UPA's populism responsible for jobless growth

Discussion in 'Economy & Infrastructure' started by Daredevil, Jan 2, 2013.

  1. Daredevil

    Daredevil On Vacation! Administrator

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    This is one bit of statistic that should have the BJP-led NDA jumping over the moon with joy. But it probably won’t, because it does not know why it has been the recipient of this good news.

    One of the enduring legacies of Manmohan Singh’s liberalisation has been jobless growth. The reasons are obvious to everybody: while reforming industrial licensing and capital markets, no reforms were done in the land and labour markets.

    Thus while output grew, jobs didn’t. People simply used more capital and machines to get production up.


    GDP growth matters, but the quality of GDP growth may be more important than its quantity. Reuters

    But the one exception to this rule was 1999-2004, which broadly corresponds to NDA rule. This does not mean the NDA was the author of this beneficial change, for the big growth in job creation may have been the result of the previous government’s efforts or some exogenous factors, but the numbers are clear.

    Writing in Business Standard, Abheek Barua tells us that during 1993-2009, employment growth in the Indian economy was just 1.7 percent, down from 2.4 percent in 1972-83, and 2 percent in 1983-1993.

    This would have been worse but for the NDA period’s 2.8 percent growth. What caused this jump? Barua is happy to leave this as an unexplained spurt. He says the “post-liberalisation average was shored up by a somewhat spectacular and unexplainable blip in employment growth to 2.8 percent between 1999-2000 and 2004-05.”

    But Barua’s very next line tells us that this phenomenon needs close examination, for, as he points out, “in the 2004-05 to 2009-10 period, in which GDP growth hit historically its highest levels, job growth collapsed to virtually zero.”

    The big question is: why did the NDA time bring jobs growth at a time when GDP was growing slowly (5-6 percent), and why did higher growth in the next five-year period bring almost no jobs growth?

    Is jobless growth a UPA curse or was the NDA surge the result of something it cannot claim credit for?

    One can speculate about the answers.

    The 1998-2004 NDA period was a period of high interest rates and slow growth. The only external variable that could have helped was the Y2K phenomenon which would have pushed up IT jobs phenomenally. But, as against Y2K, we also had the dotcom bust, the Kargil war, and the US-led sanctions against India after the Pokharan-2 nuclear blasts.

    Net-net, nobody can claim the NDA had better operating conditions for creating more jobs than the UPA.

    In the next UPA-1 period, global growth winds were extremely positive (the George Bush tax cuts, the liquidity binge) and India directly benefited from it as GDP grew to 8-9 percent consistently. It seemed we have arrived.

    And yet, jobs did not grow.

    It is not possible to imagine any exogenous variable affecting jobs growth back home. Clearly, if jobs were not growing when GDP was, the faults have to be sought within.

    The one major change during the UPA regime was the huge transfer of resources to rural welfare schemes, especially NREGA and farm loan waivers.

    Did these impact jobs growth?

    The one thing NREGA did for sure is create a wage-price spiral. It pushed more farmers to opt for farm mechanisation. Higher wages and loan waivers may also have allowed farm labour to seek more leisure time rather than work in the short run. Since rising rural wages also upped urban wages, it may have had the effect of increasing the capital-intensity of Indian industry, though we don’t know this for sure.

    The only conclusion we can draw from the stats is this: GDP growth matters, but the quality of GDP growth may be more important than its quantity. A corollary could be: welfare is fine, but if welfare leads to a reduction in jobs, what is the net benefit to the country?

    It is also interesting to speculate about the possibility that if the NDA had not lost the 2004 elections, we could have had explosive jobs growth since its core economic philosophy was not welfarist. Unfortunately, the UPA’s electoral success in 2004 and 2009 has forced all politicians to think welfare and giveaways. Are we in for more jobless growth growth?

    How UPA’s populism may have entrenched jobless growth | Firstpost
     
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  3. spikey360

    spikey360 Crusader Senior Member

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    NREGA is the single most wasteful scheme in the history of Independent India. Name a useless activity and you bet it is covered under NREGA.
     
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  4. sesha_maruthi27

    sesha_maruthi27 Senior Member Senior Member

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    UPA policies leading to jobless growth: Study by govt body

    UPA policies leading to jobless growth: Study by govt body

    NEW DELHI: Not only has India witnessed jobless growth during the UPA's tenure, it has also seen millions pushed to become casual labour with little social security, the Institute of Applied Manpower Research (IAMR), a think-tank of the Planning Commission, has said in a recently published research paper, 'Joblessness and Informalization: Challenges to Inclusive Growth in India'.

    The report by the government body comes as a scathing comment on the character of economic growth under the UPA. The authors said despite clocking phenomenal growth which has made India the world's fourth biggest economy, "employment in total and in non-agricultural sectors has not been growing. This jobless growth in recent years has been accompanied by growth in casualization and informalization".

