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Business News/ Opinion / Online Views/  Unemployment dole, the new mantra

Unemployment dole, the new mantra

Offering unemployment dole is rapidly becoming the norm in every state assembly election

It is worrying that the proposed political palliative to the vexing issue of lack of jobs will in no way resolve the structural crisis in employment. Photo: Hindustan Times (Hindustan Times)Premium
It is worrying that the proposed political palliative to the vexing issue of lack of jobs will in no way resolve the structural crisis in employment. Photo: Hindustan Times
(Hindustan Times)

In the run-up to the February-March assembly elections in Uttar Pradesh, the Samajwadi Party (SP) promised an unemployment dole as part of its election manifesto. It may or may not have contributed to the SP’s record win, but anecdotally it is well established that the proposal went down well with the young, who are now rapidly forming more than a significant chunk of the electorate across the country.

Since then, not surprisingly, it is rapidly becoming the norm with every state assembly election seeing other political parties making similar offers; both in Himachal Pradesh and Gujarat, every political party, including the two national parties, the Bharatiya Janata Party and the Congress, promised an unemployment dole in their manifestos. It is likely the trend will endure and by the onset of the next general election, due in 2014, with much more at stake, it is more than likely that all political parties will embrace it at a national level.

The good news is that finally the issue of jobs, rather the lack of jobs, is getting the overt political attention it deserves—obviously not in the way it should have but welcome nonetheless. The bad news is that the solution is not financially sustainable and will only ensure that the already overburdened exchequer will hurtle faster over the fiscal cliff.

More worrying is the fact that the proposed political palliative to the vexing issue of lack of jobs will in no way resolve the structural crisis in employment. Not only does the Indian economy not generate enough jobs to absorb the 12 million people added to the workforce every year, its populace, more worryingly, is not even equipped to do a job even if it was on offer.

Capital Calculus has in the past flagged that the data put out by the National Sample Survey Office (NSSO) has shown that in the period of record growth between 2004-05 and 2009-10, the economy is estimated to have generated only a million jobs, compared to nearly 60 million in the previous five years. Similarly, the quality of these jobs is questionable with the same data indicating a growing trend of hiring casual workers. Between 2004-05 and 2009-10, the number of casual workers increased by 21.9 million while growth in the number of regular workers nearly halved (compared with the period between 1999-2000 and 2004-05) to 5.8 million.

Now data included in the 12th Plan draft posted on the Planning Commission’s website reveals an even more worrying trend. Quoting NSSO data, the draft reveals how abysmally ill-equipped India’s workforce is. As the adjoining graphic (Pyramid of Power) reveals, of the estimated total workforce of about 420 million at the end of March 2010, nearly a fourth is not literate and a similar proportion has been educated until the primary stage—in effect, about one in two members of the workforce are either not-literate or semi-literate.

And for a country whose workforce is identified as its asset, it is frightening to learn that the best equipped—graduates and above—aggregate a mere 8.7 million—or 2.1% of the workforce. Not only are they too few, it also reveals how skewed the country’s educational qualifications are and, consequently, what little chance the bulk of the workforce has to exploit the opportunities that have been generated after the stupendous run that has powered the Indian economy to an enviable size of $1.8 trillion.

In other words, most of India’s workforce would find accessing an unemployment dole, now that it is on offer, far easier than landing a regular job. (Indeed demeaning, given that most have signalled that they would rather be taught how to fish than be given fish.) So political parties need to rethink this version of cash for votes—neither will it be a sufficient safety net nor can this political quick fix be sustained. Fiscal rectitude is not the responsibility of the finance minister alone.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at

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Updated: 16 Dec 2012, 08:52 PM IST
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