NITI Aayog vice-chairman Arvind Panagariya says that the debate on jobless growth is because of the inability of the current survey system to capture job growth. In a wide-ranging conversation on the concern areas of the economy, he tells Santosh Tiwari that the current 7-7.5% growth could not have been achieved without job growth and the new survey mechanism proposed by the panel headed by him will ensure better capturing of job data going ahead.
NITI Aayog has prepared a roadmap for privatisation and also closure of sick units. How is the work progressing in this area?
We had proposed two things, closure of sick units and privatisation of certain functioning units. On the closure, progress is very good with 15-20 units being in advanced stages of closure. So, the process has come to a reasonable conclusion. On privatisation itself though, progress has been slower. We had recommended, and the Cabinet had approved, about 17 different public sector enterprises to be privatised. Some progress has happened in some cases, advisors have been appointed, but still in terms of actual sales, we have had none. In the meantime, there is one major development that is Air India. That seems to be progressing really well. This is currently with the group of ministers, which has to take decisions on two or three major matters. One is, whether 100% of Air India is to be privatised or the government is going to keep some stake. Also, what will be the extent of foreign investment to be permitted and what part of the existing debt will be assumed by the government.
Exact valuation of Air India could be reached at when all these things are clear. Isn’t it?
Correct, because evaluation in itself will depend on what part of the debt is written off by the government. It will also depend on the extent of privatisation and whether or not there are foreign investors in the game. The larger the pool of potential buyers, the more likely that a price will come in any auction that is subsequently done.
What is the thinking on allowing foreign investors’ participation in Air India privatisation?
We will have to wait and see what view the group of ministers take. In principle, we do allow 100% foreign investment in civil aviation now. On that principle, certainly, there are no formal barriers for allowing foreign investors. But in this specific case, whether or not it will be permitted, will have to be decided by the group of ministers.
ONGC-HPCL merger has also been announced … if these two are done in the next six months, then the whole process will see a big forward movement….
Certainly. Particularly, Air India has been in the talk for such a long time. I think it is feasible to do this in the next six months. Whether or not it happens depends on how the matter progresses. First of all, we need the group of ministers to take the decisions and then the matter will go to the ministry of civil aviation which will have to carry the privatisation process. If things go smoothly, then yes, six months is a feasible time-frame.
Job growth is another area of concern. Do you think that there are jobs, but they are not being captured properly?
Generally, our unemployment rates are not very high. The real serious problem is under-employment, where people are employed in low productivity jobs which pay literally low wages. What we need is many more formal sector jobs where wages are better, productivity is higher. Now, in terms of formal sector jobs, whether we have expanded them or not, we really don’t have the numbers. There is some evidence from sources like the EPFO and ESI data that significantly larger number of enrolments in these programmes have happened. So, the number of formal sector jobs would seem to have expanded. What we don’t know is whether they are new jobs. A lot of enrolment happens due to entry of new companies, but all these jobs may not be new jobs. In any case, in terms of formalisation of jobs, if one interprets registration in the EPFO as formalisation of the jobs, then that is certainly happening.
The situation is not as bleak as it may appear, but the fact remains that we have not been collecting good enough data. The surveys are either bit outdated or they are not reliable, which has unfortunately led to this kind of debate on so called jobless growth. Personally, I don’t think growth can really be jobless because when you grow at 7-8% a year which is what our data show, there is no way to grow at that kind of pace without also increasing the inputs. Investment has to be rising and labour input also has to be going up because simply through productivity growth, you cannot grow at 7-8%. No country has evidence of productivity growth at that kind of level. So there has to be jobs growth and the issue simply is that we are not able to capture it.
How to do that then?
The task force under my chairmanship has recommended a complete revamp of our survey systems, so that employment data from different points of view is properly collected. There are two types of surveys that we will get done now. These are not entirely new but their coverage will get wider and frequency will increase, and the design will also be updated according to the latest scientific methods. So, there will be household surveys and there will be enterprise surveys. In India, there is lot of employment which is self-employment, the kind of employment which can’t be covered in the enterprise surveys. For us, therefore, it is very important to do exhaustive high frequency household surveys, where we take a large sample of households and ask for each member of households what their work status is. This way we can capture the overall picture. We also need some complementary information which we will try to gather also from doing the enterprise surveys. We are also recommending a time-use survey… this is also a household survey in which you ask the respondents how they use their entire 24-hour period. From that you also get some sense of activities that individuals are doing. Going ahead, you can also track down the changes in the time-use. Take for example, with the availability of LPG now for the rural women, a lot of time will be saved in collected wood. It will be interesting to see how their utilisation of time changes due to this. Same with piped water, it can be asked how women are utilising the time saved.
Though public sector investment is going up, private sector activity is still not picking up. Why is that?
My view is that parts of private sector are doing very well and parts are not doing so well. For example, industries in which we have traditionally done well—automobiles, auto-parts, two-wheelers, software, pharmaceuticals—they are doing quite well and contributing to the 7-7.5% growth that we are observing. But then there are large legacy sectors that were in trouble when this government came in and those sectors have not fully revived. Steel industry falls into that category. Construction was a big employer earlier, but currently it is not doing well. Textile also has not fully recovered. These are all industries where we have NPAs which are still in the process of being resolved. It’s a sort of mixed picture.
Concerns have also been raised on the results related to the Fasal Bima Yojana. It is said that the scheme has benefitted the private insurance companies instead of the farmers. Do you think there is a need to modify the scheme?
It is time that we should take a fuller look at what has happened. I believe that if there are issues with implementation and farmers have not benefitted, especially the smaller farmers, they are being looked at. In the end the outcome has to be achieved.
Do you think it is feasible to shift to the January-December financial year from 2019?
The prime minister will have to take a call as it would be the last year of the government. In principle, if the decision is made today, this should be feasible.