Editorial Articles

Volume-15, 14-20 July, 2018


Job Creation on the Rise

K R Sudhaman

The Government has taken several initiatives during the last four years that will give the much needed boost to job creation. 

The Mudra scheme has ensured that several crores of youth got jobs through self employment. The Government has already disbursed loans to over 12 crore beneficiaries since the scheme was launched in 2015. There are sizeable self employed women as well under Mudra scheme. The youth of rural India not only got jobs for themselves but also became employers for few others in their start-ups, basically micro industries set up taking advantage of Mudra scheme.  Mudra scheme is basically to help self employed persons like fruit or vegetable vendors, small repair shops and self employed eateries.

Improved connectivity through better infrastructure has ensured more industrial corridors came up in the country, which in turn will create more industrial clusters like Tiruppur in Tamil Nadu, Moradabad in Uttar Pradesh, Ludhiana in Punjab, Surat in Gujarat and Murshidabad in West Bengal. Stress on low-cost housing in urban areas, rural housing schemes for the poor has stepped up construction activity, generating more jobs.

The more than trebling of highways construction, speeding up of rural roads development, spending of Rs 8.5 lakh crore on capital expenditure  in railways in the next five years, metro rail projects will all push employment. Also allowing 100 per cent FDI in food processing will create more jobs in rural India. This will also ensure better remuneration to farmers as well and create alternative occupation for rural population in their own backyard.

Food Processing Parks in areas where farm produce is abundantly available will ensure rural jobs and better income to farmers.

Work is going on full swing in Mumbai-Delhi, Ludhiana-Kolkata, Vizag-Chennai, Chennai-Bengaluru and Bengaluru-Mumbai Industrial corridors. The Government proposed to take up a few more industrial corridors in the coming years including extension of Vizag-Chennai corridor to Kolkata on one side and up to Tuticorin on the other side. All these will create the ambience for more small scale industrial clusters.

The Government's stress on clean energy, particularly solar power including roof-top power generation will ensure a lot of jobs for skilled and semi skilled workers. This is already visible in states like Tamil Nadu, Rajasthan, Andhra Pradesh, Gujarat, Karnataka where wind and solar power development have taken a big leap forward.

The Government's performance with regard to job creation is certainly not discouraging as made out to be in certain quarters.  Even skeptics cannot deny the fact that jobs have been created during the last four years commensurate with the economic situation.

It is a fact that job creation in the formal and organized sector has been less as corporate investment is yet to pick up after years of global recession in the aftermath of 2008 global financial crisis. But 80-85 per cent of jobs in India are in the informal sector of which adequate statistics is not available to make clear cut assessment. Jobs are more than adequately created during the last four years in those informal sectors, which included self employment. Micro, Small and Medium enterprises are the main drivers of employment in the country and they too have started looking up with the effect of demonetization waning.  MSME sector accounted for 40 per cent of manufacturing and 45 per cent of India's exports, whose growth is in double digit in recent months.

Lately, there is a pick-up in organized sector job creation as well with industrial sector growth kick-starting and green shoots becoming visible. The latest monthly services sector survey shows that Indian services sector activity returned to its growth track in March driven by greater inflows of new work. Services sector accounted for nearly 60 per cent of India's GDP. The services sector activity follows greater inflows of new work. The seasonally adjusted Nikkei India Services Business Activity Index improved from 47.8 in February to 50.3, indicating business activity stabilized during the month. The index below the 50-point mark, meant that there is contraction and above 50 meant that there is expansion. The headline seasonally adjusted Nikkei India Composite PMI Output Index too rose from 49.7 to 50.8 in March, driven by growth in both the manufacturing and service sectors. Output growth in the manufacturing sector again outperformed the service sector, as has been the case since October-November last. Service providers too expanded capacity by raising their staffing levels, quickest since 2011, reflecting improved demand conditions.

In response to efforts undertaken by the government to formalise the economy after demonetization and the rollout of GST, more people are gravitating towards employment as signaled by the latest PMI data. Indeed, job-creation has accelerated.

Government's programs like 'Make in India' that helped attract record foreign direct investment of over $60 billion annually during the last couple of years, indicated that India is in a sweet spot and global investors are queuing up to set up projects in the country.

Demonetisation in November 2016 and rollout of game changing indirect tax reform Goods and Services Tax did temporarily impact  the informal sector particularly but that has led to cleaning up of the economy and the tax system. This led to more revenue collection, thereby leading to more public expenditure especially in infrastructure, generating more jobs and consumption demand.

Successive governments, including Modi Government, have rooted their economic philosophy on Gandhian thoughts that cottage industries are the key to providing jobs particularly in rural India. The emphasis on promoting small scale industries particularly cottage and micro industries, is critical to address livelihood concerns of the vast majority of population. Today, there are nearly 5-6 crore Micro, Small and Medium industries in the country including unregistered micro industries employing a few persons.

This did not mean India did not require large and heavy industries. They are needed for example in the power sector, manufacture of machine tools, vehicles, steel making, defence manufacturing, automobile, so on and so forth. But small industries are needed for job creation as capital intensive heavy industries using automation and hi-tech cannot be the drivers of employment, which can only come in labour-intensive construction, infra development, like roads and railways, logistics business, textiles, handlooms, besides small and cottage industries. A car produced, creates three jobs in the services sector like mechanics, drivers, cleaners, etc. Likewise one truck or one tractor produced creates 7 jobs. So services sector is the key especially in rural India where there is dearth of jobs other than agriculture. This will prevent large scale migration to urban areas as well.

India is certainly moving towards that and Modi Government’s performance so far as job creation is concerned, is certainly worth taking note of despite the difficult global economic situation.

The author is a senior journalist, who has served as Editor in Press Trust of India and Economics Editor in Financial Chronicle, Email: sudhaman23@gmail. com, Views expressed are personal.