Dr. Devendra Kothari
Population and Development Analyst
Forum for Population Action
India needs to be as wary of unlocking human potential as it
is, rightly, of economic development
PM
Narendra Modi assumed
charge two years ago, on May 26, 2014. It is a good time to undertake an
assessment of how Modi has fared so far; have the promises he made been
realized or not?
No doubt, it is evident that much has changed.
Policy paralysis and the pall of gloom that hung over the economy have lifted. PM
Modi has been pushing the new policies with vigor and zeal. Inflation has been
tamed and public finances have been strengthened. Consumer inflation
which was 9.5 per cent when Modi
assumed office is now 5.4 per cent. The economy is expected to grow 7.6 per
cent in 2015-16 as compared to 5.6 per cent three years ago. Yet, the proverbial green shoots have not yet broken into
flowering buds. The jobs are flagging and ‘acche din’ still seem far
away.
In coming year Modi’s job should
not be confined to dealing with immediate challenges. It must be extended to
bringing about an institutional transformation which will enhance India’s
long-term economic prospects. It is because more
than 10 million young people enter the
workforce every year. But our policies have been unable to address the issue of adequate job creation. In fact,
India has been witnessing jobless growth.[1] For reversing the
trends, the Modi government has to “acquire greater clarity of
purpose”, noted TOI Editorial.
Few can
dispute the fact that the first decade of this millennium saw the fastest rate
of growth ever for the Indian economy. Even fewer would question the fact that
this was also the period that witnessed an abnormally low rate of growth in job
creation. Take the two together and what we have: “jobless growth”, as noted by
ILO based on the National Sample Survey Office data. The 66th round of NSSO
data on employment in 2011 revealed that only 1 million jobs were added per
year during 2004-10; in a period when the economy averaged a record 8.4 per cent growth annually. In this period, 55
million people joined the labour force. So, another way of looking at it is
that a staggering 50 million failed to find employment—a vexing political/social/human
challenge indeed. It appears that the high economic growth is not backed by
high job creation.
Now question arises
why jobless growth? One of the most important reasons behind this piquant economic
reality is low level of human productivity. Productivity,
a measure of the efficiency of the
human capital, can be measured by per capita
Gross Domestic Product (GDP). [2] In their book -
Beyond 2020: A Vision for Tomorrow's India, A.P.J
Abdul Kalam and Y.S.Rajan analyzed this fact. [3] They write:
“The GDP per capita standings are the true indicators of how much India has
been able to empower its citizens” (p 244). Table 2 makes it crystal
clear how much progress India needs to make to even be par with Brazil, China
and Indonesia. India
has become the tenth largest economy in the world in terms of GDP but still has
a very-very low per capita GDP. The country placed at the 148th
position among the 189 countries, as per the World Bank. This is perhaps the
most visible challenge. GDP per capita
in India averaged 462 US$ from 1960 until 2012, reaching an all time high of
1499 US$ in 2013 and a record low of 228 US$ in 1960. The table shows that China’s GDP per capita value in 2013 was more than four and half times
that of India. As such, how India could become world’s manufacturing hub through
its “Make in India” initiative?
Table 1: Per capita GDP, selected Countries, 2013
Country
|
World Rank
|
GDP per capita (In US$)
|
1
|
2
|
3
|
Monaco
|
1
|
163,036
|
Norway
|
4
|
100,819
|
USA
|
13
|
53,143
|
Germany
|
22
|
45,085
|
Japan
|
28
|
38,492
|
South Korea
|
33
|
25,977
|
Russia
|
51
|
14,612
|
Brazil
|
65
|
11,208
|
China
|
84
|
6,807
|
S. Africa
|
89
|
6,618
|
Indonesia
|
119
|
3,475
|
Sri Lanka
|
124
|
3,280
|
Vietnam
|
137
|
1,911
|
India
|
148
|
1,499
|
Pakistan
|
152
|
1,299
|
Nepal
|
170
|
694
|
Somalia
|
189
|
150
|
World
|
10,472
|
|
Source: World Bank National Account Data, 2013.
