Indian Economy: Rising Unemployment Amid Chest Thumping Growth

The Indian Economy is moving with a good pace despite few slumps due to policy shift. The government is thumping its chest on it but it is still struggling with unemployment problem.

Despite all the Economic Uproar, How many got the Job is all that matters

Leaving the last quarter which recorded a slump in GDP figures to 5.6%, Indian economy is doing pretty well with 7% growth rate in future FY years. The government has been thumping its chest on growth rates, decline in inflation, demonetization and the latest tax reform GST but it has been seen in compromising situations whenever asked on jobs provided in last three years. The figure has been very disappointing in last three years on the jobs provided.

In the last three years since the BJP government took the office, 2.75 lakh jobs were created in 2014 (removing the two quarter till June), 2015 saw only 1.35 lakh jobs while 2016 saw 2.31 lakh jobs. The figure comprises of 8 key sectors of employment. The figure is even below the jobs provided in the UPA era.

The Rising Unemployment a Worry for the Government

The job loss grew to its best after demonetization where 1.5 million jobs were snatched according to the CMIE report. The IT sector that employs 3.9 million people is set to loose around 56,000 jobs this year due to layoffs, Trump Visa issue and automation. It is also reported that more than 70% jobs will be killed in IT sector due to automation alone in the time to come.

The CMIE report states that India had a total employment of 405 million in January-April 2017 while it was around 406.5 million in September 2016. The fall is due to demonetization which badly impacted the informal sector and more importantly the labor bound manufacturing sector.

Despite the push by the government by introducing Kaushal Vikas Yojna which focused on skill based employment didn’t do much well as only 2.9 lakh candidates out of 30.67 lakh trainees got a job placement. The telecom sector too witnessed a devastating job loss of 75,000 workers that has present strength of 2.25 lakh people working as vendors, managers, tower firms and operators.

Another Perspective on Job Growth

Defending the criticism on job growth, the government argued that around 2.6-3 crore people are pushed into self-employment because of Mudra Yojna that provided financial loan of 1-10 lakh rupees for small businesses. The government provided loans to 9 crore people of worth 4 lakh crores. If the figures are to believe then the employment provided is huge and unprecedented.

With the changing times, one needs to understand that time is up for traditional jobs and the government is more focused on providing self-employment. This can be seen well as the government is bringing reforms and encouraging banks to give loans to SMEs rather than to big businesses.

What more can government do is to reduce the interest rate and push for reforms that makes favorable conditions for SMEs and self-employment. The industrial sector and the manufacturing sector in particular needs a revival as they provide jobs in bulk especially to the lower middle class sector.