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Akhil Bharatiya Pratinidhi Sabha (ABPS), the top decision-making body of India's RSS (Rashtriya Swayamsevak Sangh), says that “the young generation is suffering from unemployment and the pandemic has made things even grim... We cannot turn a blind eye to unemployment. It is a crisis and it needs to be addressed.” The RSS was apparently reacting to the falling labor participation rate in India relative to Pakistan and the global averages. The RSS leadership wants the government of Prime Minister Narendra Modi to focus on helping small and medium sized enterprises (SMEs) to create jobs. RSS likes Modi government's ‘Make in India’ initiative “but it needs to be sharpened even more and get more investment.” The resolution is titled, ‘The need to promote work opportunities to make Bharat self-reliant’. The solution offered by ABPS resolution: Take agro-based local initiatives to promote rural areas and create jobs, according to Ram Madhav, a member of the RSS executive committee.
|Falling Employment in India. Source: CMIE|
India's labor participation rate (LPR) fell to 39.5% in March 2022, as reported by the Center for Monitoring Indian Economy (CMIE). It dropped below the 39.9% participation rate recorded in February. It is also lower than during the second wave of Covid-19 in April-June 2021. The lowest the labor participation rate had fallen to in the second wave was in June 2021 when it fell to 39.6%. The average LPR during April-June 2021 was 40%. March 2022, with no Covid-19 wave and with much lesser restrictions on mobility, has reported a worse LPR of 39.5%.
|Labor Participation Rates in India and Pakistan. Source: ILO/World ...|
Youth unemployment for ages15-24 in India is 24.9%, the highest in South Asia region. It is 14.8% in Bangladesh 14.8% and 9.2% in Pakistan, according to the International Labor Organization and the World Bank.
|Youth Unemployment in Bangladesh, India and Pakistan. Source: ILO, WB|
In spite of the headline GDP growth figures highlighted by the Indian and world media, the fact is that it has been jobless growth. The labor participation rate (LPR) in India has been falling for more than a decade. The LPR in India has been below Pakistan's for several years, according to the International Labor Organization (ILO).
|Indian Employment Trends By Sector. Source: CMIE Via Business Standard|
Construction and manufacturing sectors in India have been shedding jobs while the number of people working in agriculture has been rising, according to CMIE.
|Pakistan Employment By Sectors. Source: PBS via Bilal Gilani|
It is important to note that Pakistan’s economy has created 5.5 million jobs during the past three years – 1.84 million jobs a year, significantly higher than yearly average of new jobs created during the 2008-18 decade, according to the findings of Labor Force Survey (LFS) as reported by the Express Tribune paper. The biggest jump in share of employment (1.5%) was in the construction sector, spurred by Naya Pakistan construction incentives offered by the PTI government.
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India’s Economy Is Growing Quickly. Why Can’t It Produce Enough Jobs?
The disconnect is a result of India’s uneven growth, powered and enjoyed by the country’s upper strata.
By Emily Schmall and Sameer Yasir
But for Indian politicians, a high unemployment rate “is not a showstopper,” said Mr. Vyas, the economist, adding that they were far more concerned with inflation, which affects all voters.
India’s reserve bank and finance ministry have tried to tackle inflation, which is battering many countries because of pandemic-related supply chain problems and the war in Ukraine, by restricting exports of wheat and sugar, raising interest rates and cutting taxes on fuel.
The bank, after raising borrowing rates in May for the first time in two years, increased them again on Wednesday, to 4.9 percent. As it did so, it forecast that inflation would reach 6.7 percent over the next three quarters.
Reserve bank officials have also employed an array of fiscal and monetary tactics to continue supporting growth, which cooled in the first quarter of 2022, falling to 4.1 percent. Household consumption, a major driver of India’s economy, has dropped in the last few months.
“We are committed to containing inflation,” said the bank’s governor, Shaktikanta Das. “At the same time, we have to keep in mind the requirements of growth. It can’t be a situation where the operation is successful and the patient is dead.”
While the Bank of England and the Federal Reserve in the United States have said their countries need to accept lower growth rates because of high commodity prices, India’s reserve bank is not in that camp, said Priyanka Kishore, an analyst at Oxford Economics. “Growth matters a lot for India,” she said. “There’s a political agenda.”
The ban on food exports is a sharp turnabout for Mr. Modi. In response to Russia’s blockade on Ukrainian ports, which has led to a global shortage of grains, he had said in April that Indian farmers could help feed the world. Instead, with the global wheat shortfalls driving up prices, the Indian government imposed an export ban to keep domestic prices low.
Temporary interventions like these are easier than addressing the fundamental problem of large-scale unemployment.
“You have wheat in your godowns and you can ship it out to households and get instant gratification,” Mr. Vyas said, referring to storage facilities, “whereas trying certain policies for employment is far more protracted and intangible.”
