The biggest problem facing India, at present, is unemployment. Lack of employment leads to poverty, malnutrition, poor health status and education, and so on.
Out of India’s total population of 1.39 billion people, those living in extreme poverty is 97 million. With the sudden outbreak of Covid-19 in early 2020, many more were pushed into poverty in India. Some estimates showed that 150–199 million additional people could have fallen into poverty by the end of 2021. According to a report by the think tank Centre for Monitoring Indian Economy (CMIE), around 7 million jobs were lost in the country during the second pandemic wave. Adding to this, the consumption expenditure has come down and the public spending on development was sluggish. So, poverty in India is expected to rise in the coming days.
The greatest provider of unorganised labour in India, after agriculture, is the Micro, Small & Medium Enterprises sector. This sector needs funds to grow that can only be provided by banks as they do not have access to capital markets. However, as financial sector reform is pending, they have very little access to cash. Even though the finance minister, in the recent Budget, has increased the outlay for the MSME sector, the needs of reduction in taxation (as it was done for large-scale industries) and GST were not considered. If the MSMEs do not grow, employment opportunities will not increase in the unorganised sector. As per the World Bank, the gap between rich and poor is only increasing in India and this is not a healthy developmental model.
To worsen things, the present Budget has cut the food and fertiliser subsidy and the allocation to the health sector; that too as the pandemic still rages on. This will make the poor even more vulnerable. Data from the CMIE also shows that the rural unemployment in January fell to 5.84% as against 7.28% in December 2021 while urban unemployment stood at 8.16% compared to 9.30% in December. This is a marginal improvement and that is good news.
But it is disheartening to know that while 2.5% of the GDP is parked with the RBI because the Centre and the states could not spend it on infrastructure development, it could have created jobs and solved problems of unemployment. It is also important to note that the government has allotted one lakh crore in this Budget to the states for infrastructure funding. However, the states already have huge surpluses that have not been spent even in the last year. Then why would they take further loans from the Central government?
The unemployment situation can be tackled by providing skill development training at a much faster rate than what was happening in the last few years. The National Skill Development Corporation (NSDC) has more or less failed. No central agency like NSDC can, by definition, be effective. It is a wrong model. India is too big a country. Presently, only 2% of the total workforce in India have undergone skill training through NSDC. In addition, NSDC has cut its target. India has 50% of the population who are less than 30 years of age. If education and skill training is given effectively they can get employed as there is an acute shortage of skilled labour all over the world. India can become the largest exporter of skilled manpower. The IT sector has shown the way. The Central government can easily give a directive and incentive to the industries to train rural and tribal youth in their establishments so that skill training can take place. There are 748 districts and if each industry provides skill training to the poor youth where their industry is located, India can very quickly have a huge skilled workforce. The prime minister’s dream of Skill India could then be fulfilled. This will help the rural youth to get jobs in the industry and the industry, in turn, will get trained labour for which there is an acute shortage.
We also need to understand that the formal corporate sector is working at less than 80% levels of productivity. Therefore, one cannot expect great employment opportunities arising from that side.
Another stated agenda of the government was privatisation of PSU industries. Last year the total mobilisation under disinvestment was `38,000 crore. This fiscal year, the total mobilisation has been `9,300 crore (till November 2021) against a target of `1.75 lakh crore. The government has reduced the target for next year to `65,000 crore. Disinvestment in poorly run PSUs and banks could have made them more efficient, leading to the creation of jobs that would have solved a part of the unemployment problem. That too has been shelved. It is becoming apparent that both the Central and state governments lack the will to solve the real problems of the nation such as unemployment, poverty, illiteracy, malnutrition, primary health and education.
Creating a digital currency, speaking of a digital university, etc., can make the government look futuristic. However, when 65% or more people are suffering from acute poverty and farmers are routinely committing suicide, employment generation should be the number one priority. Along with that, social security should be provided to the poor, so that people do not die of starvation. The intent seems to be lacking.
Founder, Sri Ramakrishna International Institute of Management (SRIIOM)