Editorial Notes

[Editorial Notes] How to revive job growth in the country?

To revive job growth in India, the government must increase public investment in social services and should introduce a multi-pronged industrial policy to reverse the poor manufacturing performance since 1991.
By IASToppers
July 26, 2019

Contents

  • Efforts made by government to revive job growth
  • Unemployment scenario in India
  • Suggestions

How to revive job growth in the country?

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Context:

The central government proposed interventions to propel the job growth in various sectors in recently launched Union Budget of 2019-20.

Efforts made by government to revive job growth:

job-growth-iastoppers

  • The centre had made some efforts in the Union budget to promote jobs in the micro, small and medium enterprises (MSME) and in the construction sector (both rural and urban).
  • It announced 2% interest subvention for MSMEs under the Goods and Services Tax (GST) on fresh or incremental loans.
  • Under the Pradhan Mantri Awas Yojana (PMAY), the budget proposed 1.95 crore houses under the PMAY-Grameen scheme and 19.5 million houses under PMAY-Urban scheme between 2020 and 2022.
  • However, these actions are not suffice given the need for jobs.

Unemployment scenario in India:

From 2004 to 2012:

  • Between 2004-05 and 2011-12, about five million workers per annum left agriculture for non-farm sector jobs.
  • Among these five million, about 75% were youth between 15 to 29 years.
  • This led to tightening of the rural labour market that resulted in wage rising. Wage rising was stagnant between 1996 and 2004 because of a rising number of workers in agriculture.
  • However, there has been a slowdown in non-agricultural job creation post 2012.

Post 2012:

  • The unemployment is mainly in manufacturing and construction sector and much less in modern services such as banking, airlines etc.
  • There was a manufacturing job decline post 2012.
  • The share of manufacturing in employment has fallen from 8.1 to 7.7 % for rural males (2012 to 2018) and 9.8 to 8.1% for or rural females.
  • This is significant as over half of the manufacturing output in India is contributed by rural areas.
  • Similarly, for urban females, the share of manufacturing in the employment share fell from 28.7% to 25.2%, while the share of urban male stagnated at 22.4%.
  • The five labour-intensive manufacturing sectors (food processing, textiles, garments, wood and furniture, leather and footwear) saw absolute job losses.
  • There was growth of jobs only in the services sector due to the expansion of modern services during the post-2012 period.
  • While construction was a major employment generator between 2005 and 2012, it registered a much slower growth of jobs after 2012.

Current scenario:

  • As per the Periodic Labour Force Survey (PLFS), there is a slow job growth in the non-agriculture sectors.
  • The unemployment rate is the highest in last 45 years that grew from 2.2% in 2011-12 to 6.1% in 2017-18.
  • Moreover, there is a massive rise in the youth open unemployment rate particularly for educated youth.
  • The educated youth open unemployment rate is more than double for urban male urban female and rural females. Also, unemployment rate is more than triple for rural males.

job-growth-1-iastoppers-

Suggestions:

  • Increase public investment in social services (health and education) as it will create jobs in the government.
  • India can reverse the poor manufacturing performance since 1991 with an industrial policy that has seven components:
  1. Reverse inverted import duty structure in a range of manufactures that allows finished manufactured imports at low duty/no duty but discriminates against intermediates/raw materials imports for domestic manufacture.
  2. Provide policy packages for labour-intensive manufactures.
  3. Improved cluster development for micro, small and medium enterprises.
  4. Target urban infrastructure development through Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme.
  5. Speed up the five industrial corridor development to enable India to engage in global value chains.
  6. Prioritise mineral development as a foundation for domestic processing.
  7. Promote firm-level design capability and private Research and Development investment.
[Ref: Hindustan Times]

 

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