June 17, 2024The Intersectionpublic policy20MJ

India needs 20 million jobs per year

The 2024 election has brought the case for mass employment to the surface of the political discourse

Mint This is an unedited draft of The Intersection column that appears every other Monday in Mint.

A number of analysts attribute the BJPs underperformance in the general election to voters’ unhappiness with the Modi government over unemployment, job reservations and farmers’ livelihoods. The Agnipath scheme of military recruitment came in for criticism during the election campaign and many political commentators expect that the new government will be compelled to make changes to to it. We should treat such interpretations of election results with some scepticism, but it does appear that the issue of inadequate employment opportunities has bubbled up to the surface of our political ocean.

Trinh Nguyen’s new analysis squares with what we have known for some time. My 2017 essay for Pragati outlines the case. We have known (and denied) this for over a 100 years.

The growing India economy is creating livelihoods and employment, but not fast enough. We need to create 20 million jobs every year (to cater to the 12 million young people entering the workforce and to transition around 8 million farmers languishing in rural areas). This is the required run rate. Even if our current run rate is 5 million a year, we are still falling short of the target. To put this in perspective, India must create more jobs per year than the entire population of the Netherlands, Sri Lanka or Taiwan. It’s a scary number. Yet India cannot be Viksit Bharat without achieving this historically unprecedented feat.

How do we get there? Economic growth is the fundamental engine — the only engine — that can power this growth. High growth is a necessary condition, but it needs to be supplemented with a concerted programme to boost employment generation. So what can be done?

Before we get there, it’s important to disabuse ourselves of the notion that government jobs and military recruitment ought to be employment generation schemes. Yes, there are a huge number of unfilled vacancies in Union and various state governments, and these should be filled to capacity. Beyond that they will constitute an unwarranted drain on the economy. Similarly, there is a case to reform the Agnipath scheme so that personnel can move laterally into security forces, but it is dangerous to view the exercise from the lens of an employment programme.

Here are some ideas on how we can achieve a quantum jump in the employment scene.

First, create new well-planned, sustainable cities. There are many good reasons why India needs new cities. Existing cities are highly congested and their growth comes at the cost of quality of life and the environment. New cities can be green cities, with everything from layout, building materials, natural resources and public services designed to emit lower carbon than if existing cities were to grow. I have previously argued that India can create new cities by building new state capitals, shifting military stations, founding new universities and innovation campuses. Construction and infrastructure industries can create millions of jobs — from unskilled to highly-skilled — at a scale few other sectors can.

Second, attract large-scale manufacturing. Yes, it’s still possible in the age of robotics and artificial intelligence. We have spent more than a century telling ourselves that India cannot do industries and big manufacturing. A look at economic history shows how Mahadev Govind Ranade and B R Ambedkar debunked the naysayers and called for industrialisation in the 1890s and 1920s respectively. We must do so today to those who argue that Indians can directly jump from agriculture to services, skipping manufacturing. I’m sure there will be millions of people who will make such a jump, as can be seen from the number of people from villages and small towns who work in the services industries. But if we have to provide for hundreds of millions of livelihoods, it cannot be done without large scale manufacturing. A job-hungry India-sized player can transform global economics just as China did in the 1980s and 90s. To believe otherwise is either escapism or defeatism.

Third, get more women into the workforce. Across income levels, every employed woman creates at least one other job. Female workforce participation has been declining and it is still unclear why this is so and how this can be addressed. Deep social mores might have to do something with it to some extent. These will be hard to change directly. But we do know what we can do to make it easier for women to work from home or at workplaces. Toilets, public transport, safety, street lights, home appliances, child care facilities and anti-harassment policies are low-hanging fruit that will show results at the margin. The government has instruments and mandate to push each one of these levers.

Fourth, champion globalization. Free trade and movement of people is crucial to India’s development agenda. The West can perhaps afford to retreat behind tariff walls, India cannot. Of course reversing the current deglobalisation narrative is a great task, but great nations undertake great tasks.

Why there has been no social unrest over jobs so far (2019).

These are just some examples of the kind of thinking we need to address the jobs challenge. So far growth, migration and democracy have helped India avoid the kind of social unrest that accompanies widespread unemployment. They are limits to these buffers and it is best that we don’t take them for granted. The government has its job cut out.

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