No one issue probably dominates the narrative on the performance of the NDA government as much as jobs. Rightly or wrongly, the NDA tenure has been described as a period of ‘jobless growth’. It is not simply that automation in manufacturing is taking away jobs, the very sluggish activity in construction and real estate has meant fewer opportunities for temporary workers even as the government’s investments in infrastructure—especially roads—would no doubt have provided workers with temporary jobs.
On the bright side, the e-commerce sector has spawned jobs at every level. Unfortunately, there isn’t enough official information, and the several sets of data seem to be telling different stories. At 7.7%, the average GDP growth during NDA-2 was higher than UPA-1’s 6.7% and UPA-2’s 6.7 %. But did this growth generate jobs generously?
While the official labour bureau data suggested that only 4.2 lakh jobs were created in 2016-17, this was rejected by the government as being unrepresentative. A new NSS survey was commissioned, NITI Aayog chief Rajiv Kumar promised the data would be released in October, but there is no sign of this as yet. And while RBI’s KLEMS database showed around seven lakh jobs were lost in the textiles, textiles products and leather sectors between FY14 and FY16, independent agency CMIE estimated that around 11 million jobs were lost in 2018. CMIE’s Mahesh Vyas has justified the data by arguing female participation had fallen sharply due to the impact of demonetisation; as small industry ran out of cash, it cut back on production and jobs. And though the government initiatives were independently excellent, GST and RERA also dealt a blow to jobs since they were aimed at curbing grey market transactions.
The problem with this analysis, however, is that it doesn’t quite sound right either. Were job creation to be so low, and GDP growth at 7.7%, this implies a big surge in productivity, of which there is limited evidence. Rural distress, resulting from the falling remuneration for crops would have led to a fall in rural jobs, though by how much is unclear.
On the other side of the debate is the Ghosh & Ghosh analysis of fresh EPFO registrations which suggested 10 million jobs were created in FY17 and FY18. However, as several economists have pointed out, equating fresh registrations with new jobs might not be the right interpretation. If, for example, a firm has 19 persons, and one more joins it, it would become a member of the EPFO. But while the number of new registrations would be 20, the number of new jobs being created is one, not 20. Also, the EPFO database is continuously being revised which makes it somewhat unreliable. While 7.92 million members were shown to have registered with the EPFO in the 14-month period between September 2017 and October 2018 initially, this was later pruned to 6.62 million. On one occasion, the numbers were revised down by 91%.
Even those who don’t accept the Ghosh & Ghosh analysis would agree there have been a lot more jobs created in the formal economy, thanks to policies like GST. The number of businesses registered with the GST authorities have risen from 8.6 million in July 2017 to 11.6 million in November, 2018; of these, 5.6 million were new assessees. Also, with several sectors in trouble, the government had come up with schemes to boost employment like sharing part of the EPFO burden. According to official data, around 10 million people were registered under the Pradhan Mantri Rojgar Protsahan Yojana since April, 2016. Once again, though, these would not necessarily be new jobs but could be units choosing to get into the formal sector.
Assuming the truth is somewhere in between the 11-million job-loss and 10-million job-gain narrative, when you combine this with the steady slowing in consumption expenditure, it would appear the jobs are, at best, low-paying. Whether this is Modi’s equivalent of Vajpayee’s ‘India Shining’ moment will be clear over the next few months.