A demographic trend that’s probably the most repeated one in India’s context is that it’s a young country with more than 50% population under the age of 25. The policy subject that becomes apparent while talking about this trend is ‘jobs’. There is no doubt that Indian needs to be a job creating machine if it has to cater to its demographics. Both, quality and quantity of jobs are crucial in this regard.
Given that jobs matter so much for India, the topic has become popular enough to silence the facts of the problem itself. Experts have differed even on the number of jobs India needs to create in a year to keep pace with it’s demographics. The range has been from 66 lakh jobs a year to even possibly more than 1.1 crore jobs a year. Now there is no perfect way to find the right number but assuming the credibility of a recent World Bank report, India needs to create nearly 85 lakh jobs a year to maintain its employment rate. Another noise associated with this important issue is created by those who quote the oversubscription for certain government vacancies. Now it is true that Indians love government jobs, but to infer that just because a lot of people apply for government jobs implies that they are without jobs is outright flawed. An average Indian is aspirational and wants more security, more money with a job. There is nothing wrong with that. But to assume that everyone who wants to give a shot to be in a government job is unemployed is outright misrepresentation of the true picture. Why is the prime purpose of a job? A means to earn one’s livelihood and slowly attain a state of sustained prosperity. If that is the case, then the ideal way to assess the state of jobs in India is to analyze how many decent paying jobs are being created each year.
Job creation in various sectors
Now that the problem is well defined, let’s look at India’s performance in he recent years. Again, there is no clear way of finding the jobs created in a country as big as India but there are some indicators. Enrolling in Employee Provident Fund (EPF) is mandatory for enterprises with more than 20 workers. Between the period of September 2017 and November 2018, nearly 73 lakh Net Subscribers were added in the formal system. In the National Pension Scheme (NPS), nearly 9.2 lakh new subscribers were added in the period between September 2017 and November 2018. In this way, more than 82 lakh new people became a part of the formal workforce, indicating not only an improvement in quantity of jobs, but quality as well.
Apart from this, there are many professional bodies in the country, in which young professionals register themselves and do their work. For example, Doctors, Engineers, Architects, Lawyers, Chartered Accountants, Cost Accounts Company, Company Secretaries, conduct independent surveys to account for new additions in their professions. Independent studies say that about 17,000 new chartered accountants graduated in 2016-17. More than 5,000 of these people have started new companies. If a chartered account organization employs twenty people, then more than one lakh people have got employment in these institutions. Further, more than 80,000 postgraduate doctors, dental surgeons and Ayush doctors come out of college every year by getting educated in our country. If 60% of them practice themselves, five doctors will get employment opportunities per doctor and this number is 2 lakh 40 thousand. Similarly, nearly 80,000 Undergraduates and Post Graduate Lawyers 2017. If 60% of them had started their practice and would have given employment to two of their three people, then around 2 lakh jobs were found through those lawyers. In these three professions, more than 6 lakh people have got employment opportunities in 2017.
Now, if we consider the informal sector, then a lot of people get jobs in the transport sector. In 2016-17, nearly 8.5 lakh commercial vehicles were sold in the transport sector. If 25% of these are considered to replace the old ones, then 6.4 lakh vehicles have landed on the road for the purpose of transport and the new landing. If an average of two people get employment for one such vehicle, then the number of jobs created are nearly 13 lakh. In the same way if we look at sales of passenger vehicles, the number was 32.8 lakh. Of these, if 20% are considered to replace old ones, then about 26 lakh vehicles have landed on the roads. If only 25% of these cars employ a driver, then more than 6.5 lakh people have gotten employment. In the same way, 3-wheeler sales were 6.3 lakh in 2017-18. If 10% of these sales are considered to replace old autos, then approximately 5.6 lakh new 3-wheeler drivers have landed on the road last year.
Job Creation by the Government
Further, the government has significantly increased its expenditure levels to create an environment where more quality jobs are created. Moreover, specific government schemes have focused on job creation both in rural and urban areas.
- Mahatma Gandhi National Rural Employment Guarantee Act Scheme (MGNREGA)- In 2017-18, 231 crore days were created through this scheme. While the scheme mandates a minimum of 100 days employment, let’s assume jobs lasting 300 days in a year to evaluate the impact of the scheme on employment. The number comes to 77 lakh jobs. Now it is perfectly possible that more jobs were created through this scheme and many more than 77 lakh on individuals received employment through this scheme, however, in terms of full-time employment, this is a conservative and comparable estimate.
- Prime Minister’s Employment Generation Programme (PMEGP)- This program is “a major credit-linked subsidy programme, aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed youth”. Individuals in rural areas get a subsidy of 25% of the project cost and 15% in urban areas. As per an independent study, each unit set up under this program generates employment for nearly 7.62 individuals. As per Parliament records, the scheme generated 11 lakh jobs in the last three years. Taking an average, this comes to nearly 3.7 lakh jobs in 2017-18.