    The report noted that 15 million workers shifted out of agriculture and into the manufacturing and services sector during 2005-10, leading to agriculture's share in total employment falling from 57% to 53%. In the same period, the construction sector added 18 million people as workers as the government made huge investments in infrastructure.

    Most of those moving out of agriculture (during a period in which farm productivity was on the decline) ended up being casual labour in the construction industry with little or no social security, the study said.

    "Out of 44 million total employment in construction by 2010, 42 million (informal labour) hardly have any kind of social security benefit attached with it. In other words, 95% of workers in construction sector hardly have any kind of social security coverage," the study said.

    This explains why the report is not gung ho about the shift in employment away from agriculture towards manufacturing and services, a development that economists would normally see as positive and as an indicator of an economy in transition.

    The authors from the government think-tank warned that a "daunting and complicated task confronting the policy makers is to address the issue of informal employment within the organized sector. This issue of informalization of employment poses a serious challenge in achieving decent work and thereby achieving more inclusive growth and sustainable development".

    The research paper said in the period 2005-10, the manufacturing sector saw the loss of 5 million jobs. The services sector, which saw a massive growth of jobs during 2000-2005 of 18 million jobs, witnessed only 4 million additional jobs in 2005-2010. This, the report said, was odd considering the growth period is often called that of 'service-led' growth.

    The study by IAMR has a cautionary word for anyone who may proclaim that farm labour was doing better by coming to the cities as migrants to be part of an emerging India. "Undoubtedly, construction driven by significant expansion of infrastructure investment during the 11th five year plan has helped in absorbing surplus workers from agriculture sector. However, ensuring decent employment for those moving out of agriculture remains a big challenge," it said.

    India's track record on this front seems to be one of the worst among the developing countries. The study said "what makes India different is that the share of informal workers in the total workforce is well above the other emerging market economies - 93% of all workers compared to 55% in Brazil".

    IAMR calculated that the prevalence of informal or casual labour has been increasing not only in the small and medium scale unorganized sector but also in the kind of labour big manufacturers hire. "While the informal nature of employment is predominant in the unorganized sector of the economy, its prevalence is increasing even within the organized segment as well," it said. Almost half of the organized sector labour too is of casual nature, the think tank added.

    By 2010, 60% of the organized manufacturing employment was in the nature of informal contracts and 80% of the organized non-manufacturing employment was in the nature of informal contract, the study said.


    UPA policies leading to jobless growth: Study by govt body - The Times of India
     
  5. parijataka

    parijataka Senior Member Senior Member

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    Re: UPA policies leading to jobless growth: Study by govt body

    I believe reforms related to industrial sector that should hv been undertaken to take India forward were not undertaken by UPA-I and UPA-II and would hv lead to continued growth and job creation. Instead they hv concentrated on populist sops such as farm loan waiver and distributing freebies benefit of much of which did not reach intended beneficiaries anyway due to corruption.
     
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  6. captonjohn

    captonjohn Regular Member

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    Re: UPA policies leading to jobless growth: Study by govt body

    UPA has become blind and forgot that social reform is necessary but not on the price of common people's interest. What type of this social reform that has increased goods price so high? Petrol prices have been increased 7 times in last year and now government has freed oil companies to increase diesel price 50 paisa per month. This is not economic reform that leaves 65% middle class dissatisfied.

    Why petrol's price is higher than any other nation in Asia??
    Why government reduce export of goods to control prices in India? because they want money and they don't care common man is able to feed or not due to mahangai.

    Unemployment is going to increase and whole UPA is coming in unemployed list in next election.
     
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  7. natarajan

    natarajan Senior Member Senior Member

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    Re: UPA policies leading to jobless growth: Study by govt body

    Like 2g they will prove it is fault,after 20 years they take survey and equate it with current one.Finally they say report is wrong
     
  8. GPM

    GPM Tihar Jail Banned

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    Re: UPA policies leading to jobless growth: Study by govt body

    Labour in agriculture is decreasing due to increased mechanization. This is inevitable. But this migration has to be absorbed in manufacture and consequent service sector. But industrial expansion is facing problems as land is becoming increasingly tough to acquire. Though TATA got land a t Singur, but continous problems due to land forced it to close shop. Second, manufacting and services required skilled personnel. Where are the training institutes for such a training?
     
  9. arnabmit

    arnabmit Homo Communis Indus Senior Member

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    I am a direct victim of UPAII corruption... Lost my job because of 2G scam.
     
  10. spikey360

    spikey360 Crusader Senior Member

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    Were you associated with Uninor?
     
  11. arnabmit

    arnabmit Homo Communis Indus Senior Member

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    yup... Kol & WB circle

     
  12. spikey360

    spikey360 Crusader Senior Member

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    I see.
    Govt should have allowed Telenor to salvage the business. Don't know what they are doing, walking deaf, dumb and blind. Crony capitalism at its lowest, worst form.
     

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