The government is obsessed with economic growth. Employment is bound to follow, it claims. That's a delusion. The swelling numbers of unemployed continue to clamour for
Jobs Jobs Jobs
Jobs are what all Indians want. Governments know this. But they do not know how to create jobs. The problem is that the much-touted mantra of economic growth does not generate jobs. In fact, the reverse is quite true: India suffers from the growth-without-jobs syndrome.
Therefore in the last decade (between 1993-94 and 1999-2000), even as the gross domestic product (GDP) growth rate increased, the growth in jobs declined. The employment growth fell to 1.07 per cent per annum between 1994 and 2000, from 2.7 per cent between 1983 and 1993. This, when the GDP growth accelerated to 6.7 per cent from 5.3 per cent. "The capacity of job creation per unit of GDP output has gone down by about three times compared to that in the 1980s and early 1990s," says S P Gupta, a former member of the Planning Commission who headed a special group on employment generation set up by the last National Democratic Alliance (NDA) government.
The NDA spent its five-year tenure on the job-drawing board. In 1999, it set up the 'Task Force on Employment Opportunities' under Montek Singh Ahluwalia, who ironically is the deputy chairman of the Planning Commission now. The Ahluwalia task force, which was charged with suggesting strategies for providing employment to 100 million in 10 years, or 10 million jobs each year, submitted its report in July 2001.
But even before this report was submitted, the NDA government formed yet another task force: the 'Special Group on Targeting Ten Million Employment Opportunities Per Year.' Gupta headed this group, which submitted its report in May 2002. For the next two years, the two reports did rounds of various ministries; there was very little action besides that. In December 2002, in another ambitious document called India Vision 2020 the government reiterated its commitment to create 10 million jobs a year over the next two decades. This document with its grand promises ultimately took shape as the now infamous 'India Shining' campaign of the NDA government just before the general elections in May 2004.
The current United Progressive Alliance (UPA) government has picked up the 10 million jobs mantra. It is expected to enact a national rural employment guarantee act ensuring 100 days of employment to one person from each household across rural India. But as the debate over the employment guarantee increasingly focuses on the cost to the exchequer, the government is expected to start with 150 districts and officials hint that another task force may be set up on how to 'arrange' jobs under the guarantee scheme.
But how unemployed is India?
In a country as diverse, disparate and disorganised as India, it would be impossible to accurately measure the exact number of the unemployed. For instance, it is clear that people 'find' employment for some periods of the year and it is also clear not all people are employed for all days in the year. So, the measure of unemployment has to gauge who will be regarded as employed in terms of the days they worked during a year and the intensity in terms of the hours they worked. Then, there is the issue of 'quality' of employment: so even if people are employed, is the work they do adequate to meet their basic needs?
The census, for instance, only classifies people as employed or unemployed. But the National Sample Survey Organisation (NSSO) collects and analyses information based on different criteria to determine the rate of unemployment (see box: Who is an unemployed?) and is considered to be the best assessment. The state employment exchanges -- roughly 958 across the country -- are the third, but inadequate source of employment data as few people actually register here for jobs.
The NSSO 1999-2000 data shows the number of unemployed has increased from 20.13 million in 1993-94 to 26.58 million in 1999-2000. Consequently, the unemployment rate -- the number of people unemployed as a percentage of the labour force -- increased from 5.99 per cent in 1993-94 to 7.32 per cent in 1999-2000. The highest unemployment rate was in Kerala -- with 20.97 per cent of the labour force without work -- and the lowest in Himachal Pradesh where 2.96 per cent people had no work.
Where are the jobs?
The problem is that modern industry creates a chimera of jobs. For all the fuss made of the economic might of industry, it provides a mere 8.35 per cent of the total employment. Worse still, the glamorous and much touted private sector provides only 2.58 per cent and the much-abused public sector 5.77 per cent of this formal employment. Mining, water and electricity and in community and social services are the largest employers in the public sector. Unfortunately, with the decline of public services and demands for downsizing, this sector is showing a negative growth overall. On the other hand, with capital intensity growing in the private sector, its rate of growth has been near zero as far as jobs are concerned.
