Now, Montek Singh Ahluwalia’s Task Force report on employment and S P Gupta’s Special Group report have come up with completely different figures on unemployment. Admitted, given the large chunks of employment in our rural and unorganised sectors, unemployment figures are unreliable. Yet, using the identical set of 1999-00 figures, the Task Force came up with an unemployment rate of 2.2 per cent, while the Special Group came up with 7.3 per cent. The point is that decline in poverty and increase in unemployment (from 1993-94 to 1999-00) are apparently contradictory, and inter-regional differences offer inadequate explanations. Are we to seriously believe, as the 1999-00 figures suggest, that the lowest unemployment rates in India are in undivided Bihar and Uttar Pradesh Figures apart, there is serious divergence across the two reports in policy recommendations.
For instance, the Task Force highlighted labour market rigidities in the organised sector as a constraint on employing people. Special Group argues this is a non-issue and flexibility should await introduction of a social safety net. At best, this logic is warped. While social security is needed, that is an argument for the unorganised sector, not the organised one. Moreover, the small-scale sector (which the Special Group favours) also suffers from labour market rigidities, and capital intensity in small-scale industries is artificially high. Hence there is the paradoxical situation of the Special Group arguing that employment potential in the SSI sector is high, but simultaneously opposing reforms that enhance job creation.
The case for de-reservation has been argued ad nauseam. While the Task Force wanted de-reservation, the Special Group argues that it should only be done on case-by-case basis. There are also estimation differences across the two groups in incremental employment potential for the service and agricultural sectors.
The Task Force believed that 70 per cent of incremental employment generation would come from services, the Special Group believes the figure to be 50 per cent. The Task Force believed that employment generation in agriculture would be minimal, the Special Group believes in agriculture.There was already confusion within the government about the reform agenda and the Planning Commission has muddied the waters even more.