Instead of hard data, the Prime Minister relied on hypotheticals in the Lok Sabha
Then, in July 2018, the Prime Minister, in his reply to the motion of no-confidence moved in Parliament by the Telugu Desam Party (TDP), asserted that employment generation under his government had been robust.
The CMIE says 12.7 million jobs were destroyed in the month after demonetisation
But if you go to any district or subdivisional court, you will find countless briefless lawyers hanging around waiting for clients. How can briefless lawyers afford to hire more people?
The keywords in all these assertions are ‘may’, ‘assume’ and ‘if ’. Instead of hard data, the Prime Minister relied on hypotheticals in the Lok Sabha.
In fact, Mahesh Vyas of the Centre for Monitoring Indian Economy (CMIE) argues, even if one were to accept these numbers, they represent a shift of workers from one sector to another (from agriculture to transport, for instance) so that the net gains in employment are almost non-existent – and it is new employment which India urgently needs.
So, what is the true picture of jobs in India? According to the World Bank, India’s population in 2016 was 132 Crore. The Bank also says the employment rate (the proportion of working age people who are employed) in 2017 came down to 51.9 per cent. A more reliable figure comes from the CMIE: it says the employment rate averaged 42.9 per cent January–October 2016.
Then it fell, thanks to demonetisation. In March 2018, it stood at 40 per cent. ‘The number of persons employed in 2017– 2018 was 406.2 million (40.62 crore). This was 0.1 per cent or (46 lakh) lower than the 406.7 million employed in 2016–2017,’ its report says. In statistical terms, employment has stagnated, while there are one crore Indians who reach an employable age every year.
What is true is that the employment figures come with a lag of three years or so. Vajpayee’s government also used to face the Opposition’s taunts. They asked us where the employment was. Our reply was that all the work that was going on – in roads, construction, telecom, etc. – certainly wasn’t happening by itself, someone was doing it.
Later on, however, we got validation when the figures came out that during the five years of the Vajpayee government, 1999– 2004, we created 60 million jobs, which was six crore, or more than a crore jobs per year. That record has not been surpassed either by the UPA regime or by Modi’s regime – simply because the quantum of activity that was happening at the time is not happening now.
Of course, the Modi government axed its own foot with demonetisation in November 2016, which hit construction the hardest. Not only did construction slow down, but MNREGA went up in the states which sent migrant labour for construction work, like Bihar; the implication was that with work drying-up in construction, this labour returned to the villages and sought wage labour under MNREGA.
Incidentally, construction has been further hit by action under the Insolvency and Bankruptcy Code (IBC), in which a lot of construction firms have been caught. I met a builder a few months back and asked him how things were with small-time builders, and he said, ‘All of them are in jail.’
Most of them were small-time contractors who had other people’s money, but there were some big fish, too. This is certainly not to say that they shouldn’t be in jail if they have cheated people but only to point out that the sector is in the doldrums.
The situation now is that if you travel from Noida to Greater Noida, all along the expressway, you will see these modern ruins standing testimony to the Modi government’s policies. Instead of generating employment, the government has subjected Indians to de-employment.
Demonetisation led to de-employment not just in construction, but also in small industries. Take for instance Tiruppur, the textile centre in Tamil Nadu, which was hit with a double whammy of demonetisation and then the sloppy introduction of GST. It became virtually a ghost town in 2017, with many units shutting down since their costs rose 10 to 15 per cent. There has been de-employment in each and every place that is dominated by the unorganized or informal sector.
This has not been captured in figures; some say 20 million were de-employed. The CMIE says 12.7 million jobs were destroyed in the month after demonetization. There is a great discrepancy between the health of the corporate sector in India and the unorganised sector. The corporate sector was not so badly hit by demonetisation; but small and medium enterprises, and those that were virtually hand-to-mouth, were destroyed.
An important point in all this is the disturbing imbalance that has developed in our economy. According to the World Bank, the contribution of agriculture, forestry and fisheries to the GDP has declined to 15.5 per cent in 2017 – but it supports a population of around 55 per cent. How can 15 per cent of the GDP support 55 per cent of the population?
This has to be addressed because it fuels the rural–urban drift that puts pressure on the cities. For instance, a toilet costs three times as much to construct in a city than it does in a village. Therefore, your infrastructure costs can be contained if the rural–urban drift can be contained- but the only way to do so is to create employment opportunities in the villages of India. This is axiomatic. China did this by implementing its theory of the pole industry: they established an industry in the countryside so that the ancillaries could come up in the villages surrounding it. Where the industry was established itself became a township, and the villages became small towns and were easier to improve.
Now, there is talk that the Delhi–Lucknow road be turned into a defence corridor, that even small aircraft can land there. The talk of turning that into an industrial corridor started with the Vajpayee government and it was to be set up with Japanese assistance. But the problem in our country is that everything takes an enormous amount of time and there were the usual problems with land acquisition. Thus, the defence corridor, which would have been India’s version of a pole industry, hasn’t yet taken off.