As India is headed for a General Election in about a year, the biggest debate currently is if Prime Minister Narendra Modi has been able to create enough jobs. Here are the arguments so far
As India is headed for a General Election in about a year, the biggest debate currently is if Prime Minister Narendra Modi has been able to create enough jobs. And since the government data is not comprehensive, economists rely on different sets of data, presenting a contradictory picture of the job market. All hell broke loose, when Mahesh Vyas, CEO, Centre for Monitoring Indian Economy, alleged that economist Surjit Bhalla has “invented” an estimate that 15 million jobs were created in 2017. Meanwhile, there’s is another debate brewing: Whether or not the addition to Employees Provident Fund (EPFO) shows the creation of new jobs.
Here are some of the arguments recently made supporting and debunking job creations:
In an article in The Indian Express, titled ‘Robust job growth, not fake news’, economist and member of Prime Minister Economic Advisory Council Surjit Bhalla said that the total job-creation in 2017 was 15 million. Surjit Bhalla used two sources of data: the EPFO data for the age-group 15-24, and the CMIE employment data for the 25-64 age group. He said that EPFO data suggested that 3 million jobs were added in the 15-24 age group in 2017; he added that CMIE data showed that total employment creation was at a robust 12 million for the 25-64 age group in 2017. “While this estimate may not be the “truth”, it is unlikely to be far way (sic) from the truth,” Surjit Bhalla wrote in The Indian Express last week.
Mahesh Vyas of CMIE on Tuesday wrote a rebuttal to Surjit Bhalla’s claims in the Finacial Express. In a column ‘Why invent job-creation data?’, Mahesh Vyas claimed that Surjit Bhalla used “selective estimates of two completely uncomparable sources of data on employment”. He said that while CMIE has 10 age brackets, Surjit Bhalla picked data for the age groups 25-64 from here and ignored the data on the age groups 15-24 and greater than 64 years. “Why were these age brackets picked and why were the others not?” Mahesh Vyas wrote. He said that jobs were added in the age bracket of 25-64 years, adding, “But jobs were lost in the age brackets 15-24 years and greater than 64 years.”
In absence of comprehensive job data by the government, economists have often relied on CMIE data. In January this year, Rajiv Kumar of Niti Aayog said there is “much better news on employment”, which was in contrast with the then CMIE data, and that the think-tank would “very soon” release a report based on high-frequency data on job creation. Based on this argument, Jayant Sinha, in March, said that there has been an increase in “job creation” in last four years in new sectors but that is not been captured in various economic data.
The report by Niti Aayog based on high-frequency data on job creation has not been released yet.
The EPFO Data:
Last week, the Employees Provident Fund released provisional figures for six months that showed that 3.11 million workers joined the fund during the September 2017 to February 2018 period. Based on this data, NITI Aayog, a day later, said, “31.1 lakh new jobs were created in formal sector”, stressing that these “eye-opening” numbers put end to all “speculations” on job creation. However, a Niti Aayog paper ‘Report of the Task Force on Improving Employment Data’ pointed out two major limitations in EPFO data.
“There are two serious limitations in using these sources of information to glean data on job creation. First, there is very substantial overlap across them second limitation is more serious. Additions to these datasets need not represent new jobs,” NITI Aayog said in the paper.