This when the maximum increase in employment growth rate over the 1990s decade was in the sectors of construction (7 per cent), financial services and transport and communication (roughly 6 per cent each). But it is the unorganised sector, which provides the job benefits. For instance, the small and medium manufacturing enterprises contribute nearly 80 per cent of the manufacturing sector employment and its employment elasticity is almost 3 times more than the organised sector.
But all this so-called growth in the construction-trade-transport and services sector is negated because agriculture, the major employment generator, has stopped absorbing people. The annual growth rate in this sector declined from 1.51 per cent in the 1983-94 period to -0.34 per cent in 1994-2000.
Another indicator of worsening employment scenario inrural areas is the declining share of self-employment in total rural employment from 58.9 per cent in 1977-78 to 52.9 per cent in 1999-2000. This indicates the proportion of farmers who cultivated their land has decreased because of declining yields or fragmentation of holdings. Similarly, there is a sharp increase in the share of casual employment over time -- reflecting the displacement of marginal cultivators and their conversion into agricultural labour. As a result, casual labour increased from 29.7 per cent of rural employment in 1977-78 to 37.3 per cent in 1999-2000.
Employment programmes fail to create enough rural jobs, people migrate
|Rural Employment Programme under the 10th Five Year Plan
||Increase in employment opportunity (in million person years)
|Sampoorna gramin rojgaar yojana
|Swarnajayanti gram swarozgar yojana
|Pradhan mantri gram sadak yojana
Will job programmes work?
Government runs rural employment programmes to create jobs in times of distress. The two key programmes of the early 1990s -- Employment Assurance Scheme (EAS) and the Jawahar Gram Samridhi Yojana (JGSY) -- have been renamed and relaunched a dozen odd times with changes in political leadership. In 2001, the schemes were merged into a single employment programme, namely the Sampoorna Gramin Rozgar Yojana (SGRY) with an enhanced annual outlay of Rs 10,000 crore, to create 10 million person days of employment each year. The government's calculation was simple. It had been shown (on paper) that 0.5 million person days were generated through EAS and JGSY with its allocation of Rs 6,000 crore annually (see table: Runaway bus).
Therefore, a doubling of budget would ensure a doubling of employment, it assumed. The question is if the schemes can actually create the jobs and if these casual jobs work more as supplementary source of employment in time of crisis or as real employment. The question also is how these programmes can be used to create continuous employment.
The job scene therefore looks grim. The organised sector has a low base and is shedding jobs. According to government estimates, even if this sector grows by a phenomenal 30 per cent per annum till 2007, its contribution would just go up from 2.58 per cent to 3.5 per cent in the employment chart. At the same time, large enterprises threaten the survival of the unorganised sector. The public sector is being downsized. The public and social services are being disabled. The agricultural sector -- still comprising 57 per cent of India's total employment -- is in decline. What is then the way ahead? How will the government make good on its 10 million jobs a year promise?
At which road head?
There is one strong view in the job-business: more growth will lead to more jobs. We have to invest in only economic growth and not in employment creation programmes and other sectors. This is what the NDA-created Ahluwalia Task Force had maintained then. It would not be surprising if Ahluwalia, now in his UPA avatar, would continue to take this view. The task force had forcefully argued that a shift from 6.5 per cent to 8 per cent growth would generate an additional employment of 14.5 million by 2012. "In contrast," the report said, "the total volume of employment created by all special employment programmes put together is only 4.4 million and this level has actually declined over time."
Interestingly, the Ahluwalia committee also trashed the UPA government's plan for additional employment generation arguing that, "because of severe resource constraints, it is unlikely that the volume of employment provided by special employment programme can be increased significantly in future."
This report therefore, emphasised on the macro-level policies needed for rapid growth. It pushed for higher rates of investment, improvements in efficiencies, improvement in infrastructure, reforms in the financial system and credit for the informal sector. But the stress was broadly on doing more of what is being done currently to accelerate economic growth. Jobs, they all argue, will come as a bonus.
Similarly, in the field of agriculture, the attempt should be to increase its efficiencies by bringing in private capital and public-private partnerships. For instance, the Ahluwalia task force recommends that leasing of land should be liberalised (read made easy for private interests to garner land); degraded wastelands can be taken out of the purview of tenancy laws and agro-companies allowed to buy, develop, cultivate and sell this land. Therefore, in its view the growth model for agriculture is the same as the industrial sector -- regardless of its failure to provide jobs.
