When the new president of the Confederation of Indian Industry took charge last fortnight, he reportedly made the following observation: "While the flow of direct foreign investment is important, what is more important is that employment generation must be ensured in the country". Then -- and this is even more important -- he went on to explain the strategic choice that had to be made for the kind of job creation he had in mind. He said, for instance, that if a 0.5 million tonne paper industry imported its pulp it could create only 600 new jobs. But if the same paper industry worked with farmers and tribals to grow its wood, then, instead of a mere handful, it could create another 0.3 million jobs.
This indeed is the crux of the noise on inclusive growth. Currently, economic growth does not lead necessarily to growth for all. The fact is that, in the last decade, even as the rate of growth of our Gross Domestic Product has increased, the growth in jobs has declined. Between 1994 and 2000, the rate of growth in employment fell to 1.07 per cent per annum as compared to 2.7 per cent per annum per year during the 1980s -- this when, in the same period, the rate of economic growth increased. We should not be surprised. The formal industrial sector has never been a rock-solid, or even steady, provider of employment in the country; with changes in scale and increasing mechanisation, its contribution is declining further.
But we must understand that this syndrome of jobless growth plagues us because we are wilfully making choices that manufacture unemployment and poverty. It is clear that while the role of big and powerful business in creating employment is limited, it is not necessary this has to be so. But for this to occur, big business -- and government -- must realise that finding jobs in India will demand a change in the way we do business.
The fact also is that the biggest employment opportunity in India lies in building productive and sustainable livelihoods based on its vast natural resources. The potential is enormous -- from planting trees for pulp to rearing animals for dairy farming to rearing worms for silk and growing medicinal plants for pharmaceutical companies.
But in each of these employment options, there will be tough but strategic policy decisions, which will need to be taken. Let us be clear. Governments and business will need much more than paper programmes and political platitudes to make this job business work.
A study of the pulp and paper sector by the Centre for Science and Environment shows that trees planted for the pulp and paper sector in India can provide a fascinating model of growth with jobs in the country. Roughly 1.1 million hectares of land are required to supply the requisite 5 million tonnes of raw material to the industry currently. This, in turn, could provide employment to over 0.55 million farming families in growing wood and harvesting wood in a sustainable manner.
But this means that government policy will have to promote the use of wood grown by farmers on private land, or by communities on degraded forestland. It also means that the Indian government cannot allow large-scale concessions on forest land to industry, for such a move will immediately distort the market for farmer and community-grown wood.
But such imperatives create a very specific demand: the governments at the Centre and states will have to reorient their environmental policies from conservation to sustainable utilisation. For instance, there are many legal constraints that prohibit people from growing, transporting and marketing trees. These legal provisions are designed to protect forests, but they restrict people from regenerating forests.
Another telling instance: the Indian government has identified bamboo cultivation and its products as an important contributor to employment. Excellent indeed. But what the Centre fails to comprehend is that the law, in most parts of the country, does not allow people to grow and market bamboo. The forest department is still struggling to define whether bamboo is a grass (which people can then harvest, market and build enterprises out of) or a tree (which then gives government the monopoly over its sale). All in all, the situation is such that growing bamboo for cultivation and enterprise is not profitable unless farmers bribe their way up the chain, which then makes their transaction costs prohibitive. Yet another: government says that silkworm rearing is the employment creator of the future. But it has not done anything about the fact that, in certain states, even owning a silk worm, or a cocoon or even raw silk, is illegal under the law, unless the venture is fully licensed. The list can go on and on. And all the examples point to a single need: to restructure rural economies so that people can participate in the business of growth.
For this, governments will also have to take the fight to international trade fora. They will have to fight for the small producers and secure their space to compete in international trade. They will have to argue that poor farmers compete in a world of overproduction, and cheap (because heavily subsidised) products. That they over-work the land, over-fertilise it and over-use pesticides to increase production at any cost. In this way, they devalue the land and their labour to compete in unfair terms of trade. In other words, global markets do not allow them to capture the ecological costs of what they produce. Therefore, sustainable agriculture or forestry is not possible, without removing distorting subsidies in the North.
This business of true growth is a do-able job. But it will need to be done.
-- Sunita Narain