Those policies, analysts say, could include greater efforts to build up India’s underdeveloped manufacturing sector. They also say that India should ease regulations that often make it difficult to do business, as well as reducing tariffs so manufacturers have an easier time securing components not made in India.
Exports have been a source of strength for the Indian economy, and the rupee has depreciated by about 4 percent against the U.S. dollar since the beginning of the year, which would normally boost exports.
But inflation in the United States and war in Europe have started to affect sales for Indian-made clothes, said Raja M. Shanmugam, the president of a trade association in Tiruppur, a textile hub in the state of Tamil Nadu.
“All the input cost is increasing. Even earlier this industry worked on wafer-thin margins, but now we are working on loss,” he said. “So a situation which is normally a happy situation for the exporters is not so anymore.”
The struggles of working-class Indians, and the millions of unemployed, may eventually cause a drag on growth, economists say.
Zia Ullah, who drives an auto-rickshaw in Tumakuru, an industrial city in the southern Indian state of Karnataka, said his income was still only about a quarter of what it was before the pandemic.
The $20 he used to earn daily was enough to cover household expenses for his family of five, and school fees for his three children.
“Customers are preferring to walk,” he said. “No one seems to have money these days to take an auto.”
Female labor force participation rate in India has recently fallen to just 19%, the second lowest after Afghanistan's 15% in the South Asia region. By contrast, Pakistan's women's labor force participation rate is 21%, Sri Lanka's 31% and Bangladesh's 35%. Prime Minister Narendra Modi's mishandling of the COVID19 pandemic has hit Indian women particularly hard, with 90% of those who lost their jobs now shut out of the workforce.
Why Multinational companies are quitting #India? 8 years after #Modi first urged foreign companies to “Make in India”, #Indian #economy is seeing thousands of foreign firms leaving. #MakeinIndia #Islamophobia #Hindutva #BJP #bigotry #violence #hate
Eight years after Prime Minister Narendra Modi first urged multinational companies to “Make in India”, Asia’s third-largest economy is seeing many foreign firms give up on the country
A slew of big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to
pull the plug on their operations in India or downsize their presence here in recent years. That is a worrying trend at a time when India is trying to position itself as an alternative to China, in a post-Covid world where many MNCs are looking to diversify their supply chain.
A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament late last year. That is not a small figure, given that there are only 12,458 active foreign subsidiaries operating in India.
This might also explain why some of the world’s biggest chipmakers have not warmed up to India despite its government rolling out a red carpet for them by approving a $10 billion incentive plan last year to establish chip and display industries in the
in the country.
When asked if he would consider setting up a factory in India, Tesla CEO Elon Musk tweeted last month that the automaker would not set up a manufacturing plant “in any location where we are not allowed first to sell & service cars”.
Musk will instead look for potential opportunities in Indonesia, known for its business-friendly policy and production of nickel, a critical ingredient in making EV batteries.
#India’s World-Beating Growth Isn’t Creating #Jobs. #Unemployment rate is hovering around 7% or 8%, up from about 5% five years ago. The labor force participation rate has dropped to just 40% of the 900 million #Indians of legal age. #Modi #BJP #Hindutva
No other major economy has been expanding as fast as India lately, beating both China and the US. But beyond the headlines lies the grim reality of rising unemployment. The nation of 1.4 billion people isn’t creating enough jobs for its growing workforce, despite campaign promises by Prime Minister Narendra Modi to make it a priority. Output is increasing as a result of pandemic-related government spending while the private sector sits on the fence, deterred by dim conditions for new investment. Meanwhile, pandemic-related disruptions and rising inflation are making it harder for everyone to get by. Tensions boiled over in June when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire.
The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy, a private research firm. At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns. The labor force participation rate -- meaning people who are working or looking for work -- has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE. By comparison, the participation rate in the US was 62.2% in June.
India’s unemployment rate in August shot up to 8.3%. This is the highest in 12 months, according to CMIE data. This is causing extra hardship because it is happening amidst high inflation. This is where we need to focus all policy attention.
India's unemployment rate surged to a one-year high of 8.3 per cent in August as employment sequentially fell by 2 million to 394.6 million, according to data from the Centre for Monitoring Indian Economy (CMIE).
During July, the unemployment rate was at 6.8 per cent and the employment was 397 million, the CMIE data added.
"The urban unemployment rate is usually higher at about 8 per cent than the rural unemployment rate, which is usually around 7 per cent. In August the urban unemployment rate shot up to 9.6 per cent and rural unemployment rate also increased to 7.7 per cent," CMIE managing director Mahesh Vyas told PTI.
Vyas further stated that erratic rainfall affected sowing activities and this is one of the reasons for the increase in unemployment in rural India.
The unemployment rate in rural India rose from 6.1 per cent in July to 7.7 per cent in August. More importantly, the employment rate fell from 37.6 per cent to 37.3 per cent.
