Demonetisation has deepened the gloom on India's employment prospects which have been shrinking
Kautilya, Whom the Bharatiya Janata Party (BJP) sets so much store by, would not have approved of the way Prime Minister Narendra Modi has gone about with demonetisation. The fountainhead of statecraft in ancient times would have been appalled by the frequent changes in policy. Kautilya, better known as Chanakya, decrees in the Arthashastra, his celebrated guidebook for rulers, that the one quality a ruler should always follow is to be well-prepared, whether the task is big or small. “Planning is the light that shows the path in darkness,” says one of his aphorisms.
And there are other injunctions that the BJP strongman has overlooked in his headlong rush to junk over 86 per cent of the currency in circulation. Kautilya says: “A work which is obstacle-ridden should not be started. One who knows (opportune) time accomplishes the task. One should commence a work after understanding the country and the consequences.” That is pretty close to the bone although written some 22 centuries ago. As we come to the end of the 50-day period sought by the prime minister to get the cash situation back to normal, what is most worrying is the impact of the chaotic demonetisation on employment and the economy. Already under severe strain, the job market has gone into a tailspin in the past seven weeks, bearing out the dire prediction of worthies such as Amartya Sen and Manmohan Singh of the impact on the economy.
Reports have been pouring in daily of the different sectors where workers have been laid off in the wake of Modi’s war on cash. Textile units in Tamil Nadu, construction in northern states, jute workers in Bengal were all being laid off apart from tens of thousands in small and medium enterprises (SME). The SME sector employs 40 per cent of the workforce.
Three weeks before Modi made his so-called ªsurgical strikeº on black money on November 8, India had been given what can only be called scary news. A study by a Delhi-based think tank had warned that employment was shrinking continuously with as much as 550 jobs disappearing every day in the past four years. The Prahar study capped the gloom that set in when data released by the Labour Bureau in early 2016 showed only 135, 000 new jobs had been created in 2015, compared with 419,000 in 2013 and 900,000 in 2011.
The only hope is that the current layoffs are temporary. Once enough cash is back in the system—and here again we have different estimates of when this will transpire—the economy should start looking up. But such optimism is hard to sustain since the Reserve Bank of India (RBI), followed shortly by the Asian Development Bank, has pared India’s growth forecast by half a percentage because of the disruption of economic activity in recent weeks.
And can we any longer trust RBI? The figures of cash infusions that it has been putting out simply do not tally. Either the banking system is suffering a shortfall of Rs 5,000 crore or a whopping Rs 56,000 crore, according to the different numbers of new currency notes the central bank has been claiming to have put back in circulation. Sharp eyes have also noticed that the august RBI has been editing and excising official figures on its website. Not at all a reassuring situation.
Adding to the uncertainty is the protest announced by bank employees who have been bearing the brunt of the strain caused by the chaotic demonetisation. The demand of the bank staff—adequate supply of cash to all branches along with transparency in numbers—makes it clear that the new RBI governor is out of his depth in managing the cash flows.
This makes one recall another of Chanakya’s sutras on governance. “Everyone should be yoked to task for which he is fitted.” So apt now.
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