Millennium Post

Road to nowhere

With unemployment at its 45-year highest, the Indian economy is writhing – most ironically, the educated are as ill-off as the illiterate  

Confirming all suspicion surrounding India's unemployment low, recent data released by the Government of India confirmed that joblessness in the country was indeed at 6.1 per cent in 2017-18, the highest in 45 years. The release of the data coincided with the Narendra Modi-led NDA government taking charge of office after a landslide majority in the 2019 Lok Sabha polls. The data showed that 7.8 per cent of employable urban youth were jobless while for rural youth, it was 5.3 per cent. Further, according to the data, 6.2 per cent of Indian males were unemployed, while it was 5.7 per cent for females.

Frightening Numbers

The report shows how rates of unemployment between males and females in both rural and urban groups stand at their all-time highest. This increase in unemployment is more than three times among rural men and more than double among rural women. "In urban areas, the unemployment rate among men is more than twice and has increased twice among women since 2011-12. It is important to note that the unemployment rate between 1972 and 2012 was almost static. Besides, the unemployment rate has risen sharply among youth between 15 and 29 years, especially among those with better education," noted the report.

For males, unemployment was higher in cities at 7.1 per cent compared to 5.8 per cent in rural areas. Similarly, joblessness among women was also higher in urban areas at 10.8 per cent compared to 3.8 per cent in rural areas.

Unemployment among urban youth in the age group of 15-29 years, who are looking for jobs, has been consistently rising for three quarters and was at 23.7 per cent in the December quarter. This is despite the urban youth spending an average of 11 years in formal education, compared with 9.3 years spent by their rural counterparts.

Further, labour force participation in the age group of 15-29 years has been declining and touched 36.9 per cent in 2017-18, as more among them, especially females, have chosen to enroll for higher studies. The rising unemployment rate despite falling labour force participation among the youth is worrying.

It should be noted that according to Census 2011, India has 333 million youth – a number that is likely to touch 367 million in 2021 and 370 million by 2031. Youth unemployment in the December quarter of 2018 was the highest in Bihar (40.9 per cent), followed by Kerala (37 per cent) and Odisha (35.7 per cent), while it was the lowest in Gujarat (9.6 per cent).

WHY Unemployment?

The exact reason for this spike in the unemployment rate in India is as elusive as the rate itself. Till now, India has witnessed the play of various internal and external factors – oblivious to the politics of the ruling regime – causing a rise in unemployment rates.

Laveesh Bhandari, economist and director of Indicus Foundation, noted, "The employment conditions are very poor for all levels of educated and uneducated. The NDA government is not responsible neither is UPA. A global structural shift is happening, which is very fast and is also destroying old jobs even while new ones are not fully developed yet."

He also noted that more jobs require reducing the transaction cost of hiring labour, setting up new small and large units, eliminating inspector Raj, simplifying the tax mechanism and lowering cost of funds. "This, in turn, requires the government to spend less on subsidies and invest more, free the public sector from bureaucratic control, remove hurdles to internal trade and external trade. Finally, the urban informal sector requires freedom – from police, inspectors and municipal authorities – with adequate access to space in urban areas," Bhandari observed in a media report.

On the other hand, a section of economists also blames the current regime's structure of a neo-liberal economic model. "Expanded capitalist development across the world, accelerated by neo-liberal policies, has led to an onslaught on labour. India is no different. The quantum of employment generation every year is falling. We have an unemployment rate that is at a 45-year-high," observed Professor R Ramakumar, Tata Institute of Social Sciences, in a media report.

He further observed that real wages are stagnating. Women, in particular, are the most acutely affected section in this regard, along with children – they are seen as a cheap source of labour power in the production process. It is a race to the bottom.

"The quality of jobs generated is increasingly poor. Job security is becoming rare; casualisation is the rule everywhere. Unfortunately, this fluidity of labour makes the collectivisation of labour difficult. As a result, the balance of power is shifting more and more away from labour," observed Ramakumar.

Falling GDP

After Narendra Modi took charge as Prime Minister for a second term, government data showed that Gross Domestic Product (GDP) estimates for the January-March quarter of the financial year 2018-19 was 5.8 per cent. This is the lowest growth rate of the last five financial years.

"GDP at constant prices (2011-12) in Q4 of 2018-19 was estimated at Rs 37.20 lakh crore, as against Rs 35.15 lakh crore in Q4 of 2017-18, showing a growth rate of 5.8 per cent," the government said in a statement. This also means India is no longer the fastest growing major economy in the world. China is ahead with 6.4 per cent recorded GDP growth in the March quarter. India's GDP estimate for the entire financial year 2018-19 was 6.8 per cent.

"The Indian economy reported a continuous decline in GDP growth rate as fiscal 2018-19 progressed. GDP growth rate has constantly declined from 8 per cent in the April-June quarter of FY19, to 7 per cent in the July-September quarter and 6.6 per cent in the October-December quarter," noted the report.

As per government data, the Indian economy is estimated to grow at a rate of 6.8 per cent through 2018-19 after a downward revision from the government estimate of 7 per cent in February. The Indian economy had grown at 7.2 per cent in the previous financial year.

Politics of Unemployment

Before this 2019 election, the opposition had feebly challenged the ruling party on the issue of unemployment – but all claims against employment were dismissed. The opposition pointed out that the high unemployment rate has been driven by India's current economic policy which includes the decisions of demonetisation and implementation of GST, among others. While the opposition attacked the ruling regime's economic policy, the incumbent focused on its various other development works including national security – unemployment rate didn't pick pace as a poll concern.

Meanwhile, mindful of the woes of unemployment, Congress came up with its minimum income guarantee scheme, formally called Nyuntam Aay Yojana (NYAY), for five crore poorest families covering 25 crore people, by assuring them a guaranteed minimum income of Rs 6,000 per month or Rs 72,000 a year. But Congress failed to reach its scheme, which was also only minimally corrective, to the people.

Amid politics panning from religion to national security, Ujjwala Yojana to constructing toilets, farm loan waivers to other freebies – India's unemployment rate rose unabated. The youth, which has reposed its faith on the ruling regime, is today disenchanted as policies have failed and unemployment has only increased. After the data was released, PM Modi formed a special committee to monitor the matter. It is beyond time that the government reviewed its existing economic policies as a decline in the employment rate is one the most devastating social indices for a developing country as tremendous as India.

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