For the small scale sector, the task force mouths some platitudes, but then recommends that the policy of reservation cannot be sustained in the face of the new import regime and de-reservation (which provides the protection to this labour intensive segment) must be completed over the next four years. Therefore, the organised -- labour-poor, but much more efficient sector -- would ease out the less competitive unorganised sector. But where the Ahluwalia task force sees major growth is in the service sector -- from travel to information technology to road transport and trade.
The real issue is if this strategy is adequate? The current experience does not tell us that it will not work. The proposals may be essential for economic growth, but they will not break the growth-without-jobs syndrome of the modern economy. But then, what will work?
The "new" enterprises
India needs a new approach to increase its employment potential -- moving consciously to source jobs from the non-organised sectors, particularly from rural-based non-farm sectors. The issue to look at carefully is whether there has been a decline in the key livelihood areas of agriculture, forestry, livestock, fishing, and horticulture and to see how these can be renewed and revived. In other words, the environment is the business of creating jobs. The question is why has this sector failed till now.
Interestingly, this was also the focus of the S P Gupta special group set up by the NDA government. According to this Planning Commission committee, a growth rate of 8 per cent would be inadequate to meet the employment challenges. It therefore, found the alternative strategy was to identify activities with a major potential of large new job opportunities -- agriculture, social forestry, fishing, animal care, horticulture as well as the small and medium industries and the service and financial sectors.
For instance, according to the special group report, the total additional job opportunities that could be created in the agricultural sectors would be 9.47 million in the 10th Five Year Plan (see graph: Tap nature). These jobs would come from variety of initiatives like watershed programmes, medicinal plants, bamboo development and plantations of energy rich species.
But it needs to be understood that there are serious obstacles to these opportunities today. It is only when we understand why these livelihood options are not part of the economic future that we will understand what can be done to make this work. It is clear that green livelihoods will need more than platitudes and government reports. They will need an enabling macro-economic framework to maximise their potential.
Living off leaves
STATUS: Generates 2.5 million jobs in Orissa alone
POTENTIAL: High capacity for employment because India has several sal forests. Can generate another 2.5 million jobs in Orissa alone
HURDLE: Forest laws restrict plucking of leaves
For a mere Rs 300, 27-year-old Somnath Mohanta sells a cycle-load of sal (Shorea robusta) leaves to agent Kathia Naik. Mohanta is least concerned with how much money others will make from his efforts. He is only anxious to somehow earn Rs 1,500 in a month from the leaves he collects from the nearby forest to make ends meet. The leaves are processed into disposable cups and plates and sold all over the country.
After the transaction, which takes place in Mohanta's thatched house in Jamuguda village of Mayurbhanj district in Orissa, Naik takes the leaves on his cycle to Betanati town, barely seven kilometres away. He will make a profit of about Rs 50 when he sells it to manufacturers of sal cups and plates.
At one such processing unit, owner Ambarish Mohapatra is busy doing some calculations. He's satisfied to find he will make a profit of Rs 5-6 on every sack of leaf plates and cups he sells. The merchandise ends up in the godown of a businessman, who will send out truckloads on receiving "anonymous" calls from Rajasthan, Uttar Pradesh, New Delhi or Haryana.
This is how the flourishing but unorganised sal leaf trade completes a full circle in one pocket of the forest-rich Mayurbhanj district. More than 1.2 million of the district's 2.2 million people -- mostly tribals -- are involved in the multicrore business.
It is estimated that this trade employs 1.2 million people, in the tribal dominated districts of the state. But it can employ five million people for 100 days in the state if it were organised, believes Vikash Rath of Vasundhara, a Bhubaneswar-based non-governmental organisation, which works on natural resource management through community action. Orissa has 1.7 million ha of sal forests in its western region.
