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India


Five mn lost jobs in India b/w 2016-18, says report

New Delhi, Apr 17 (UNI) India consistently ranks high among major countries in economic growth but its record in employment generation has been underwhelming and thus there is an urgent need to craft a government policy, adequately supported by the budgetary resources, to promote robust employment generation, says a report.
"Our analysis of CMIE-CPDX reveals that five million men lost their jobs between 2016 and 2018, the beginning of the decline in jobs coinciding with demonetisation in November 2016, although no direct causal relationship can be established based only on these trends," according to the report -- "State of Working India 2019", released by the Centre for Sustainable Employment, Azim Premji University, Bengaluru.
It also observed that unemployment, in general, has risen steadily post 2011.
Both the PLFS and the CMIE-CPDX report the overall unemployment rate to be around 6 per cent in 2018, double of what it was in the decade from 2000 to 2011.
Also, India’s unemployed are mostly the higher educated and the young. Among urban women, graduates are 10 per cent of the working age population but 34 per cent of the unemployed. The age group 20-24 years is hugely over-represented among the unemployed, the report released here on Tuesday said.
Among urban men, for example, this age group accounts for 13.5 per cent of the working age population but 60 per cent of the unemployed.
In addition to rising open unemployment among the higher educated, the less educated (and likely, informal) workers have also seen job losses and reduced work opportunities since 2016. In general, women are much affected than men.
The first few months of 2019 have been unusually eventful for labour economists and statisticians in India. The ongoing controversy over job creation received a fresh impetus early in the new year with the ‘leaked’ findings of the newly instituted Periodic Labour Force Survey (PLFS), which showed that unemployment rates had risen to an all-time high of 6.1 per cent in 2017-2018, the report added.
The Centre has enough fiscal space to adopt a robust employment generation policy. Even a doubling in the outlay on MGNREGA would hardly be profligate.
The leaked PLFS report came on the heels of considerable uncertainty about the state.
The biggest challenge India faces in growing robustly, with or without fiscal expansion, is the challenging global economic environment and consequent sluggish growth in exports. Anemic exports combined with strong domestic growth tending to result in higher imports, will cause the trade deficit to widen and exert pressure on the BOP.
Rising trade deficits will need to be balanced by higher capital inflows, which will increase the vulnerability to unfavorable developments in global financial conditions. Alternatively, imports have to be lowered. That is, monetary and fiscal policies will have to tighten, bringing down domestic growth. Escalating trade tensions and a rollback of globalisation would only make matters worse.
While India needs to find ways to grow its exports more rapidly, it is important to be realistic about the prospects, given the global backdrop. Thus, India's policymakers need to craft a proactive, comprehensive policy to overcome the BOP constraint on growth.
It is not as if India is a laggard. India's export growth, both in the dollar and real terms has largely tracked that of the broader emerging market group. Thus, India's export performance does not reflect India-specific problems but global economic weakness and the plateauing of the benefits of globalisation.
Despite tepid export growth, India has managed to grow its economy robustly in the past five years. The steep decline in oil prices has been a major factor in keeping a lid on import growth. Gold imports too have been weaker.
However, India’s other imports have grown strongly, largely the result of increasingly skewed income and wealth (Kumar 2018). Upper-income consumption tends to be much more import-intensive—foreign education and vacations, high-end smartphones, cars, and so forth—and increases the import elasticity of growth. Although fiscal expansion directed at the bottom of the pyramid will dampen the import elasticity of growth, the overall boost to growth will still tend to exert pressure
on the BOP.
At this juncture, India needs more comprehensive import substitution policies that seek to manage the BOP situation. Thomas (2019) discusses the continued relevance of industrial policy today for job creation. Industrial policy and import substitution in the Indian context brings back bad memories of planning and shortages.
Ultimately, the best remedy for alleviating poverty is enough jobs and enough high-quality jobs.
CMIE-CPDX is a nationally representative survey that covers about 1,60,000 households and 5,22,000 individuals and is conducted in three ‘waves’, each spanning four months, beginning from January of every year.
An employment-unemployment module was added to this survey in 2016.
While economic growth has allowed India to bring down poverty rates dramatically, especially extreme poverty, growth has not translated into jobs. Given India’s burgeoning youth population, there is an urgent need to craft a government policy, adequately supported by the budgetary resources, to promote robust employment generation, it added.
Ultimately, the best remedy for alleviating poverty is enough jobs and enough high-quality jobs. The central government has enough fiscal space to adopt a robust employment generation policy. Even a doubling in the outlay on MGNREGA would hardly be profligate.
Moreover, the high potential multiplier of such outlays is likely to result in robust growth and tax revenues, thereby limiting the deficit. While expansionary fiscal consolidation has been debunked by global and Indian experience over the past 10 years, fiscal consolidation via fiscal expansion has a sound basis, especially in the current context.
UNI AE SW 1657
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