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Business News/ Politics / Policy/  Creating jobs is imperative: Economic Survey
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Creating jobs is imperative: Economic Survey

Jobs was a recurring theme in the Economic Survey released on Friday

Prime Minister Narendra Modi. Photo: Bloomberg (Bloomberg)Premium
Prime Minister Narendra Modi. Photo: Bloomberg
(Bloomberg)

New Delhi: Jobs was a recurring theme in the Economic Survey released on Friday, reflecting one of the most pressing imperatives before the Narendra Modi government, and highlighting the aspirations of a large proportion of India’s young population.

India would grow by 8.1-8.5% in 2015-16 on the back of reforms, declining oil prices, monetary easing and a good monsoon, the survey said, adding that the key would be for this growth to create jobs.

Sure, there was too much data, and not enough accurate data, on India’s labour market, the survey conceded, but it couldn’t be argued that the pace at which the country’s workforce is growing is outpacing that at which the number of jobs are.

An improvement in the quality of employment in rural areas, a greater thrust on manufacturing and supply of trained workforce for industries will help India reap its demographic dividend, the survey added.

One cause for concern is the deceleration in the compounded annual growth rate of employment from 2004-05 to 2011-12 to 0.5% from 2.8% during 1999-2000 to 2004-05, the survey said.

Quoting National Sample Survey Office (NSSO) data, it said that between 1999-2000 and 2004-05, the number of jobs increased by 59.9 million against the increase in labour force by 62 million people.

And those were the good years.

After a period of slow progress during 2004-05 to 2009-10, employment generation picked up between 2009-10 and 2011-12, when 13.9 million jobs were created, but even this did not keep pace with the increase in the labour force (14.9 million).

According to the survey, a major impediment to the creation of good jobs in India is the small share of manufacturing in total employment. However, data from the 68th NSSO round (2011-12) indicates a revival in employment growth in manufacturing from 11% in 2009-10 to 12.6% in 2011-12.

“Promoting growth of micro, small and medium enterprises is critical from the perspective of job creation, which has been recognized as a prime mover of the development agenda in India," the survey noted.

This fits in with the current government’s “Make in India" campaign.

The survey said that eliminating all exemptions for countervailing duty will eliminate the negative protection facing Indian manufacturers, and help the Make in India initiative, without violating the country’s international obligations.

The survey also pointed to the importance of the services sector, which has generated jobs far more rapidly than manufacturing activity.

Manufacturing will still generate more jobs, but services should not be ignored, it said.

There have also been structural changes—the share of the primary sector (agriculture, forestry, fishing, mining) in total employment has dipped below the halfway mark, while employment in the secondary (manufacturing) and tertiary (services) sectors has shown a considerable increase.

Self-employment continues to dominate with a 52.2% share in total employment, with a significant share of workers engaged in low-income-generation activities, the survey added.

It said that due to population control in some states, especially in southern India, the demographic challenge is more significant in some parts of the country.

For instance, the projected national average age of 29 years in 2020 has already been surpassed in Kerala (33 years), Goa (32.3), Tamil Nadu (31.3), Himachal Pradesh (30.4), Punjab (29.9), Andhra Pradesh (29.3) and West Bengal (29.1 years).

“States already well into the demographic window should actively pursue policies for employment generation to the already bulging labour force, while states just entering the window period have some time to plan and must pursue policies simultaneously in several areas like education, health (including reproductive health), gender issues and employment generation from now on so that they can fully utilize the opportunity," the Economic Survey said.

It said the present “capacity for skilling is grossly inadequate" and needs to be scaled up to meet immediate requirements of the country. According to the Labour Bureau Report 2014, the current size of India’s formally skilled workforce is approximately 2% against South Korea and Japan, where skilled workforce is 96% and 80%, respectively, of the total workforce.

At the all-India level, around 6.8% of the population over the age of 15 is reported to have received or be receiving vocational training, the survey said. A renewed focus on skill development and entrepreneurship through a dedicated ministry, the Make in India mission and labour reforms will help the cause of skill development in the future, it added.

CARE Ratings, a rating agency, said there is a need to bolster the Make in India initiative by complementing it with the Skilling India initiative. This would enable a larger section of the population to benefit from the structural transformation that such sectors will facilitate.

“By 2020, India is projected to be the youngest nation in the world in terms of size. While this ‘youth bulge’ provides India great opportunities, it also poses challenges. These young people need to be healthy, suitably educated, and appropriately skilled to contribute optimally to the economy," said the survey that was tabled in Parliament on Friday.

Amrit Raj contributed to this story.

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Published: 28 Feb 2015, 12:47 AM IST
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