Based on information from traders and others involved in sal leaf trade, Down To Earth found that annually Rs 1,095 crore flows into Orissa, while consumers pay Rs 2,096 crore to buy sal products (see table: Profitable and unorganised). The differential amount is shared by primary collectors, village traders, owners and workers of processing units, power companies, agents, transporters, big traders, distributors, retailers and -- last but not the least -- the government.
|Profitable and unorganised
Sal leaf trade-chain
||Rs in Crore
|Total money inflow (from consumer to retailer)
|Profit of the retailers
|Profit of the distributors
|Money coming into Orissa
|Profit of the wholesellers
|Orissa sales tax
|Central sales tax
|Plastic bag industry
|Processing unit worker
|Paste, other consumables packing charges
|Profit of the processing unit owner
|Profit of the ‘Kuchia’s’ (village level small leaf traders)
|Source: Laxmidhar Nayak, who has been studying the sal trade since last 10 years has calculated the above based on real figures and trades provided by the traders and collectors
The law is again in the way. In Orissa, the government announced a sal leaf policy in the year 2000 to ensure sustainable use of this resource. The policy declared that primary collectors could collect sal leaves and sell it or its products only through their respective Van Samrakshan Samiti (VSS), to the Orissa Forest Development Corporation or the Tribal Development Cooperative Cooperation. But there are many areas where VSS is either non-existent or inactive. So collection from such areas is either not possible legally or the objective of ensuring sustainable harvesting cannot be met. The policy also put a ceiling on gathering sal leaves: not more than 5 kg could be collected per ha, annually.
The policy was revised in 2002, increasing the permissible yield to 200 kg per ha but then set many conditions: when sal could be harvested, how it should be harvested and to whom it could be sold. The principal chief conservator of forests is expected to decide the silvicultural practices and yields based on the forest characteristics of each area. Under it, private traders have to get permits from the divisional forest officers for leaf collection. All this, important as it is for forest conservation, means that the trade is destroyed or becomes illegal. The harassment of tribals increases. Again, rule of the license raj prevails.
But this was not enough. The government then imposes a sales tax of 8 per cent on the goods made of sal leaves. In addition, there is a 4 per cent central sales tax for registered sal leaf dealers and 10 per cent for unregistered. Therefore, people get less and less, while the government earns out of harassment and tax.
STATUS: Generates 10 million jobs currently
POTENTIAL: Can generate 8.6 million additional jobs if bamboo plantations are undertaken and high value artisanal and other products marketed
HURDLE: Remains a monopoly of forest departments. Has to be given agriculture status to cultivate, harvest and sell
Sandni, a village in Rajasthan's Chittorgarh district, has been waging a decade-old battle with the forest department to resolve a peculiar question: is bamboo a grass or a tree? The answer is crucial for the 400 residents because it means the difference between becoming rich and staying poor.
The villagers protect the nearby forest under the Joint Forest Management (JFM) programme. The forest, because of their labour, has a rich cover of bamboo but JFM gives them full legal rights to collect only grass. Botanists classify bamboo as a grass species, but the Forest Conservation Act, 1980 does not. So the villagers are prohibited from harvesting any bamboo, which could be a renewable source of livelihood for the villagers and fetch about Rs 80,000 a year to the village, every year.
Bamboo could be a crucial employer. It has exceptional versatility -- as many as 1,500 uses, including as building material, and for making agricultural appliances, handicrafts and paper. It is also a renewable resource and farmers currently get up to 7.5 tonnes per ha (dried wood) on a three-year rotation, which following the South Asian experience, can be increased to 20-30 tonnes dried bamboo harvested on a sustainable basis. The data collected by the Centre for Science and Environment's Green Rating Project shows that pulp industry -- which incidentally pays the lowest rate for wood -- pays Rs 3,400 per tonne for dry bamboo and if productivity increases, the annual income to the farmer can go up to Rs 34,000 per ha. And if farmers were to sell the high value bamboo products they would make even bigger profits.
The Indian government, too, plans to go in for fresh bamboo plantation over six million ha during the next ten years under its National Mission on Bamboo Technology and Trade Development (NMBTTD). It also agrees that this could be a money and job spinner. According to Planning Commission estimates, altogether, 8.6 million jobs would be generated, that is, 1.4 million jobs per million ha of plantation in the next 10 years.
