India’s jobs data leaves Modi govt red-faced

When Narendra Modi swept to power in 2014, one of the major promises he made was to create 20 million jobs a year and turn India into an economic powerhouse. Industrialists were assured that he would shake off the policy paralysis witnessed during the previous United Progressive Alliance (UPA) government led by Dr Manmohan Singh.

However, during Modi’s four-year tenure as prime minister, economic growth has been sluggish, and many economists have criticized his controversial move to demonetize 86% of high-value cash in circulation and the way the goods and services tax (GST) was implemented.

India’s GDP growth took a beating, with International Monetary Fund chief economist Gita Gopinath claiming that demonetization had shaved economic growth by at least 2 percentage points for the October-December quarter of 2016, when it was brought into effect.

And now, just a few months away from general elections, the latest unemployment report produced by the government’s National Sample Survey Office (NSSO) has claimed that the country’s jobless rate reached a 45-year high in the 2017-18 fiscal year.

Interestingly, the report was to have been released in December and this week two external members of the NSSO, acting chairman P C Mohanan and member J V Meenakshi, stepped down, citing reasons such as differences with the government and delays in releasing the office’s findings.

Business Standard on Thursday published leaked findings from the unemployment report, which was based on the NSSO’s periodic labor force survey (PLFS). It noted that in 2017-18, unemployment rose to 6.1%, the highest since 1972-73. In 2011-12 the unemployment rate was just 2.1%.

The findings are significant as this was the first comprehensive survey held since the Modi government’s demonetization. This also indicates that the present government’s income-generation schemes such as “Make in India” and “Start-up India” have failed to generate enough jobs.

Getting into the details, the daily reported that unemployment was higher in urban areas (7.8%) than in rural areas (5.3%). What was more alarming was the high unemployment rate among youth, the most productive section of the population. The jobless rate among males in the 15-29 age group in rural areas jumped threefold to 17.5% in 2017-18 from 5% in 2011-12. In the urban areas it rose from 8.3% to 18.7%.

Among females of the same age group, in rural areas it was 13.6% in 2017-18, compared with 4.8% in 2011-12. In urban areas it shot up to 27.2% in 2017-18, as against 13.1% in 2011-12.

In an update, Business Standard on Friday claimed the real impact of demonetization and the GST on jobs has been much more than what is shown in the headline unemployment figures given in the NSSO report. According to the current weekly status (CWS) approach of the NSSO’s PLFS, the unemployment rate was 8.9% in 2017-18. In this approach, the activity status of a person is determined on the basis of a reference period of one week.

These findings kicked up a political storm with opposition parties, with the Indian National Congress leading the attack. Party president Rahul Gandhi referred to Narendra Modi as “Führer” in his tweet: “NoMo Jobs! The Fuhrer promised us 2 Cr [20 million] jobs a year. 5 years later, his leaked job creation report card reveals a National Disaster. Unemployment is at its highest in 45 yrs. 6.5 Cr (65 million) youth are jobless in 2017-18 alone. Time for NoMo2Go.”

The hashtag #HowsTheJobs became a hit on Twitter.

Reacting to Gandhi’s comment, the ruling Bharatiya Janata Party’s official handle tweeted: “It’s clear that he has inherited Mussolini’s short-sightedness and has myopic understanding of issues. EPFO’s real data shows sharp increase in jobs, created in just the last 15 months. Only a man who hasn’t ever held a proper job & is totally jobless can peddle such.”

The party tweet was referring to recent Employees’ Provident Fund Organization data that showed employment is rising. It needs to be noted that EPFO figures concern only those employed in the formal sector of the economy. Nearly 85% of India’s labor force is employed in the informal sector.

The government went into damage-control mode. Rajiv Kumar, vice-chairman of NITI Aayog, the government’s planning body, said the unemployment report was still in draft form, was not ready for dissemination and would be released in March. He also debunked claims of jobless growth, questioning how an economy could grow at an average of 7% without employment.

NITI Aayog chief executive officer Amitabh Kant claimed India was creating an adequate number of jobs for new entrants, but probably not of “high quality.” His citing of the increase in the number of cab drivers registered with ride-hailing apps Ola and Uber drew angry reactions on Twitter. The NITI Aayog officials failed to provide any reassurance and some even speculated that the NSSO data to be released in March may be sanitized.

Taking a dig at NITI Aayog officials, former UPA finance minister P Chidambaram tweeted, “NITI Aayog vice-chairman asked ‘How can a country grow at an average of 7% without employment?’ That is exactly our question. With unemployment at a 45-year high, how can we believe that the economy is growing at 7 per cent?”

Experts point out that even the NSSO data may have not captured the actual extent of India’s job crisis. People who work irregularly are also considered employed by the NSSO, so the job distress, especially in rural areas, may be much higher.

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