|
||
The
current pool of India’s labour force has very low employability mainly due to
low productivity. If the labour productivity is low,
then employers do not hire workers. And that is happening in India. India graduates
more than five million graduates every year. Engineers comprise a small (but
significant) part of it at around six hundred thousand, whereas the rest take
up a variety of three or four year bachelor degree programs. The National
Employability Report 2013 reveals that a significant proportion of
graduates, nearly 47 per cent were found not employable in any sector, given
their poor English language and cognitive/analytical skills. The report
also indicates that only 17.4 per cent of technical graduates (engineers) in
the country are ready to be employed. What this also means is that the rest,
that is, 82.6 per cent, engineering graduates are unemployable. Again, their lack of English
language knowledge and cognitive skills were identified as the major obstacles
to their suitability in the job market. [4]
This shows that economic growth, even when it takes
place, does not create as many jobs as it is skewed towards capital - or
skills-intensive sectors rather than labour intensive manufacturing. The state
of Gujarat itself confirms the picture – it is a manufacturing powerhouse that
specializes in capital intensive products such as petrochemicals, drugs and
plastics. As a result, jobs are not available. For example, when the Government
of Uttar Pradesh advertised for the post of 368 peons on August 11, 2015, it
could not have guessed the response would be so overwhelming. Over 2.3 million candidates applied for these
posts (over 6,250 per post). The minimum qualification for the post was Class V
pass but only 53, 000 of the candidates
who had applied has not studies beyond
Class V. Rest of applicants include those with degrees like BTech, MSc and
MCom, besides 255 youths with PhDs.
It
appears that problem of unemployment/underemployment has taken a serious turn
and there is apprehension of its becoming still grim in the future. There is an urgent need to build skills with an
industry/market focus to avert demographic dividend from turning into
demographic bomb. The Patel/Jat unrest whose intensity took the country by
surprise could already be one manifestation of this. Clearly, India is
frittering away the opportunity of capitalizing on the 'demographic dividend'.
During the
last two year, the Modi Government has embarked on ambitious structural reforms
to revive growth, including significant efforts in the agricultural sector to
boost productivity through irrigation, insurance, and access to markets, a
strong push to deregulate business, especially for startups, and important
efforts to improve the governance of public sector banks, as noted by the RBI
Governor Raguram Rajan. In addition, PM Modi has taken several significant decisions,
resulting in initiatives such as Make in India, Swachh
Bharat (Clean India),
Skill India, Jan Dhan Yojana (People’s Bank Plan), Beti Bachao, Beti Padhao (to addresses the issues
of women empowerment), Ujjwala Yojana (make availability of
cooking gas to very poor households), and several more.
Are
these initiatives aimed to enhance human development geared enough to meet the
problem of low productivity? One cannot be too optimistic about
considering the Modi Government’s piecemeal approach. In other words: Is the
piecemeal path down which our country is currently headed to handle core issues
of sustainable development a dead end, or can it lead to lasting and
rational reform? No doubt, India needs comprehensive
policy package in place of incremental piecemeal approaches to unlock human
potential?
India’s vast young population (currently, around
900 million people are under 35 years of age) is its strengths and therefore
one has to mobilize them to go forward fast. So what
need to be done to unlock India’s potential? In other words, what should be agenda
for enhancing human capital? No doubt,
putting the economy back on track should be the government’s first priority. It
is because India’s demography is such that we have to create a million
additional jobs every month. This can only be done by making it easy for
job-creating businesses to run, facilitating not just big companies but more
importantly small scale industries which create the most jobs. However, for sustainable development it is equally
important to focus on human capital. Central to the
human development approach is the concept of capabilities. For this, it is must
to build skills with an industry focus to avert the demographic
dividend from turning into a demographic disaster.
India needs comprehensive human development policies which include ensuring quality education
especially school education, enhancing primary and reproductive health,
strengthening decision making power of women or
empowering women, improving living conditions better including sanitation and water supply,
and shifting access labour force from agriculture to non-agriculture sectors. Among these first two need urgent but special
attention.
India does well to
keep ninety six per cent of children between 6 and 14 years of age enrolled in
schools but the problem is now of quality, not quantity. More than half our
students are being classified as functionally uneducated and unskilled or
simply half educated. Unless education
is rescued from the quagmire of mediocrity, all talk about realizing India’s
demographic dividend will be without substance. If India is to meet the more ambitious
development goals in a more challenging external environment, the post-2015
agenda needs to focus on ensuring a structural transformation of education
system. That will enable labour to shift towards higher value-added sectors and
more knowledge-intensive activities, thereby improving labour productivity
relative to other developing countries. It is argued that the enjoyment of the
right to education could be enhanced if there is an acknowledgement of the problems
that beset our educational system and if there is a willingness to solve such
problems. [5] In other words, the
government must focus on quality education, infrastructure rather than
attempting to introduce controversial issues in the education system.