But why all this glib talk about bamboo's potential? Does the government have any clue about how it will grow the bamboo? No. The fact is that farmers cannot sell bamboo, other than in the Northeast of India, because of forest laws. The forest department, which has the land to grow the bamboo plantations, cannot protect the saplings from the grazing animals. The people, who can protect the saplings, like the residents of Sandni, are not given the option to earn from their labour.
The Supreme Court (SC) had banned felling in forest areas in December 1996. The forest departments used the order as an excuse to enforce a ban on bamboo felling. In 2001 MP, AP and Rajasthan forest departments did seek clarifications from the apex court whether bamboo generated under JFM could be extracted. But the Union ministry of environment and forest (MoEF) refused permission citing that without a working plan the permission was not possible due to a court order.
Then in February 2002 the SC clarified that its 1996 order prohibiting cutting of trees (except in national parks and sanctuaries) did not apply to bamboo and cane as it was a grass. After this clarification, the state has been trying its utmost to get it revalidated.
The question also is if bamboo is a minor forest product, (MFP) which would allow states to distribute it free of cost or at nominal charges to people. Only AP, MP and Rajasthan include it in the MFP list, with MP giving 100 per cent of the bamboo revenue to its JFM committees and AP 50 per cent. Orissa, on the other hand gave the state forest development corporation the sole right to market bamboo.
The state governments under various laws have monopolised bamboo and offer only limited share of the revenue to people under JFM.
It's all about money. The forest departments lack revenue sources, particularly after the SC's ban on tree felling without a clear management plan. Bamboo being outside the ambit of the order provides the department with its necessary finances. Why would it want to share the booty with the people?
In contrast, China had decentralised the bamboo trade after the 1979 land reforms. Villages were allowed to grow and harvest the 'grass-tree'. As a result China now exports bamboo and its trade in fresh shoots has proved to be more profitable than tea, silk or even rice. But will India's forest bureacracy learn some lessons from our neighbours?
STATUS: Employs 8 million people currently
POTENTIAL: Even the existing capacity can absorb another 3 million people
HURDLES: Lack of productive silkworms. Poor technology. No access to forests, limits the production of wild silk
The shimmer of silk captivates even the most languid eye. But first, the cocoon of archival laws has to be unravelled and examined in fresh light.
India is the world's second largest producer of silk, after China. All the four silk varieties -- mulberry, tussar, eri and muga -- are produced here. Karnataka is one of our traditional sericulture states and is the country's largest producer of mulberry silk. So it comes as a shock that some farmers rearing silkworms have uprooted their mulberry crops and planted tomatoes instead.
Explains HP Venkatesappa, head of Karnataka's cocoon marketing advisory committee: "It costs Rs 90-100 to produce a kg of cocoon but the current selling price is only around Rs 60-70 a kg and farmers have to abandon this trade." The state government controls the price of cocoons, which has fallen sharply -- from Rs 150 per kg four years ago to less than half that figure now. In the Kolar cocoon market, the usual crowd of reelers -- the daily customers for the cocoons -- is thinning out by the day. Of the 1,500 licensed reelers registered with the cocoon market, barely 250 turn up. At the government cocoon market in Ramnagaram, one of the largest in Asia, cocoon arrivals have gone down by 40 per cent in late 2004 over that of last year.
The 10th Five Year Plan had fixed a target of 24,500 tonnes of silk production for 2004. But Joy Oommen, Central Silk Board (CSB) member secretary, admits, "It's more than ten months into the year, and the target looks quite distant." Domestic demand for silk hovers around 23,000 tonnes while production during 2003-04 was 15,700 tonnes -- this agro- based industry has clearly not been able to get on its feet. Meanwhile, Chinese imports rose from less than 3,000 tonnes to over 7,000 tonnes in the last three years. Government is under pressure from the weaving industry to allow the import of raw Chinese silk. But this import, which helps the weavers and traders, destroys the abilities of the cocoon growers and farmers to compete. Even an anti-dumping duty on Chinese raw silk has not helped, with traders finding many ways of bringing in the cheaper fibre into the country.