"Going forward, the rural unemployment rate may come down as delayed monsoon will increase agricultural activities towards the end of the monsoon season. However, it is not clear how the urban unemployment rate will play out in the coming months. Currently, it is quite elevated," Vyas added.
During August, the unemployment was the highest in Haryana at 37.3 per cent followed by Jammu and Kashmir at 32.8 per cent, Rajasthan at 31.4 per cent, Jharkhand at 17.3 per cent and Tripura at 16.3 per cent, according to the data.
While the unemployment was the lowest in Chhattisgarh at 0.4 per cent followed by Meghalaya at 2 per cent, Maharashtra at 2.2 per cent and Gujarat and Odisha at 2.6 per cent each, the data showed.
Over 2020-22 India's annual GDP growth is 0.43%. This places India in the middle of the world's growth table. What's worrying is that a decade ago India was in the top 3. Also youth unemployment at 28.3% is the highest in decades. So the growth that's happening is all at the top.
India's Economic Situation 'Bleak'; We Know the Issue but Not the Solution: Pronab Sen
In an interview with Karan Thapar, the country's former chief statistician said that India will miss the RBI's target of 7.2% growth for this financial year and that it'll come around 6-6.5%. (real growth going forward will be around 4%)
Pranab Sen: Demonetization and COVID lockdown dried up the informal credit and killed a large percentage of small and medium enterprises.
In an interview where he paints a bleak and disturbing picture of the state of the economy, India’s former chief statistician professor Pronab Sen has said that we can identify the problems that are retarding growth but we don’t know how to tackle them.
Worse, professor Sen says he is not sure if the government has diagnosed the problems because it has not spoken about them and its silence can be variously interpreted. Consequently, he says that India will miss the RBI’s target of 7.2% growth for this financial year and that it will growth will only come in somewhere around 6-6.5%.
However, he points out, in real terms growth will actually be just 4% which, he adds, is at least 2.5% below the growth India needs to create jobs for its population. This means, professor Sen points out, we can boast of being the fastest growing economy but it’s equally true that we are considerably falling short of the rate of growth we need (6.57%) to create sufficient jobs for our people which, in turn, will boost consumption and spending and create incentives for investment.
In these circumstances, professor Sen said that first quarter growth of FY23 at 13.5% is clearly disappointing.
In a 42-minute interview to Karan Thapar for The Wire, professor Sen, who is currently the country director of the International Growth Centre, identified two critical areas where the Indian economy faces serious problems about which we are not sure what we should do.
The first is the MSME sector which, he added, has undoubtedly shrunk in size over the last two years. The problem is not a question of encouraging and helping existing MSMEs so much as creating the environment for new MSMEs to emerge. The specific problem is that the informal credit line on which they depend has dried up and we don’t know how to revive that credit line. The government does not have a clear way of doing so.
And, the problem afflicting MSMEs, professor Sen says, is the reason why manufacturing has only grown year-on-year by 4.8% and why joblessness and unemployment are an increasing concern. Most jobs are created by MSMEs or the wider unorganised sector and that seems to have stopped or, at least, is not happening in sufficient measure.
The second problem professor Sen identified is the critical services sector of trade, hotel, transport, communication and broadcasting services, which represent 30.5% of employment but is still 15.5% below pre-pandemic levels. Once again, he said we don’t know what we need to do to boost this sector back to pre-pandemic levels. He pointed out that many MSMEs work in this sector and its future is, therefore, directly linked to MSMEs.
Professor Sen also pointed out that the global situation will not be of much help to India. Interest rates are likely to remain high and exports, which have been a support to the economy until recently, will face problems in markets like Europe and America and, therefore, fail to provide the boost to growth they have previously given. However, he believes oil prices could come down.
He believes India is clearly locked into a K-shaped recovery and the arms of the K are moving further and further apart.
Whilst scoffing at commentators and newspapers that have called for broad-based reforms, without identifying what they would be, professor Sen said that the key reform needed would be credit lines that would service MSMEs and provide funds for new MSMEs to start up.
“The poverty in the country is standing like a demon in front of us. It is important that we slay this demon. That 20 crore people are still below poverty line is a figure that should make us very sad. As many as 23 crore people have less than Rs 375 income per day. There are four crore unemployed people in the country. The labour force survey says we have an unemployment rate of 7.6 per cent,” said Dattatreya Hosabale. Also Read - 23 Crore Indians Pushed Below Poverty Line Amid COVID-19 Pandemic, Says Study
He also spoke about the rising levels of economic inequality that the country is witnessing today. Acknowledging that India is among the top six economies of the world, he said top 1 per cent holds 1/5th (20 per cent) of the nation’s income. He added that 50 per cent of the country’s population has only 13 per cent of the country’s income. Hosabale went on to quote United Nations’ observations on the poverty and development in India. Also Read - Today Will be Your Last Working Day With Uber: Ride-hailing Firm Lays Off Nearly 3,700 Employees Via Zoom
“A large part of the country still does not have access to clean water and nutritious food. Civil strife and the poor level of education are also a reason for poverty. That is why a New Education Policy has been ushered in. Even climate change is a reason for poverty. And at places the inefficiency of the government is a reason for poverty.”
