is economic growth possible without growth in employment opportunities? Comment its possibilities and its impact. (150 words)
Introduction: India has been facing a jobless growth for many years after of 1991 reforms. We have seen stagnation in agriculture and subdued growth in the agriculture sector. Both of which are labour intensive. However, good growth opportunities have been seen in service sector which is not seen as labour intensive.
Reasons for jobless growth & failure of labour intensive manufacturing:
- Lack of skills and vocational courses: Less than 10% of people in India have been exposed to some kind of a skill. This number is 50% for China.
- Credit facilities: Large proportion of population still depends on informal credit.
- Law and Order, Contract enforcement: due to over-burdened court system and tribunals it is difficult to resolve commercial disputes.
- Technology adoption: which hurts quality. The expenditure on R& D is quite low and so is the private investment in this regard.
- Inadequate Infrastructure: Increasing the logistics costs.
- Restrictive labour laws: Which repels businesses to freely hire in the labour market.
- Stalled Projects: Due to issues like red-tapism, slow movement on various permits and frequent agitations due to poor environmental and social impact assessment.
- Protectionist global environment: With problems like trade wars etc.
- Social environment: the perception of intolerance.
Ways to boost employment
- Improvement in productivity: Re-allocation of labour from low-productivity agriculture to high-productivity sectors, such as manufacturing, has been a primary channel through which today’s advanced economies raised their living standards. With over 42.5% of the work force still engaged in agriculture, the move of workers from farms to factory jobs could be a source of economy-wide productivity growth.
- Reforms in Labour laws: As per the Annual Survey of Industries 2017-18, nearly 47% companies in India employed less than 20 workers. These labour laws created incentives for firms to remain small and uncompetitive, thereby affecting productivity. The new labour code, once implemented, would increase the threshold relating to layoffs and retrenchment in industrial establishments to 300 workers.
- Focus on Technology-intensive sectors: India must also focus on improving ‘within sector’ productivity through, R&D investments, better management practices and adoption of new technologies. The experience of several countries that have fallen into the middle-income trap bears testimony to the need for a gradual strengthening of tech-intensive sectors.
- Export orientation: If exports are taken as a proxy for the manufacturing capabilities and competitiveness of an economy, the present status of tech-intensive manufacturing in India leaves a lot to be desired. As per World Bank data, high-tech exports accounted for only 10.3% of India’s manufacturing exports in 2019, only a marginal improvement over its share of 9.7% in 2009.
- Full convertibility: To become a truly global economy India must look forward to allow full capital account convertibility. This would bring more investment into India and can lead to better growth.
- New Age-Skill development: In sectors like communication, designing, computing, cyber security, data processing, artificial Intelligence, much more focus is needed to build a workforce for future economy.
- Boosting MSMEs: With measures like credit enhancement, production linked incentives and tax subsidies.
- Tax reforms: Lower ing direct and indirect taxes, including fuel, electricity and alcohol in the GST net.
Conclusion: There have been various programs such as Make in India, Atmanirbhar Bharat, Insolvency and Bankruptcy code, GST reforms, Start-up India initiative and many more in the recent past which aim at boosting job growth in India. These steps are expected to remove the bottleneck that India has been facing in the last decades and boost the job growth.
