Last month, during an event to celebrate 100 days of the second term of the Narendra Modi-led NDA government, the honourable finance minister parked the woes of the Indian economy at the doors of millennials, stating that their penchant for app-based cab hailing services have set the auto sector on the road to ruin.
On aggregate terms, the used-car segment is almost 1.4 times the new-car segment; only two out of 12 used cars is financed, compared to three out of every four new cars. Available data from the used-car segment shows robust growth of 10% for FY20, driven by millennials who are buyers of every second used car. The average age of the new-car buyer has reduced in the last decade, and auto manufacturers have introduced a slew of swanky models to cater to the changed demographic. The buyer motivation, utility, actual and transactional costs associated with buying a used car vis-a-vis a new car are entirely different, but why have customers, millennials included, turned their backs to new cars? This points to a malaise plaguing the auto industry and the finance minister is mistaken.
Growth potential arising from shifts in a population’s age structure is defined as demographic dividend by the United Nations Population Fund (UNFPA). Starting 2018, India’s working-age population, individuals aged between 15 and 64 years, outnumbers the dependent population and this phase is likely to continue till the year 2055. The economies of Japan, China and South Korea have all seen manifold growth towards the end of the 20th century, owing to their demographic dividend.
According to UNFPA, countries can harness their demographic dividend only if they can provide good health, quality education, and decent employment to the entire population. As cogent critics, we want to understand what opportunities have been created for India’s working population by the Union government in its current and previous avatar.
None of the Indian higher education institutions featured in the Top 300 in the World University Rankings 2020 by Times Higher Education. And the Union government admitted, albeit conveniently and belatedly, that the current unemployment rate is 6.1%, one of the highest ever.
Let us take the example of Pradhan Mantri Mudra Yojana (PMMY), cited as a flagship program for entrepreneurship and economic upliftment, to provide unsecured finance to non-corporate and non-farm small businesses to commence or expand operations. According to loan-size data available for FY2018-19, a total of `3.12 lakh crore has been disbursed under the Mudra Yojana. A bulk or around 86% of disbursed loans have an average value of `27,000 and only 3% of loans exceed the disbursal value of `4 lakh and above. One wonders about the quality of revenue and employment generating opportunities fashioned by this program.
Perhaps the Union government can share some success stories of entrepreneurship and employment generation, given that every sixth Indian is a Mudra Yojana beneficiary (almost 20 crore loans sanctioned to date).
Currently, more than 20 ministries/departments are running skill-development programs under the flagship Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme for drop-outs of Class 10 and 12. One crore people are expected to be skilled under this scheme dubbed PMKVY 2.0, for the period 2016-2020.
According to published data, cumulatively 72 lakh people have been trained since the launch of the scheme in 2015, and 15 lakh or 21%, have got placements. Data about placement is opaque, and there is no visibility about the sector in which candidates have been placed, and if they continue to remain employed. The honourable labour minister’s comment on “employability of North Indians” raises serious questions about the efficacy of the Kaushal Vikas Yojana.
The present government refuses to acknowledge the slowdown in the economy or the job crisis, and claims these issues have been concocted by vested interests to malign its image. Demand has collapsed, and sector-specific interventions are being introduced on the supply front, in a piece-meal fashion.
If jobs do exist as the honourable labour minister claimed in a recent interview, the ‘villain–nials’ need to be induced to loosen their purse strings. To spur demand, the government may designate mall-cum-multiplexes as temples of neo-India, announce tax holiday for movies released in Q3-Q4, reduce GST on AC restaurants and spread some holiday cheer. And the economy will pick up. Well… hopefully.
(Views expressed are personal)
Gourav Vallabh
National Spokesperson, AICC
Email: gourav.vallabh@gmail.com