Photo: Raj K Raj/ Hindustan Times
On the eve of the 2014 parliamentary elections, while the animating pulse of the nation was clearly a sentiment of outrage over big-ticket corruption, another significant undercurrent propelled what came to be called the “Modi wave”: the issue of jobs. Prime Minister Narendra Modi rode to power promising the creation of millions of jobs a year. But as the country awaits the first national test of that promise, things are looking rather bleak for the Bharatiya Janata Party-led government. Citing official data from a yet-to-be publicly available Labour Bureau survey, the Business Standard in a report published on Friday claimed that the aftermath of demonetization sent the unemployment rate soaring to a four-year high. The immediate negative effects of the demonetization exercise have been widely acknowledged by now, even by some within the government. Private agencies like the Centre for Monitoring Indian Economy, which undertakes a large-scale monthly survey of 172,000 households, projected that roughly 3.5 million jobs were lost in the early months of 2017.
The bigger worry for the government is that the promise of millions of jobs a year has remained a mirage. The shoddy introduction of the goods and services tax—considered to be good policy—in the immediate months after the shock of demonetization doesn’t seem to have helped matters much. The CMIE’s estimates for the most recent month, December 2018, show that things haven’t improved much since 2017. Supporters of the government are clearly beginning to worry. In a recent paper, Surjit Bhalla, member of the PM’s economic advisory council until recently, rejected the oft-quoted requirement of 12 million new jobs a year and suggested that 7-8 million jobs are adequate. He also argued that a large part of the inertia on the job growth front is because a large chunk of young people (15-24) are withdrawing from the workforce in order to get educated further. That has been a trend at least since 2005. In a seven-year span under the previous United Progressive Alliance government (between the mid-2000s and the early part of this decade), National Sample Survey estimates indicate that only 10 million jobs were created, or about 1.4 million jobs a year. Young people withdrew from the workforce. But once they have an additional academic degree, they expect a better quality job. However, the economy is not creating enough well-paying jobs and, hence, a mad dash for government jobs ensues. Since liberalization, worker productivity has risen substantially but wage growth in the private sector has been muted. Only white-collar workers have benefitted from a reasonable growth in wages.
The well-documented rise in inequality in India post-1991 was accomplished using the levers of jobs (number of jobs created per unit of capital investment has plummeted) and wages. And that is precisely why popular anger at the polls has begun to coalesce around those issues. Democratic institutions are supposed to intervene under circumstances of market-induced inequality so that popular anger is kept at bay. But the solutions on offer, including additional quotas for already scarce government jobs, seem to be hardly making a dent. While the wait continues for the release of reliable official data on the Modi government’s performance on jobs, the patchy data that is available does indicate that its track record has been largely abysmal. As election season nears, all types of political formations will be looking to latch on to that strain of resentment.
This edit has been corrected to show that the BJP promised millions of jobs, not 20 million jobs.
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