India silk sector is a large employer. CSB estimates the entire chain of silk production -- silkworms to manufacturing the fabric -- employs nearly 8 million people in 26 states on a full-time basis. The same capacity could absorb another 3 million people, provided the market picks up. What hinders higher production is the absence of quality silkworms, use of outdated technology and complete neglect of the non-mulberry sector.
According to K N Ramadas, additional director, department of sericulture, "We have only two or three races of silkworms to fall back on. In comparison, China has 600." China has also invested into developing quality silk based on bivoltine hybrids. We lag despite a programme to develop better quality silkworms dating back to the 1970s. According to an estimate by the United Nations Development Programme, each kg of incremental production at the cocoon stage provides full employment for a year to one worker. The silk board estimates that one acre (0.4 ha) of mulberry plantation could generate employment, till the final silk mulberry weaving stage, of 1,000 person days -- in other words 3 people could get full employment with this plantation.
The problem is finding the land to plant the trees, which can then host the worms. The non-mulberry silk sector, which sustains the poor living in and around forests, is dependent on growing worms on trees in forest lands. Forest departments term the collection of cocoon from natural forest as NTFP extraction and restrict its collection and trade based on the state laws. The Forest Conservation Act, 1980, allows tussar cultivation, without the plantation of monoculture species, as a forestry activity. The act requires that if trees are to be planted for silk rearing, at least 3 different species be planted and that no single species cover more than 50 per cent of the total planted area. The act also specifically disallows the plantation of mulberry silkworm rearing as a non-forestry activity. These provisions, per se, are not limiting. The problem is the implementation of the act gives the forest department enormous discretion in permitting people to work in the forest. The problem also is that the forest area is declining. Consequently the trees that could breed these worms are also disappearing. To compounds things further, state governments monopolise the silk trade through legislations. For instance, in Karnataka, it is illegal to own a silk worm, a cocoon and even raw silk, unless you have a license given by the state's sericulture department.
All in all, a story, not made for success.
The fundamental shift
What is clear is that finding jobs in India demands a change in the way we do business. Let us be clear, the formal industrial sector has never provided employment in the country. With greater mechanisation in the years to come, its contribution towards generating employment is bound to decline further. The service economies -- outsourcing included -- will grow but cannot really absorb jobseekers in a country the size of India. The key to generating employment lies in building productive and sustainable livelihoods-based on 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 industries.
It is critical that employment and enterprise go beyond the conventional economic opportunities. It is here that the challenge of sustainable resource utilisation becomes imperative. A study by the Centre for Science and Environment shows trees planted for the pulp and paper sector in India can provide a fascinating model of growth with jobs. Roughly 1.1 million ha are required to supply the required 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 government policy will have to promote use of wood grown by farmers on private land or by communities on degraded forestland. It also means the government cannot allow large-scale concessions over forestland to industry, as it would distort the market for community-grown wood.
In each of these employment options, tough but strategic policy decisions will need to be taken. Let us be clear. Governments will need much more than paper programmes and political platitudes.
All this will also demand that governments reorient their environmental policies from conservation to sustainable utilisation. For instance, several legal constraints prohibit people from growing, transporting and marketing trees. These legal provisions are designed to protect forests, but they restrict people from regenerating forests. For instance, the Indian government has identified bamboo cultivation and its products as an important contributor to employment. But the law in most parts of the country does not allow people to grow and market bamboo. Poverty eradication will demand innovation in managing the competing and complex needs of conservation and employment generation. It is not enough to launch a mission for bamboo, without working through this legal framework and securing the rights of people to grow and harvest the crop.
It will also mean that governments will have to take the fight to international trade forums. They will have to fight to secure a place for the small producers to compete in international trade. They will have to argue that poor farmers compete in a world of overproduction and heavily subsidised products. That as a result they over-work the land, over-fertilise it, over-use pesticides -- all to increase production. They devalue the land and their labour to compete on 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 is not possible, without first removing distorting subsidies in the North.
What we need now is a new set of policy measures to facilitate use of ecology for economy. But when government is the biggest obstacle, who will pave the way for such measures?
Reported by Satyasundar Barik and Ranjan Panda in Orissa, Deepa Kozhisseri in Karnataka, Mahesh L in Gujarat, Kushal P S Yadav in Rajasthan and Vikas Yadav in Delhi
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