JOIN – The Need of the hour

The budget has lot of expectations from almost all constituencies.  The corporates, personal and small scale industry clamour for lower taxes. This budget is presented after Demonetisation (Demo)and Remonetisation (Remo)which adds to more expectations from the budget.  The data from tax collections point out impact of Demo and Remo instituted by Namo defies doomsday prophecies. At the same time, there has been representation across different class of people such as Patidars, Jats, Gujjars for reservations. Most of the agitations are participated in large numbers by youths, youths have the time as their unemployment rate is quite high compared to people in the age bracket of 30’sThe editorial column in the Hindu has pointed out unemployment range between 9-10.5 % for people in the age group of 15-29 years, but unemployment rate declines drastically to less than 1.0% for people above 30’s.,maybe people above 30 are in a sweet spot .

National Democratic Alliance (NDA) government has recently approved an ordinance passed by Tamilnadu government for conduct of Jallikattu (bull embrace). NDA government had to listen to YMV – Youth’s master voice for the conduct of Jallikattu. In my view, NDA government will be approving lot of ordinances in the next few years unless remedial measures are undertaken to address unemployment problem especially among youths. The government has posted good GDP growth rates around 6-7.0% which is laudable. At the same time, job growth has been abysmal.

The question to be asked – 5% GDP growth with 3.0% job growth is better or 7.0% GDP growth with 1.0% job growth?

Jobless growth

The latest quarterly survey by the labour bureau points out that that India has never created so few jobs, since the survey started in 2009, as in 2015: Only 1.35 lakh jobs compared to more than 9 lakhs in 2011 and 4.19 lakhs in 2013 in eight labour-intensive industries based on the survey.

Based on data from Economic survey of India, the growth rate of the labour showed that during the last decade (2001-11), the growth rate of the labour force (2.23 per cent) was significantly higher than the growth rate of employment (1.4 per cent).  In addition, only six out of 10 people among working age population are employed throughout the year. India needs to create at least one million jobs every month to address the problem of joblessness otherwise our country’s demographic dividend will be a disaster. Just as startup India, Make in India and Digital India. NDA government should institute a programme coined as “Join” which is Jobs in India. What would be the major initiatives under Join programme?

Join -Way to Prosperity

Confederation of Indian Industry (CII)study analysis points out in the period  2004- 05 to 2011-12, employment growth in highly skilled sectors was much higher than that in low skilled sectors. This was reflected in the jobs growth seen in high skilled sectors such as – Biotech (16.81%), Electronic Systems (14.24%) IT&BPM(10.81%),Defence Manufacturing (10.69%), Aviation (8.85%). In contrast employment CAGR growth during the same period for Leather Industry  was negative 3.02%, Textiles and Garments ( 1.64%), Tourism and Hospitality (1.64%) and Food Processing (0.86%). The outlier in terms of labour intensive sector employment growth is the construction sector (72.75%) because of robust housing demand, higher infrastructure spending, tax incentives, speculation and haven for black money.  In the Indian context, employment growth in labour intensive sectors such as Textiles, Tourism and Leather is of paramount importance as majority of the youth have education only up to secondary level (Refer Table Below).

Table 1- Education Profile (Indian Working class)

table1

These sectors such as construction, food processing, leather, textiles and garments, tourism and mining  need to be provided with more policy impetus compared to other sectors.  One of the neglected sectors is Tourism. According to FICCI study, for every INR 1 million of investment, the number of jobs created is as follows: Travel & Tourism – 78, Agriculture -45 and Industry -18. Kheersana Yumlembam, a reputed tourism expert reveals the fact that the US captured 15.4 per cent of the worldwide tourism market. France captured 7.2 per cent of the market, Spain 5.6 per cent, China 4 per cent, and India only 1.45 per cent as of 2014, which is very mediocre compared to its immense potential. India has a vibrant film industry though their names ape the West. Well known directors such as Mani Ratnam shoot their films in beautiful locations in India. The government should provide a tax rebate to film makers who disclose the location in their film credits. This would foster domestic tourism.  In addition, focus should be on harnessing the great soft power potential in terms of music festivals, dance festivals, festivals of different religions(India being a secular country), promoting health tourism and integration with smart cities programme.  Government in the pecking order should focus on harnessing the potential of Tourism sector.  

As India makes the transition from developing to developed country, predominance of agriculture is likely to decline in the coming years. The agriculture will witness a decline in human returns replaced by machines to improve productivity. It is more important for the Government to provide job opportunity for the displaced job seekers from agriculture in the manufacturing sectors.  The government should provide more than 30% tax exemption for sectors such as Tourism, Food Processing, Leather and Textile and Garments for creating 2.0% additional jobs. The other sectors incentive would be in the range of 20% income tax exemption for other skilled sectors for creating additional jobs.

Thus, JOIN will help in creating more jobs, thereby result in more domestic consumption, thereby resulting in higher GDP growth.  In addition, it would act as a catalyst in in unleashing the animal spirits of the economy. India’s growth need not depend on protectionist policy of developed nation. The programme of JOIN is a domestic one, it is based on First developing India. The choice is left to the government whether to face more social unrest or implement programme such as JOIN. Is the Government ready to Join?

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2 thoughts on “JOIN – The Need of the hour

  1. Good article.At the end of the two years of Modi government, one major weak point has been lack of sufficient job creation. Prime Minister Modi in his election speeches did promise to give jobs to the youth. Around 100 million youth are seeking jobs every year in the Indian job market. But only 1.35 lakh jobs were created in 2015 and 4.93 lakh jobs were created in 2014 The slowdown in manufacturing growth has been another weak spot in the last two years of the Modi government. There has been the lack of momentum in manufacturing sector growth despite the launching of Make in India initiative. IIP growth was low at 0.1% in March and manufacturing growth contracted by 1.2% in March 2016. Manufacturing comprises 75% of IIP index and so if manufacturing growth is slackens, IIP is dragged down. Why is it that despite all the hype about India becoming the next China as the factory of the world, the manufacturing growth is not picking up?

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