Indian Elections - Unemployment

CNBC TV18 Column: The challenges facing the next Government

I write on the Indian Elections, and the challenges facing the next Government

The 4th phase of elections has drawn to a close. At the end of these, it is two predominant messages that stand out – one is NYAY, the Indian National Congress’ (INC) grand plan to introduce a variation of the minimum income scheme that would put Rs.6000 in the hands of each household; and the Bharatiya Janata Party’s (BJP)  focus on National Security and why it is important for India to give a strong message to those trying to break us up. These two messages have heavily overshadowed any other message. All other messages have gotten overshadowed by this. And, yet these are not binary topics. It is not about a one or the other.

At the core any Government’s most fundamental role is to provide physical security. They are supposed to ensure that people can go about their everyday jobs without fear of being attacked. And most countries, including India, manage to provide this most of the time. Ultimately, terror attacks are the exception to life at large. Not the rule. As, societies evolve, the kinds of security that need to be provided increase. Economic security being one key plank. The countries of the early European Union would not have risen from the ashes of the destruction wrought by the second world war, if there were no safety net. Wages, employment, and a safety net, not just allowed immense progress and development, but also maintained relative peace for 75+ years. Minimum Income Guarantee is a policy that no government in the world can choose to disregard in a world where more efficient ways of producing goods, and serving customers, is enabled by machines. India too will adopt it in the near future, irrespective of which government is in power.

Given that neither national security, nor an economic safety are be negotiable, the question to ask is how future governments will pay for both. With the Indian debt up by 50% in the last 5 years, touching almost 83 lakh crore, there isn’t much place for even more deficit financing. Also, a large chunk of the defence budget – 42% – is consumed by salaries and pensions; leaving little over for desperately needed investment in modernising both the armed forces, and the national security apparatus.

The answer is fairly simple. India needs job creation on a war footing. One of the major failures of the last government has been the inability to create jobs. The confusion on the data has just compounded the problem of knowing what are the unemployment rates. More acute is the rate of graduate unemployment. As per the Centre for Sustainable Employment, Azim Premji University’s, State of Working India report 2019,    the unemployment rate in 2018 stood at 4.9% for men, and 14.2% for women. The figures are even worse when it comes to graduate unemployment. As per the  report 9.7% of all male graduates, and 34% of all female graduates have not yet found a job. Even if we discount half the unemployed women to societal reasons – their families won’t let them work – it is still a lot of unemployed.

This is the challenge for the next government. The creation of jobs. And, with this comes a linked challenge – that of making people employable. Just as employment has to be created on a war footing, so does the government need to appoint a Skills Czar (or Czarina) to tackle the issues of acute unemployability. 

As skilled jobs get created, and more people get into the employment space, they hopefully will get into the tax bracket. Even if they don’t, their expenditure on goods and services will attract a tax, and the rather depleted Indian coffers will start filling up. The increased income will act as an accelerant to the economy, and the economy itself will grow, creating more jobs, more taxes, and more investment on things that are in party manifestos.

In the campaigns Rahul Gandhi has focused on unemployment and promised policies that create employment while Mr Modi’s speeches are far more focused on defence and building up infrastructure. Neither has particularly focused on skills needed to get jobs.  The challenge for the next government is not just to create more graduates but create graduates with skills that land them jobs.    

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