In his speech, Hosabale also stressed on the importance of creating an entrepreneurship-friendly environment apart from the need to carry skill-training from the urban to rural India.
“During Covid, we learnt that there is a possibility of generating jobs at the rural level according to local needs and using local talent. That is why the Swavalambi Bharat Abhiyan was launched. We don’t just need all-India level schemes, but also local schemes. It can be done in the field of agriculture, skill development, marketing etc. We can revive cottage industry. Similarly, in the field of medicine, a lot of Ayurvedic medicines can be manufactured at the local level. We need to find people interested in self-employment and entrepreneurship,” Hosabale said.
manufacturing share of gdp has fallen after launch of make in india
a report by ashoka ceda’s ankur bhardwaj showed jobs in manufacturing in india had halved after 2017
the beauty of new india is that popularity is dissociated from performance/governance
CEDA-CMIE Bulletin No 4: May 2021
With the second wave of the coronavirus pandemic battering India at present, the Indian economic outlook looks bleak for the second year in a row. In 2020-21, India’s real GDP growth is estimated to be minus 8%. This would also put pressure on India’s employment numbers. In previous bulletins, we have analyzed the impact of Covid-19 pandemic on employment, individual and household incomesand expenditures in 2020.
In this CEDA-CMIE Bulletin, we try to take a longer-term view of sector-wise employment in India. We base this on CMIE’s monthly time-series of employment by industry going back to the year 2016. For this bulletin, we have focused on seven sectors, viz. agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services. These sectors make up for 99% of total employment in the country.
Princeton Economist Ashoka Mody: How India’s growth bubble fizzled out
The slowdown is not a short-term disruption. What can replace India’s finance-construction growth model?
As the finance-led growth model collapses, India must invest in its future. India will need at least a generation to build necessary human capital alongside more productive urban spaces
India’s gross domestic product (GDP) growth has slowed sharply from 8% a year last year to 5% in the second quarter this year. Optimists, Indian and international, say growth will pick up soon. The International Monetary Fund (IMF) projects the Indian economy will hum at 7.5% a year by 2021. Such optimism is dangerous.
’Shining India’ years
Domestic policymakers and international observers celebrated the high headline growth numbers. Indian software producers gained disproportionate spotlight as markers of success. In March 1999, the Bengaluru-based Infosys became the first Indian-registered company to be listed on the Nasdaq stock exchange. In March 2000, the then US President Bill Clinton visited India, making a stop in Hyderabad, dubbed “Cyberabad" under the tech-savvy chief minister Chandrababu Naidu. Clinton spoke in awe of India’s dazzling diaspora in the US Silicon Valley; he applauded India’s young multimillionaires.
Some months before Clinton’s visit, in October 1999, a BJP-led coalition had gained a stable majority in the Lok Sabha. But the essential philosophy established by Manmohan Singh—more open markets, financial deregulation—remained unchanged.
India now decisively missed the second wave of global competition in labour-intensive products. When, on 11 December, 2001, China became a member of the World Trade Organization, Chinese exporters powered into the new markets opened up to them.
India’s finance-construction growth model continued apace. In 2003 and 2004, two new private banks, Kotak Mahindra and Yes Bank, joined the crowded financial field. The BJP built more highways, which created more need for private finance and gave more fillip to construction. The barely hidden nexus of politician, bureaucrat, and financier became tighter. India steadily became one of the world’s most unequal economies. The BJP’s 2004 Lok Sabha campaign with the slogan “Shining India" felt hollow and cynical to far too many people.
Losing to international competition in this second wave failed again to bring home the message that India lacked a core ingredient of success: human capital. From the time of the industrial revolution in the late 18th century, economic growth and human capital development had been closely related. Each round of successful new entrants on to the global stage had pushed the human development frontier further.
The Americans achieved near-universal high school education in the early 20th century and they followed it up after the Second World War with the spread of state-financed universities. The East Asians understood this historical lesson well.
Even for labour-intensive manufacturing, quality and timely production required a high degree of industrial literacy. East Asian—including by now Chinese—schools got steadily better; the governments there began the task of building world-class universities.
In India, the illusion continued. The years 2003 to 2008 were heady. Although China was chewing up export market shares, it was also a major importer of raw materials and industrial products. Thus, the Chinese boom fuelled extraordinary global trade volumes. The entire world rode that rising global tide—and so did India.