Jobless Growth Strategy Still Haunts

Very often it is in some abstruse seminar papers that the actual thinking of the establishment is revealed.  Notwithstanding eloquent speeches to the contrary in the legislatures, or loud protests against them on the streets, it is these strands of ideas that relentlessly shape the government’s policy thrusts.

One important clue to the Planning Commission’s thinking on agriculture, employment generation, and small industry is offered by the most important economic apparatchik of the present regime.  Montek Singh Ahluwalia, the Commission’s Deputy Chairman, described agriculture “as a residual sector marked by widespread disguised unemployment.” At a seminar in Delhi recently, he advocated for “a shift of workforce from agriculture to non-agriculture to raise the per capita income of workers.”  He said that “mere expansion of employment would not make a dent on poverty.”  He went on to argue that the “two were not necessarily correlated.”  He proposed that it was more important to concentrate on sectors “which had higher labour productivity and high employment potential.”  In the same breath he wondered whether reservation to the small-scale sector would generate jobs.

He talked about the three most important sectors of the Indian economy.  What does this thinking portend?

Let’s first look at the farm sector.  Indian agriculture has witnessed severe crisis during the last five to six years.  From Kerala to Punjab thousands of farmers have committed suicides.  Well into the third year of the UPA rule there is no marked improvement in the farm sector conditions.  While it is true that the sector is host to a large army of disguised unemployed, the solution is not to shift workforce from this sector to the non-agriculture sectors.

The challenge that Indian agriculture poses to any sensitive economist is to suggest strategies to make it provide gainful employment to the available workforce.  There are people and families behind the cold numbers of workforce data.  They have not known anything but farming. The solution is not to drive them out of the farm and into the wretched urban slums.  The way to increase productivity in the agriculture sector is not by slashing the number of hands that work the land. It should be done by changing the farm ownership patterns and improving farm practices.  Shifting workforce out of agriculture can kill both the farmer and the farm.  This is an uncomfortable portend.

The importance of small scale industry in the Indian economy and its potential for employment generation cannot be overemphasized.  Once upon a time it was the socialists who laboured under the fetish of largeness.  It seems that now it is the turn of the born-again free-marketers to suffer from the same disorder.  Their preference is for one big enterprise producing one hundred goods, rather than ten small ones producing ten goods each to make up for one hundred goods in the economy.  The first one is easy to administer.  The second, they feel, is clumsy.  But the first option assures only production. The merit of the second one is it guarantees consumption too.  The misplaced predilection for high growth rates ignores the need for sustainable consumption levels.  Ultimately, all economic planning should be about assuring minimum and humane levels of consumption.  The present thinking in Yojana Bhavan, however, portends disregard to this fundamental principle.  It spells danger to the enterprise, the entrepreneur, and the worker.

Employment generation has taken a beating in the recent past.  Yet our growth rates have not suffered.  High value-adding and skilled employment, of course, can generate prosperity.  One could, indeed, leap-frog to 10 per cent growth rate without significantly increasing employment opportunities.    If you look only at heartless bar-charts and faceless statistics, you will not find a correlation between unemployment and poverty or employment and prosperity.  But look at people in flesh and blood. Understand the misery of a jobless farmer.  Realize the travails of a wage-less weaver.  The correlation between poverty and unemployment is inescapable.  It hits you hard in the face.

It is, of course, possible for joblessness and prosperity to co-habit for a while.  That kind of prosperity, however, comes with a price.  The society is filled with echoes of heart-rending wails of the dependents of farmers and weavers who commit suicide.  The rulers are forced to announce relief packages.  But those packages seldom work. And in democracies, the price of such insensitivity is not just troubled consciences. It will ultimately cost the rulers their jobs.  It happened earlier. And it will happen once again if the jobless growth strategy is not exorcised.

Incidentally, the Delhi seminar was co-sponsored by the World Bank.

One Response to “Jobless Growth Strategy Still Haunts”

  1. March 29, 2011 at 12:35 am #

    Surprising to see the analysis without actions.

    I found from one news channel, ” India’s Chinese imports are 3 times more than exports – India has plunged into a $20-billion trade deficit with China”. Why it is so? is our workers incapable of producing? or we don’t have resources!. Find out what products we are importing from china and dumping in the Indian market. I feel shame, can’t we made these simple products here. There seems to be $20 billion market for our own use and we are incapable!!!. for $20 billion industry how much unemployment can we solve?

    These so called economists favors only bureaucrats. They never look in to the point of view of a common man.

    I feel, we can get maximum employment from the tiny and small scale industry. we have good labor or work force which are needy. Many farm workers migrates to cities and in Hyderabad it self many of the painters, masons and carpenters, helpers are form labors.

    There is no need for the economic calculations, appoint commissions etc.. For this, I feel, simply stop importing products from china or other countries, which we can get it here.

    We are destroying our own economy by importing products, which we can manufacture. we are creating unnecessary competition with our products with low cost china products. Some time back, I remember, Iron ore is exported to china at a lower cost at that time, steel rates raised. Is china dictating our economy!

    I strongly feel, encourage small entrepreneurs and micro industries which produce products that we are importing from china by funding a fraction of funds that goes to bureaucrats.
    and encourage them to start their factories in villages, and arrange marketing/ selling of their product by the govt. at a reasonable rate will create thousands of employment opportunities. we have everything. mainly good manpower and resources. The deficit we had is action. No need for the SEZ’s. we have good wind energy and solar energy, which can be utilized. There is a need for village revolution.

    Many of the Civil/ Mechanical/ electrical Engineers are turned to I.T sector, because of the poor payment. But not satisfied with I.T as their actual study and experiences of the field is a mere waste. If we can encourage these professionals to start these product manufacturing facilities, no one can stop our growth. we can extend our growth from village end. most of the machines we are importing from china can be made is India with better quality.

    No need to think and appoint well educated gentle men and commissions, who earns crores and never actually think in the point of view of common men. The govt. should start action.

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