Economy

10 million jobs: Vajpayee floated, Manmohan adopted, and Modi faltered

How the promise gave birth to India Shining campaign and ultimately led to defeat of NDA-I

 
By Richard Mahapatra
Last Updated: Thursday 31 January 2019
Photo: getty Images

It is unusually satisfying to witness national-level debates and dialogue over unemployment, even though it mostly revolves around the now-leaked National Sample Service Office’s (NSSO) periodic labour force survey.

Two members of the National Statistical Commission resigned, alleging that the government didn’t want to release the report that would have brought out the unemployment scenario in 2017-18.

Daily newspaper Business Standard has accessed this report and reported that unemployment that year was at 6.1 per cent, the highest in 45 years. As expected, it is a political riot now.

By this time, unemployment has become a major political battle for the ruling National Democratic Alliance (NDA), particularly for Prime Minister Narendra Modi. This is also because of the fact that his ascent to power was majorly fueled by two magical figures: Rs. 1.86 lakh crore indicating the level of corruption by the then ruling United progressive Alliance (UPA) government, and his grand promise of 10 million jobs a year.

The slogan of 10-million-jobs-a-year has assumed the devilish character of the Rs. 1.86 lakh crore figure that battered the UPA government.

In the last four-and-a-half years, Modi has replaced two ministers in charge of employment as apparently he was not happy with their performances on this critical promise. Meanwhile India is just seven years away from becoming the world’s largest labour force.

But, coming back to this magical promise: who exactly made this promise and how was it made into a magical figure to make everybody employed? Answers to these questions take us back to the last NDA prime minister, the late Atal Bihari Vajpayee.

When it all started

The first promise of this magnitude was made in 1999 by Vajpayee. He set up the Task Force on Employment Opportunities under Montek Singh Ahluwalia. Known as the Ahluwalia task force, its brief was to suggest strategies for providing employment to 100 million in 10 years, or 10 million jobs each year. When it submitted its report in July 2001, for a brief time the slogan 10-million-jobs-a-year hogged national headline and, like in 2014, was crafted for Vajpayee’s re-election in 2004.

Such was its perceived power over electorates that even before Montek’s report was out, advisors to the then NDA government forced it to form a task force called the Special Group on Targeting Ten Million Employment Opportunities Per Year. This was headed by SP Gupta, a former member of the erstwhile Planning Commission.

It submitted a report in 2002, which slipped into bureaucratic oblivion but made a comeback as India Vision 2020 that promised precisely 10 million jobs a year to Indians. It gained importance and also popular traction as according to the NSSO, the number of unemployed had 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.

A crisis could best be turned into an opportunity, at least politically. This is how the NDA-I interpreted it. The promise of 10 million jobs a year was simply a win-win situation. And this India Vision 2020 was converted into the now almost-blasphemous ‘India Shining’ slogan for the general elections in 2004. Vajpayee lost the elections. But the lure of 10 million jobs a year continued.

UPA-I adopted this goal. Montek was back as the deputy chairman of the Planning Commission. However, it remained in the background as it rolled out the Mahatma Gandhi National Rural Employment Guarantee Act.

After the first five-year plan (1951-1956), that was for the 10th time that India reset its target to eradicate unemployment and poverty. The new UPA-I declared employment generation as its first policy priority. It also accepted the previous government’s target of eradicating unemployment by 2011 or the end of the 11th Plan.

Varying visions

By far these two reports remain two important official documents that captured the debate over unemployment, particularly to understand the employment character of India. But the confusion further precipitates when one compares the reports; they in fact represent two different approaches to create employment, which still is the debate.

While the Task Force estimates the unemployment rate in 1999 at 2.2 per cent, the Special Group says that the unemployment rate had risen to 7 per cent. This difference in the figures was the result of the fact that the two groups used different methodologies.

The Task Force estimated on the basis of the Usual Principal and Subsidiary Status (UPSS) method of the National Sample Survey. The Special Group contends that this method is not precise as it leaves out a large number of people who are unemployed over six months or less in a year and sometimes marginally employed for a few hours during their working days. It has used the Current Daily Status (CDS) method of measuring employment, which, it said is reflective of open unemployment in the country.

The Task Force says that it is not necessary to have a target of creating 10 million jobs a year; a smaller number of jobs will meet the Tenth Plan target. But the Special Group says that this calculation does not take into account the large base period pool of unemployment of around 26 million, estimated using the CDS method, which is a universally accepted practice.