India’s demographic bulge needs not only a sustained
does of quality education from top to bottom and practical skills for
employability and productivity but also sincere efforts to minimize the
incidence of unwanted fertility through proper health policies to harness the demographic dividend. The World Bank estimates that the prevalence of underweight children
in India is among the highest in the world with
dire consequences for mobility, mortality, productivity and economic growth.[6]
India’s population has grown from
846 million in 1991 to 1210 million in 2011- that is by 364 million in
the last twenty years, and is still growing by around 17 to 18
million every year. Current population growth
is mainly fuelled by unwanted fertility. More than four in ten pregnancies are
unintended/unplanned or simply unwanted by the women who experience them and
half or more of these pregnancies result in births that spur continued
population growth. Today 26.5 million babies are
born each year and out
of this about 6 million births could be classified as unwanted or unplanned. It
is estimated that around 450 million people out of 1200 million in 2011 in
India who were result of unwanted pregnancies and most of them are from the
lower economic strata.[7] The consequences of
unintended pregnancy are serious, slowing down the process of socio-economic
development as well as process of change, and is being reflected in widespread
hunger, poor health, poverty, under educated labour force, unemployment,
regressing governance as well as increasing scarcity of basic resources like
food, water and space despite concerted developmental efforts since 1991.
In addition, government policies
have to be redrafted or reviewed to empower women, improving living condition
including sanitation and water supply and shifting access labour force from the
agriculture to otter sectors.[8]
In short, India’s
aspirational youth are an amorphous mass; however, they are desperate to see
the Modi Government succeed, if only because it is India’s last chance at
getting on the high growth track which can help to achieve an overall development. The main concern today
is the impairment of human potential, which is not allowing India to reap its
rich demographic dividend. It is high time that Modi Government and political
parties focused on improving people’s ability to earn more rather than dolling
out subsidies that make people dependent on the political class and
system. For this, Indian
policy makers need a sense of self confidence and clarity over the direction
where we want to reach. As of now we have a slogan: ‘Make in India’. It must be
supplemented by another slogan: ‘Enhance Human Capital’. For this we need an
agenda, as noted in my earlier post entitled: “Growth with
structural transformation: A development agenda for India”.
I
will like to conclude in the words of
N.R. Narayana Murthy, author of highly acclaimed book: A Better India: A
Better World, “Economic growth and
prosperity require not just growing population, but also what economists call
‘good human capital’ – a population equipped with the skills and resources to
participate in the economic. With limited progress in human development,
India’s large population can become a liability rather than an advantage. In
other words, the demographic predictions are loud and clear: that the promise
of demographic dividend will not last long, in any case beyond 2030. Can India
take advantage of this demographic window in the next couple of years and
garner its benefits by adopting right type of human development policies?
Hope policy makers/experts are listening!
[1]
“Jobless growth” means a
situation where the flow of output increases without a proportionate increase
in employment opportunities.
[2] The measure is especially
useful when comparing one country to another because it shows the relative
performance of the countries. A rise in per capita GDP signals growth in the
economy and tends to translate as an increase in productivity.
[3] A.P.J
Abdul Kalam and Y.S.Rajan. 2014. Beyond
2020: A Vision for Tomorrow's India, Viking, New Delhi.
[4] For
details, see: The National Employability Report Graduates 2013 at: http://www.aspiringminds.in/docs/national_employability_study_IT_aspiringminds.pdf. Also see: The National Employability Report (NER) for Engineers
by Aspiring Minds at: http://www.aspiringminds.com/research-articles/exploring-national-employability-report-engineers-2014-part-i .
[5] Kothari, Devendra. 2016. Education in India needs intensive care, not a quick fix, RAEA Policy Paper No. 6. Rajasthan Adult Education Association, Jaipur.
[6] Refer: World
Bank, India Malnutrition Report, 2009 at: http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/223546-
[7] Kothari, Devendra.
2014. “Managing Unwanted Fertility in India: Way Forward”, Institute of
Economic Growth (ed.): National Rural Health Mission: An Unfinished Agenda,
New Delhi: Book Well, pp.25-36.
[8] For remaining components of human development agenda o, read my
article entitled: “Growth with structural
transformation: A development agenda for India” at: http://kotharionindia.blogspot.in/2015/01/growth-with-structural-transformation.html. Also refer, Kothari,
Devendra. 2014. “Empowering women in India: Need for a Feminist Agenda”,
Journal of Health Management, 16 (2), pp 233-43.
