cannot create jobs for the unskilled class and those agricultural labourers who are migrating to cities.
But, delve a little deeper into the global scenario and it is possible that the manufacturing sector can still work wonders. Global exports are rising day by day and China takes a lion’s share in exports.
In order to at least remain in the periphery, if not become equal to China, India’s ‘ease of doing business’ should look upwards. It is true that many forward-looking acts in regard to the corporate have been put in place. But more needs to be done. One big prospect of bringing substantial investment into the country is by making state governments compete with each other.
Employment creation
Four states in the past couple of months have risen to the occasion and the investment scenario there is reasonably looking up: Rajasthan, Gujarat, Madhya Pradesh and Andhra Pradesh. These states have brought a number of labour reforms to smoothen the progress of employment creation.
India may have missed the bus in manufacturing, but the high growth trajectory has been possible via the service sector. The contribution of the service sector should not and cannot be under estimated.
Take for example cars. For every three cars sold, one car creates a job for a driver. India sells some 25 lakh cars every year which means that there is a job creation of eight lakh drivers. Add to this the seven lakh driver jobs for the commercial vehicles.
So also is the case of e-commerce. It is estimated that by 2020, 13 lakh sellers will go online and the e-commerce business will be somewhere around $90 billion.
Employment-wise, every e-commerce seller creates 4 direct jobs and 12 otherwise, indirect jobs: storing, warehousing and delivery.
A simple computation will tell you that at least 2 crore jobs can be created by e-commerce companies. Even if these jobs are fashioned over a period of time and not instantaneously, there are, to be sure, a crore jobs for India’s educated youth.