Job creation continues to plague ‘fastest’ growing major economy

A recent report, ‘State of Working India 2023,’ by the Azim Premji University’s Centre for Sustainable Employment has, though unsurprisingly, underlined the Achilles’ heel of the Narendra Modi government—the unemployment problem. More than 42 per cent of the country’s Under-25 graduates were unemployed in 2021-22. This has remained a thorny issue right from the days of Manmohan Singh. However, taken as a whole, the incumbent administration has done quite well in managing the economy, particularly the dexterity with which it bounced back from the lows during the first phase of Covid-19 in 2020.

Rather than buckle down to demands for loosening the purse strings, the Centre actually announced a mega Rs 20 lakh crore package. In fact, the actual expenditure incurred by the exchequer was a minuscule fraction of the total package sum. This ensured that the fiscal deficit didn’t go haywire. A couple of years down the line, India has emerged as the fastest growing major economy. The government has also been spending huge sums on infrastructure development—and the results are visible by way of better roads, bridges, flyovers, ports and airports, leading to a paradigm shift in the mindset of the top echelons.

Earlier, big building projects—whether related to Asian Games or infrastructure—drew flak from policy and opinion makers, who wondered if such expenditures were required in a country where millions had no access to drinking water. Evidently, Modi and other decision makers are immune to such sentimentalist rhetoric. While their resolve is as admirable as their focus on infrastructure, their success in tackling the problem of unemployment is limited, though. It is true that the unemployment rate came down to 6.6 per cent in 2021-22 from 8.7 per cent in 2017-18, but this is still a high rate. There has been some improvement in the nature of employment over the years.

There has been intergenerational upward mobility since 2004, when 86.5 per cent Scheduled Caste and Scheduled Tribes men in casual wage work saw their sons involved in casual wage work. This declined to 75.6 per cent in 2018. Most of the mobility has been in informal regular wage work. In the case of other castes, the fall has been steeper, from 83.2 per cent in 2004 to 53 per cent in 2018.

It must be emphasized that even as more people are getting regular wage work, it is still informal. It means that they can’t have social security benefits that only salaried persons are privileged to enjoy. To be fair to the Central government, it is keen to boost economic activity, especially in the manufacturing sector, which is a large employer. It has come up with various schemes like the credit guarantee scheme for micro, small and medium enterprises (MSMEs) and production-linked incentives or PLIs.

There are also programmes to boost farming, fisheries and food processin but in terms of job creation the results are not as good as expected. Execution of these programmes at the state and local levels needs urgent attention. Only that can boost economic activity and generate quality jobs.