Indian Prime Minister Narendra Modi is facing anger from his core voters, “educated youth”, because of his government’s inability to generate enough jobs as he promised during the election campaign in 2014.
Modi promised 10 million jobs a year, but in actuality, the total number of jobs created in the first three years of his government is just 1.51 million, which is 39% less than the 2.47 million jobs created in the previous three years (April 2011 to March 2014). And the story of a worsening unemployment situation does not end here. The country witnessed a loss of 1.5 million jobs in the first four months of 2017.
An annual survey published by the Ministry of Labor and Employment found that the country’s unemployment rate was 5% in the 2015-16 fiscal year as compared with 3.8% in 2012-13. In other words, the rate of unemployment was the highest in eight years. In a country where close to 30,000 young people enter the workforce every day, the present government has only been able to add up 450 jobs per day on average. In other words, job growth is equal to less than 1% of the growth in the workforce.
India is facing an alarming unemployment crisis, with job growth stagnating. The Modi government has not been able to make any headway to improve labor-market conditions. The situation has become far worse since mid-2014 (Modi took over as prime minister in May 2014). There was an absolute decline in employment during the period 2013-14 to 2015–16, perhaps for the first time in independent India.
The Modi government’s failure is far more visible in the fact that 30% of youth (those aged 15-29) in India are neither in employment nor in education or training, according to a recent report published by the Organization for Economic Cooperation and Development (OECD). This is worrying for the government, which is facing massive job loss in the manufacturing sector, as this sector contributes 18% of gross domestic product and directly employs 12% of the Indian population. Many economic analysts have warned the government that the current hiring outlook in this sector is nearing a 12-year low.
Other sectors previously seen as having high employment-growth potential have also started showing negative trends. For example, 67 units in the textile sector closed down during the first two quarters of the fiscal year ended in March 2017, with the job-loss figure reaching 17,600, including 14,000 employees asked to leave Larsen & Toubro (L&T).
Most big information-technology companies have started downsizing their workforces, as well as some private banks, citing strategic reasons. This also shows that the organized sector is seeing a sharp decline in the growth of employment.
According to a recent report published in Economic and Political Weekly, employment decline in the agriculture sector is predictably accompanied by increasing labor absorption in two industries, namely manufacturing and construction. Unfortunately, what is most worrisome at present is the absolute decline of job requirements in both of those sectors.
Employment in the manufacturing sector was on the rise from the 2009-10 fiscal year, reaching 9.8 million persons by 2011-12. However, the trend then turned negative, resulting in the decline of 2.1 millions jobs in this sector between 2013-14 and 2015-16, under the present Modi government. The construction sector also experienced an absolute decline in employment in the same period, by about half a million.
Fears are building that the present unemployment situation will be further complicated and may result in youth unrest and violence. Therefore, Modi needs to take this as a top priority and take necessary measures to ensure the revival of the agriculture, micro and small-scale construction, and retail trade sectors. The health of these sectors has become much worse since Modi announced demonetization and implemented a new tax system without a proper mechanism in place to manage the new goods and services tax.
Modi is being criticized for government policies that have been responsible for a steady decline in GDP numbers over the past five quarters, negative credit growth in industry, no increase in investments and poor demand for electricity. As Modi’s policies are imposed in the states ruled by his Bharatiya Janata Party (BJP), they are experiencing record rises in farmer suicide rates, as the agriculture sector is in complete shambles.
Modi needs to revisit his economic-policy measures. He should come out from his present denial mode and take strong action in areas of failure without any further experimentation. He needs to deliver on the promises he made to voters in the 2014 election campaign and provide jobs for the 18 million educated unemployed youth in the country. Otherwise, he may find it difficult to retain his own job for a second term as prime minister in 2019.
Now the educated but mentally illiterate Modi Bhakts who have escaped from Bharat Mata long back to Missionaries countries will start abusing this author for speaking the truth. Modi is nothing but a Dramabaaz and expert in making fool of brainless people. He has a great future in India.
Spending scarce resources on purchasing arms and rapport with US military plans does nothing for India’s economy and jobs.
Reforms are always painful. But they are needed. I think Modi is doing what India needs badly — reducing corruption, improving tax system, cleaning up bad debt, forcing construction industry to follow laws. Sure, he could put his head in the sand and just eat up all the money like previous government did. And let others eat too. And then people would be happy!
But that would not help India where only 2% pay taxes. Unemployment data is only for formal sector, which is only showing that credit growth has fallen down and private sector is not investing. IT is seeing major changes due to automation and adjusting. Construction industry is consolidating its bad debt. Metals were flat for years, and now started growing. What India needs next is change in its labor and land laws to make manufacturing easy; it’s not a popular move, but something that is required for long term growth. Modi tried that in his first year, but failed due to opposition from the left wing parties.
I think if there was a politician who could change India for good, its Modi. I just hope he does not spends all his political capital in doing so. We need him for another 10 years.
You need arms when you are surrounded by Pakistan and China and have hot borders, where terrorists are being pushed in every day. Not every country is lucky to have peaceful countries like Malaysia or Australia at its border!
Sam Ontoor the U.S. Is the biggest creator/supporter of terrorism worldwide whether intentional or not
Sam Ontoor And whats the excuse for China who have hot borders with India, Korea, Vietnam, Japan and US? Is it too radical and idea to reach settlement on border wth China?
Whatever the data mentioned above are not accurate, Indian economy is moving in right direction yes there are some transitional effects of demonetisation and goods and service tax on economy but overall outlook for economy appears very good so I don’t think that there is need to make so much noise about employment and growth rate.
Thus spoke the Bhakt who deserted his home country and settled in a Missionaries country. Looks like you the worlds greatest economist so why dont you fly in to India and help your Master Modi?