First, the good news. In 2009, we have finally got two sets of data that tell us how macro developments are affecting lives. The first of these two are the quarterly series on jobs that the labour ministry has introduced; without any fanfare.

The other is the data sets from the New Pension Scheme. The NPS will have a central recordkeeping agency that will collate data on the age, income and the monthly contribution of subscribers.

Data from the two sources will fill up a vacuum that now exists in tracking the demographic economics. The utility of the two sets of data will become apparent pretty soon. They will make possible a far more accurate tracking of how GDP growth impacts the working population.

By next year, for instance, the data will tell us whether or not the economy has moved into a jobless growth path. This will in turn help the government to decide what steps are needed to develop fresh avenues for employment.

As of now the indications are that the successive decades of bad labour laws will colour the recovery story of Indian industry again. Thanks to the rigidity in the deployment of labour, plant managers have learnt to use labour much more frugally than capital in India. For instance, government data for 2004-05 shows the labour output ratio and the cost of labour to value of production of 474 big companies, with sales of above Rs 100 crore, declined year on year. Output of these companies taken together increased by 14.29% to Rs 6,76,768 crore in 2003-04 from Rs 5,92,168 crore in 2002-03 and further increased by 25% to Rs 8,47,209 crore in 2004-05. But the labour cost of these companies increased at a lower pace. Consequently the labour-output ratio has declined from 4.82% in 2002-03 to 4.78% in 2003-04, and then to 3.89% by 2004-05.

This is unfortunate, of all countries, in India. The labour pool is immense even if ill-trained. This is also one of the only two economies whose growth numbers have held up reasonably well. Going by the projections made by RBI and the Prime Minister?s Economic Advisory Council, the economy will end 2009-10 with a 6 to 6.5% rate of growth. This is a far better estimate than the frequent, almost monthly changes that assorted banks and other institutions have resorted to in their growth projections.

The problem is that this will fall short of the growth numbers for last year at 6.8% (real GDP at factor cost). The projections for gross domestic capital formation, a large percentage of which will obviously stem from the corporate sector India, are also in sync with this number at 36.6%, as per the RBI survey of professional forecasters.

The same survey shows the median estimate for real GDP growth rate at factor cost is 7.5% for 2010-11, nowhere near the 9% rate of growth with a rate of capital formation at 37.9%.

What the numbers basically tell us is a story of gradual recovery from the downturn of 2008-09. So the investment climate will be very measured in terms of deployment of capital and labour.

The companies coming out of the decline will attempt to maximise the returns to pay for the cost of borrowing that even at the current interest rates will be a larger percentage of their total revenue, simply because the latter has slipped more than the interest rates.

Even before the meltdown happened, at the end of 2006-07, out of a sample of 3016 companies in the RBI data base, the ratio of short-term bank borrowing to inventories had risen to 81.30, from 73.10 in 2000-01, showing how sharply the companies were milking their assets. This will obviously rise now, as the companies try to squeeze growth on a much thinner order book.

So the spectre of jobless growth is quite real. This is going to be a big challenge for the government, as it also has the potential to exacerbate the inequality in the economy.

The set of policies the government should therefore push with vigour must attempt to at one level expand the supply of the trained workforce in industrial processes. This means giving the plan to revitalise the ITIs much more leeway. Although the plan was launched in 2004-05, to make 1,396 ITIs into centres of excellence, with 300 to be taken up every year on a PPP mode, its pace has not kept up.

The other has to be the development of self-employment. But that would mean a far softer rate of interest pattern than is available now for entrepreneurs. The survey of professional forecasters itself shows bank credit is expected to continue at 18% in 2009-10, and will improve to 21% the next year, a far cry from the 27%, it logged till July 2008. The cure has to, therefore, be far deeper than has been attempted so far.

?subhomoy.bhattacharjee@expressindia.com