India 2019: Who to vote for? Part #2 Employment & Entrepreneurship
(Note: If you are arriving here first, consider starting with part #1 on price rise)
In this part, I’ll attempt to collate all the data I have managed to find on another important manifesto promise: employment & entrepreneurship.
One of the ways traditionally the governments of past have published data on unemployment has been via the Employment Unemployment survey (EUS) conducted by the Labour Bureau. However, this methodology was scrapped in favour of a better alternative, Periodic Labour Force Surveys (PLFS), though no report has yet been published. The governments position has been that because the survey methodology has changed, data published by PLFS is not comparable to data from earlier years published under the EUS method. This may have been the source of recent controversy around the high unemployment data that got “accidentally” published.
In fact when I started researching for this post, I looked up numbers on tradingeconomics and found that they were reporting against this leaked data:
Of course, this was subsequently corrected, and withdrawn from public ledgers, though Google never forgets, as of this writing, Google still consider the unemployment rate to be, what was accidentally published: (I suspect someone from Google will soon be getting hauled up the Government for this “fake” news):
If you were to review the same today, that number has been updated (based on ILO estimates):
Now, before we go further it’s worthwhile to review some definitions:
Now, going back to the unemployment numbers, let’s zoom out a bit, to gain some perspective on how we have been fairing on unemployment over the last 20+ years.
Historically speaking the NDA government doesn’t appear to have had a good track record on unemployment. Although numbers in their recent stint are not as stark as they were during 1998–2004. That said, if we zoom in over the last 10 years:
We can observe the unemployment rate has been rising, albeit marginally, from around 3.4 when BJP government came into power in 2014 to over 3.5 in 2018 (as per ILO estimates). Given the downward momentum since 2004–2005 (outside of the spike in 2012), I think it’s reasonable to expect the government should have done better on reducing unemployment.
Now, in the absence of any recent data published by the Government (or rather being held back), some have looked at proximate sources of relevant data to project the unemployment rate. Particularly insightful was this “State of Working India” report published by Azim Premji University, in which they have looked at the Consumer Pyramids Survey from the Centre for Monitoring the Indian Economy (CMIE-CPDX) and used that to demonstrate what might be indicative of the unemployment status in the country over the last couple of years.
The workforce participate rate and labour force participation rate graphs, plotted for Urban and Rural India are quite striking:
It’s evident that both LFPR and WPR both started to decline suddenly from the third quarter of 2016 (September to December 2016) for both urban and rural men. And, in case you are wondering, yes, incidentally the timing of that decline coincides with the demonetisation event.
The report goes on to quantify what this decline means:
What does a 3 percentage point decline in the WPR mean in terms of jobs lost? We can answer this question by drawing on the population estimates provided by the UN Department of Economics and Social Affairs.3 As per these data, the male working age population in India increased by 16.1 million between 2016 and 2018. Accounting for the increase in working age population, the decline in the WPR amounts to a net loss of 5 million jobs during this period.
Now, against this rather disturbing reality, propaganda such as below, seems distastefully disingenuous:
To be fair though, there’s been no dearth of schemes launched to generate employment though:
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to train 1 crore Indian youth from 2016–20. As per one report, about 18 lakh candidates have enrolled and 17.93 lakh have been trained under PMKVY, so far. Though there are other reports suggesting “the government has placed 1 million trainees in jobs, 90% short of the 10 million target. Enrolment is short by 64% and certification by 74%”.
- National Career Service meant to serve as a platform for addressing all career related needs of the youth and students. The service aims to consolidate 978 Employment Exchanges and bring the opportunities online thereby improving the delivery of services.
- Prime Ministers Employment Generation Program: As per this report, the Khadi and village industries commission (KVIC) has generated over two million new jobs and set up 267,226 new projects under the Prime Minister Employment Generation Programme (PMEGP) between 2014–15 to 2018–19, according to the KVIC chairman Vinai Kumar Saxena.
- Startup India which aims to promote entrepreneurship besides providing funding support and other tax incentives. As per one NASSCOM report, 1200+ tech startups added in 2018. 40K new direct jobs created, over a total base of 1.6–1.7 lakh, with 2.5–3X indirect jobs.
- Pradhan Mantri Rojgar Protsahan Yojana(PMRPY) Scheme under which the Government of India will be paying the full employer’s contribution towards EPF & EPS, to incentivise employers for generation of new employment. As per some reports, till December 10, the scheme had covered 1,15,113 establishments and 92.23 lakh beneficiaries.
- Pradhan Mantri Mudra Yojana (PMMY) to facilitate credit access to non-corporate, non-farm small/micro enterprises. Under the latest performance report published, an amount of INR 5.71 lakh crore has been sanctioned under the programme, benefiting nearly 12.27 crore loan accounts, in the first three years of the programme. Though, there are reports that indicate ~INR 11,600 crores of loans disbursed have turned into NPAs amounting to ~3.43% of amount disbursed under the scheme by PSBs.
While the performance of these individual schemes appear to be promising, from the data that we have, it appears the government has largely failed on generating sufficient employment. How much of that failure can be attributed to demonetisation (and possibly GST), despite the governments sincere attempts to facilitate employment generation otherwise through well meaning schemes, is hard to tell. But at the end of the day, we have to measure the performance of a government based on the outcomes it has managed to drive, not merely based on the output of a few schemes. So, to me, it seems reasonable to conclude that the government has failed on the employment agenda.
Thoughts?
In the next part, I’ll attempt to dig up what evidence I can find on the alleged increase in communalism.