The two groups are completely at variance with each other on ways to generate employment. The Task Force advocated that growth in Gross Domestic Product (GDP) would generate employment. The Special group says that GDP may be growing but jobs are not being created at the same pace. The Special Group points to saving and investment constraints, unsatisfactory infrastructure, and the absence of good governance. The Task Force, as also the approach paper to the Tenth Five-Year Plan, recommended a growth rate of 9 per cent per annum in order to generate further employment.

The Special Group comes down heavily on the organised sector and sees no potential in it to create the required number of jobs. The report emphasises that the unorganised sector needs to be targeted in order to create jobs. It says that at present the unorganised sector provides 92 per cent of employment. In contrast, the Task Force said that eventually the organised sector would ease out the less-competitive unorganised sector.

The Task Force says that agriculture has no future as a creator of new jobs. But the Special Group maintains that the agricultural sector is a 'gold mine' with the potential to create at least 11 million jobs over five years. It emphasises horticulture, floriculture, agro-forestry, minor irrigation and watersheds among others as labour-intensive, high-value areas. The Task Force recommended that agro companies be allowed to buy, develop, cultivate and sell degraded wastelands, but the Special Group says that this scheme should take the form of a time-bound lease in which the interests of local landless labour and marginal farmers are also taken into account.

The Task Force recommends the conversion of rural land for urban use and laws to facilitate private development of townships and estates. But the Special Group says that this should be done only on selected stretches of wasteland.

Whatever the differences are, one thing is clear now that generating employment through sheer economic growth will not help. This is because we are increasingly experiencing jobless growth, which started way back in early 1990s. In fact, going by the government’s claim, India is the fastest-growing economy now. But jobs have not been created as expected.

The farm, stupid

Modi faces twin challenges. It is common knowledge that India is facing a deep agrarian crisis. But the context of the crisis is where the real message lies. Farmers are earning less and less, despite increasing farm productivity. People are not finding jobs within rural areas despite the rural economy growing at an impressive rate.

Agriculture, which is the biggest employer, is losing the capacity to create jobs. More and more people are quitting farming to pursue alternative sources of livelihood. But even these are not adequate to absorb such a massive surge in job-seeking people.

Recently, economists Ramesh Chand, SK Srivastava and Jaspal Singh from the NITI Aayog circulated a discussion paper on the changes in rural economy and their impact on employment. It offers, by far, the most objective analysis of the depressing rural employment scenario in the face of various positive economic indicators.

According to the paper, between 1970-71 and 2011-12 “India’s rural economy expanded from Rs 3,199 billion to Rs 21,107 billion at 2004-05 prices” —  a growth by seven times. Now, compare this with the growth in employment generation from 191 million to 336 million — less than double — in this period.

Another piece of information also points at the jobless growth of the rural economy. During the four decades, the agriculture sector, for the first time, witnessed a reduction in workforce. According to the NITI Aayog paper, rural employment registered a 2.16 per cent annual growth rate before economic liberalisation, initiated in 1991.

In the post-reform period, or in the early 1990s, it came down to 1.45 per cent. In fact, it recorded a negative growth at a time when the entire country was witnessing an economic boom. “Thus, employment increased at a much lower rate compared to output and it even declined in the wake of high growth in output post 2004-05,” says the paper.

In fact, the rural economy’s capacity to create jobs according to demand is in the negative now. This means the non-farm avenues in rural areas are not able to absorb those abandoning agriculture. Then where are these people going to seek employment?

In 2011-12, there was a need to shift some 84 million agricultural workers to non-farm sectors. This required a 70 per cent increase in non-farm jobs. Usually, people leaving agriculture seek employment in manufacturing, construction and other service sectors in urban areas. But these sectors are now facing a slowdown and, as mentioned, will not be able to absorb the entire workforce leaving the farm sector.

Then how does one make jobs available for such a high number of people quitting farming? Addressing this challenge will not be possible just by introducing a one-off “farmer-friendly” budget. It requires a soul-searching overhaul of the rural economy, which must begin with the acceptance of the fact that there is a crisis.

The origin of the India Shining is similar to the current New India. The government has already started selling a “blooming India” at the World Economic Forum. But it must remember that a misplaced pride often leads to a rude electoral jolt.

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