Job creation and growth
For India, the task ahead to create jobs is indeed daunting. "Over the next five years, India will need to create 12-15 million non-agricultural jobs per year. However, between 2005 and 2012, only eight million such jobs were created. Hence, the gap of 4-7 million jobs a year needs to be addressed, which is likely to rise with the rise in young people joining the labour force," a joint report by Boston Consulting Group and the Confederation of Indian Industry (CII) said last month. India's proud record as the fastest growing economy in the world in terms of gross domestic product means nothing with job growth in the doldrums. In economics, one often comes across the concept of employment elasticity. This concept refers to the rate of job growth in relation to GDP growth. According to a recent HDFC Bank report, employment elasticity in the economy is currently close to zero. In other words, for every one point rise in GDP, jobs grow only 0.15. Fifteen years ago, this figure stood at 0.39.
At a time when 12 million join the labour force every year, experts are worried about the implications jobless growth could have on India's social fabric. Moreover, the proportion of workers across agricultural enterprises in rural India has increased while the share of those working in non-agricultural jobs has declined, as per the Sixth Economic Census. Small companies are obviously in no position to take up the burden of employment generation. They just aren't productive enough. Meanwhile, many large corporate houses are submerged under a mountain of debt, sparking a circle of low growth, weak bank credit, job cuts, low output and low growth. It is imperative that the government must focus on the generation of more jobs as the principal goal, rather than GDP growth. One of the major failures of the Indian liberalisation story has been its inability to generate enough jobs. In a recent report, the United Nations Development Programme assessed that India will need to create 280 million jobs between now and 2050—the year when the number of people between 15 and 64 (working-age population) will reach its peak. In a stunning revelation, less than half the Indians who sought jobs between 1991 and 2013 got them, according to the UNDP report.