- Pradhan Mantri Rojgar Protsahan Yojana (PMRPY): “PMRPY has been in operation since August, 2016. In this scheme, Government is paying the 8.33% contribution of Employers to the Employees’ Pension Scheme (EPS) in respect of new employees (who have joined on or after 1st April 2016) having a new Universal Account Number (UAN), with salary up to Rs. 15,000/- per month. The scheme has a dual benefit i.e. on the one hand the employers are incentivized for increasing the employment base of workers in the establishments, and on the other hand a large number of workers will find jobs in such establishments. A direct benefit is that these workers will have access to social security benefits of the organized sector.” As per government data, 13.5 million individuals benefited from this scheme in 2017-18.
- Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)- This program provides placement linked skill trainings. As per government data, 1.28 lakh rural youth received trainings, out of which 69,320 got jobs until February 2018. On a pro-rata basis, this comes to 1.4 lakh trainings and nearly 75,000 jobs.
- Pradhan Mantri Kaushal Vikas Yojna (PMKVY)- This is the government’s flagship skill development mission. As of February 2018, 3.18 lakh youth were employed in the 17 months of its rollout. On a pro-rata basis, this translates to 2.25 lakh jobs in 2017-18.
In addition to direct employment creation schemes, government expenditure in the field of infrastructure- roads, rail, ports, housing have created multiple jobs. Let’s analyze these,
- Pradhan Mantri Aawas Yojna (Housing for all)
- Urban: As per a study by NCAER, for every Rs 1 lakh invested in the housing sector, 2.69 new jobs (2.65 informal and 0.4 formal) are created in the economy. With induced effect, the number of jobs would be 4.06 (3.95 informal and 0.11 formal). While extra budget allocations will be much more, nearly Rs. 6,000 crores from the budget were spent in 2017-18. This would lead to a number of 16.1 lakh direct and 24 lakh induced jobs. Moreover, in 2018-19, the government has allocated Rs. 6,500 crores through budgetary resources and Rs. 25,000 crores for extra-budgetary resources that would create many more jobs in the current financial year.
- Rural: A recent NIPFP report suggests that the Rural Housing Scheme generated over 52 crore person days of employment in last 2 years. Of this, 20.85 crore person days are for skilled labour and 31.62 crore for unskilled labour. As per the report, employment generated was linked to the construction of 25.3 lakh houses and another 21.3 lakh are under construction. The total expenditure during this period was Rs. 35,135 crores. The completed houses account for 40 crore person days and the under-construction account for 12.42 crore person days. If we assume that 60% of the work was done in 2017-18 and 40% in 2016-17 (based on budgetary allocations), then the number of direct jobs created can be estimated at 10.4 lakh in 2017-18.
- Road Construction
- National Highways: To evaluate employment generated through highway construction in 2017-18, a ball park figure given by the ministry offers a clue. The estimate by NHAI suggests that construction of 50,000 km of highways requires 50 crore person days. Thus, every 1 km of highway constructed results in 10,000 person days or around 33 jobs. In the year 2017-18, nearly 10,000 km of highways were constructed, which implies that 3.3 lakh direct jobs were created through highways construction alone.
- Pradhan Mantri Gram Sadak Yojna (Rural road construction): As per a World Bank analysis of rural roads construction in Bihar, 2500 km of roads were projected to create 20 million person days. Thus, 1 km rural road construction creates nearly 27 direct jobs. In 2017-18, 48,750 km of rural roads were constructed which yields to nearly 13.2 lakh jobs.
- Railways: While Railways on its own creates many jobs, one major national task is to convert the current meter and narrow-gauge tracks into broad gauge. As per the Railway Minister’s statement, the pace of 13 km/day conversion or new development has the potential to create 9 crore man days. In 2017-18, Railways commissioned 1861 km of tracks which translates to 5 km/day. Thus, a total of 3.5 crore person days were created, which imply a creation of 1.2 lakh jobs.
- Swachh Bharat Abhiyaan: Construction of one toilet generally involves 9 person days. In the year 2017-18, 2.95 crore household toilets were constructed. This translates to 26.5 crore person days or 8.8 lakh jobs in rural areas. On the Urban side, in 2017-18, 2.4 lakh community toilets and 35.5 lakh individual toilets were constructed. Assuming a community toilet requires 30-man days and individual man days requires 9 man days, it translates to 1.06 lakh jobs to construct individual toilets and 24,000 jobs for community toilets. The total being 1.3 lakh jobs.
All these figures point towards a common theme that with robust economic growth, jobs are created. India has seen rapid and inclusive economic growth in the past few years and many jobs have been created in various sectors. However, one needs to keep in mind that India’s aspirations are growing along with its economy and hence, many young people are choosing to pursue higher education rather than taking up any job that comes that way. The hallmark of the Modi Government has not just been number of jobs, but good quality jobs that are helping people eliminate the uncertainties of the informal sector. The current momentum needs to be maintained to ascertain that India’s growth is inclusive its labor market is dynamic.
Diwakar Jhurani is a Young Professional with the Economic Advisory Council to the Prime Minister (EAC-PM). All views expressed are personal.