Yashwant Sinha asks in his latest book: Where are the jobs?
In this extract from Yashwant Sinha’s new book, ‘India Unmade’, the former Union Finance Minister takes on the PM over misleading claims of job creation
- In May 2017, twenty-five lakh people appeared for a competitive exam for 6,000 jobs as Group D employees in the West Bengal government. Candidates travelled from Bihar and Jharkhand for the exam, in which over 400 people were competing for each job.
- In January 2018, 12,453 people applied for the job of peon in the Rajasthan government. There were only 18 vacancies, which means nearly 700 people vied for each post. The applicants included 129 engineers, twenty-three lawyers, a chartered accountant and 393 postgraduates in the arts stream.
- On 31 March 2018, newspapers reported that over 2.8 crore people had applied to take the online exam for nearly 90,000 jobs: 26,502 posts of train drivers and 62,907 posts of gangmen, switchmen, trackmen, cabinmen, helpers and porters in the Indian Railways. That translates to over 300 people applying online for each job.
- In a month-long process that began on 8 April, Mumbai Police looked to fill 1,137 vacancies for the post of constable. Among those who applied were 167 MBAs, 423 engineers, 543 postgraduates, three bachelors of law and 167 bachelors in business administration.
- One hundred and fifty engineers, with BTech and MTech degrees, have become constables in the Haryana Police. There is clearly a jobs crisis in India. ‘Where are the jobs?’ Road Transport and Highways Minister Nitin Gadkari asked reporters in August 2018, in the midst of a stir by Marathas for job reservation. Labour Minister Bandaru Dattatreya confessed in May 2017 that India was undergoing ‘jobless growth’. He said his ministry would compile figures for the last three years, but in June 2018, the Modi government withheld the labour ministry’s quarterly employment survey (QES) for 2017–18. The QES had been in place since 2009; officials said it was now likely to be abandoned. BJP president Amit Shah defended abandoning the survey, saying its formal employment figures did not include those who were self-employed.
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.
- ‘India produced 17,000 new chartered accountants [CAs] in the fiscal year 2016– 17; 5,000 of them may have started their own accounting practice. If we assume each accounting practice hired 20 new people, there were one lakh new accounting firm jobs created,’ said the Prime Minister. But, according to the Institute of Chartered Accountants of India (ICAI), the total number of CAs in India was 2,82,193 at the end of 2017. A large chunk does not practise in India. An informed guesstimate of the number of new CAs India produces each year is between 4,000 and 7,000.
- ‘India produces 80,000 new doctors, dentists and healthcare graduates every year. If we assume that 60 per cent of these started their own medical practice and employed five new people each, then the medical profession created 2,40,000 jobs,’ said the Prime Minister. But many of the doctors may themselves be unemployed!
- ‘India produces 80,000 new lawyers every year. If 60 per cent of them started their own new legal practice and each employed two or three people, the legal profession created two lakh new jobs,’ said the Prime Minister.
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?
- ‘There were 7.6 lakh new commercial vehicles sold in India last year. If we assume 25 per cent of these were replacement vehicles and 75 per cent new vehicles, and each new vehicle employs two people, then the transport sector created 11.4 lakh new informal jobs,’ said the Prime Minister. But in fact, the industry expects that replacement vehicles will drive growth in the coming years due to an ageing fleet.
- ‘Twenty-five lakh forty thousand passenger vehicles were sold last year. Let’s now assume 20 per cent are for replacement of old vehicles and 80 per cent new. If only 25 per cent of these new vehicles employed one driver, this alone created five lakh new jobs for drivers,’ said the Prime Minister.
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.