- India needs eight percent growth over the next 20 to 30 years to grow the Indian economy from a lower-middle income country to an upper-middle income country
- The advantage to us is that India has a huge population of youth which if well utilised by providing jobs can reap rich dividends for India- if not, can become a nightmare and result in Social unrest.
- India should also be generating more jobs than other countries- India needs to create 12-15 million jobs each year. But the Indian economy is pretty slow in job creation despite good GDP growth.
- India’s rate of job creation is only two-thirds of the global average.
- The employment elasticity of the Indian economy—the numbers of jobs it creates with economic growth—has been declining in the last few years.
In this context there were two recent reports, both produced jointly by the Confederation of Indian Industry (CII) and Boston Consulting Group (BCG) named –
- “India: Growth And Jobs In The New Globalization”
- “Future Of Jobs In India, Enterprises And Livelihoods”
The reports analysed the reasons for low job creation and suggested how more jobs can be generated. This editorial summarises the recommendations made by the report.
Challenges for job creation in India
In recent years, however, very few countries have achieved such a sustained period of high growth and job creation, other than China. And in light of developments the world over that are creating a ‘new growth paradigm’ driven by the ‘new globalisation’ the aforementioned task is even more formidable.
India faces challenges in achieving this growth and job creation target.
- “Capitalization” of production systems, with increasing automation, is reducing jobs for workers and producing more wealth for owners of capital than for workers in production systems.
- “Financializing” of economies, with even more money being made from purely financial assets, has turbo-charged the increase in inequalities in incomes and wealth around the world.
- We are now witnessing a shift in this model of globalisation that shaped the economic growth models of several countries which followed the transition from agriculture to light manufacturing and rapid growth of exports, followed by the development of heavy industry and then services. This model which was sought to be emulated by countries India and Vietnam. Vietnam is being fundamentally disrupted today by the twin forces of growth in digital technologies, including manufacturing technologies collectively.
- “Industry 4.0” automation technologies, more flexible, and less dependent on labour are enabling production systems to be localised within developed countries’ markets.
Focus Areas for reforms
We need a focused implementation of these policies as well as a special focus on ‘activating’ key leverage points, described below, which are critical to the success of the new paradigm of growth and jobs.
- Digital infrastructure will be as critical as physical infrastructure. This should cover all layers of the ‘technology stack’ (described in detail in the report)—high quality and ubiquitous broadband and low-cost smartphones, the India stack, societal platforms, and standards and norms for interoperability of digital systems that enterprises can leverage. (Digital India)
- Risk and growth capital for micro-entrepreneurs has to be scaled up rapidly, along with the rules and mechanisms for easy access to them. (Mudra Bank, Stand up India Scheme)
- The learning and skilling ecosystem has to move towards a ‘life-long learning system’ as new kinds of jobs emerge with very different skill profiles. This will ensure that the appropriate skills are provided to enable employment in the new development paradigm and there is a continuous mechanism in place to update these skills as required. (Skill India Mission)
- India should be developing life-long learning systems that will enable people to learn new skills “just-in-time” when the content of their work changes, which it will often in future when new technologies are applied and new industries emerge.
- Labour norms need to be revisited to ensure that they also cater to and support the new types of workers and their employers who will drive growth in this new paradigm. (Labour Reforms)
- Coordinated strategies to increase India’s share of exports (trade facilitation, branding and marketing, foreign direct investment (FDI) promotion, etc.) should continue to be implemented, especially in light manufacturing sectors where the opportunity is ripe.
Drivers of Job creation
- Small Enterprises: The quality of small enterprise associations and clusters must be substantially improved. Giving the example of Ola Cabs and OYO Rooms, the report says Government policies should aim to strengthen and enable digital technology platforms and communications networks to empower small and micro enterprises.
- The Government must ease constraints on the growth of small enterprises and develop enterprise learning architectures which can help them to avail of shared services such as staffing, financing, quality management and so on.
- Innovative business solutions of small enterprises must be recognized and scaled up.
- India must pursue more growth in manufacturing and build infrastructure.
- It must vigorously pursue other avenues too. India has a large growth opportunity in natural produce sectors—food, fruits, vegetables, dairy, poultry and fish.
- Rural and urban economies support each other through natural produce supply chains.
- Natural produce enterprises can generate jobs around the country.
- India has enormous and diverse assets of natural beauty, heritage and culture, spread across all its states. Therefore, another sector where India has huge, insufficiently tapped potential for widespread generation of livelihoods is tourism and hospitality
- Some other sectors with large potential for more enterprises and sources of livelihoods around the country are healthcare, renewable energy, water and sanitation.
- Government at all levels, Centre, states and district administrations, should be coordinated under the Prime Minister’s Office and Chief Ministers with systematic methods for policy formulation and stakeholder participation to drive jobs growth
- A holistic thought process is needed that converges multiple policy sets through a systems approach to job creation. The systems approach will accelerate widespread job creation as well as boost GDP growth by 2-3 %
- Job creation must be a principal metric in performance scorecards for governments at all levels to ensure adequate employment generation.
[su_box title=”Practice Questions” style=”bubbles” box_color=”#99bb41″ title_color=”#000000″ radius=”20″]
1. Identifying challenges in job creation for India, enumerate the focus areas for reforms that can increase job growth in India.
2. Jobs cannot be sprinkled into the economy from above; Indian policy towards economic reforms needs a paradigm shift in the new global order. Substantiate.