New focus: bailouts, govt spending have to create jobs2 min read . Updated: 19 Jun 2009, 12:08 AM IST
New focus: bailouts, govt spending have to create jobs
New Delhi: In a bid to put job creation at the centre of its economic policies, the government plans to make it mandatory for all development programmes to generate employment, through a first-ever National Employment Policy (NEP).
The same goal will also be embedded in future bailouts or concessions to private sector companies, said a labour ministry official, and will also apply to special economic zones, the tax-free export hubs on which no consolidated survey reports on job potential exists.
Critics of Indian growth since the advent of reforms have often pointed out that job creation has not kept pace with economic expansion, unlike in many other Asian countries such as Taiwan and South Korea. India’s average annual employment growth rate between 1999-2000 and 2004-05 grew 3%. But during this period, the unemployment rate also went up from 2.2% to 2.3%, according to labour ministry statistics.
About 10 million people are expected to enter the labour force each year. The policy notes that unemployment is highest among the youth, women and college graduates, and new opportunities can be created in both labour-intensive and new sectors, such as construction and tourism.
The official declined to be identified because the policy, which has been prepared by the ministry, has not yet been cleared by the cabinet; the first draft note was introduced before the previous government’s cabinet committee on economic affairs on 23 February, and the ministry of finance has sought inclusion of a time-bound plan for creating job opportunities.
The policy, drafted after several rounds of discussions with representatives of industry, trade unions, academics and officials of the International Labour Organization, also says that foreign direct investment in the retail sector must be reviewed only after examining its impact on small traders and businessman. “Fixing a target for employment is one of the main objective of the policy as there is no way to quantify benefits reaching the local population," the official said.
While restoring jobs after the economic slowdown and creating new ones through an economic revival plan is a top priority for the Congress-led United Progressive Alliance, the proposed employment policy hopes to provide multiple strategies to tackle falling employment in the organized sector, improve remunerative prices of the vast majority of marginal, mostly self-employed farmers dependent on agriculture for their livelihood.
It also emphasizes that the majority of India’s labour force works in the informal sector, and their earnings and social security must be protected.
“There is a challenge India is facing in terms of employment, so there is a need to mainstream employment in the country’s growth strategy," T.S. Papola, visiting faculty at the Institute for Studies in Industrial Development, said.
While the labour ministry has begun revamping the country’s 1,896 industrial training institutes to improve employable skills of the youth, it stressed that incentives such as tax exemptions and concessions to industry must be directly linked to employment. It has also suggested easy credit for labour-intensive sectors, such as small and medium enterprises.
For agriculture, which accounts for less than a fifth of total gross domestic product, it has suggested diversifying agricultural products, raising technology inputs and enhancing land regeneration projects to improve remuneration. The government also notes that manufacturing and services “must pull out the excess labour force from agriculture".