An encouraging set of data from India’s largest factory database seems to have gone largely unnoticed amid rising concerns about an intensifying economic slowdown and the threat of job losses in the country.

The provisional Annual Survey of Industries (ASI) numbers for the fiscal year ending March 2018, released a couple of weeks ago, show that new jobs for both blue-collar and white-collar workers rose to their highest levels in half a decade in fiscal 2018. The results are based on the annual survey of more than two hundred thousand factories across the country, employing more than 15 million employees.

After showing a sharp decline in fiscal 2013, when India was faced with a near-economic crisis, factory jobs have been rising over the past few years. The latest data confirms a slow but steady recovery in factory jobs since 2013.

The latest numbers on annual growth of workers (4.8%) and managers (4.5%) do not qualify as a boom. The last factory jobs boom India witnessed was in the 2004-08 period, when the blue collar workforce grew at an average annual pace of 8%. In the four years leading to fiscal 2018, the average growth rate was much more modest at 4%.

However, the boom phase was preceded by a sharp contraction in the factory workforce in the years leading up to the boom. In four of the five years between fiscal 1999 and fiscal 2004, the factory workforce actually shrank in size. As a result, a part of the boom that followed merely replenished the diminished stock of workers across India’s factories.

Like all booms that went bust after the financial crisis of 2008, factory job growth also slowed down in the post-crisis era. Nonetheless, the slowdown was not as severe as the one in the early 2000s. The upswing too has been more modest.

Besides, as in the rest of the world, almost all indicators of economic activity in India --- other than the disputed gross domestic product (GDP) numbers --- have grown at a more modest pace in the post-2008 era than they did in the pre-2008 era.

Data from annual reports of companies broadly corroborate the trend reported by ASI, with job growth picking up over the past few years after a slowdown in the first half of the current decade. Compensation data from ASI and corporate balance sheets also point to a gradual --- even if slow --- recovery in real wages (adjusted for inflation).

How do these data square with the numbers from the Periodic Labour Force Survey (PLFS) conducted in 2017-18?

The comparable numbers from the PLFS survey relate to workers in regular or salaried jobs (although this category includes more than just those employed by registered factories and large companies). For regular workers, the picture is less gloomy than what the headline numbers suggest. Compared to the previous employment survey conducted in 2011-12, the PLFS reported a 5 percentage point increase in the proportion of regular workers to 23% in 2017-18.

It is also worth noting that since the PLFS was conducted after a gap of six years, it fails to capture both the jobs slowdown and the recovery in the intervening years that the other (annual) datasets report.

It only shows the net result at the end of the period (a modest increase in regular jobs). It is another matter that the government’s economic managers did not care to look at those numbers carefully, and hurried to hush up the report on the eve of elections, creating an impression that the job market situation is far more grim than what the evidence suggested.

Be that as it may, the ASI numbers indicate that India’s post-crisis industrial recovery has not been ‘jobless’ even if both the quantity and quality of employment leave much to be desired.

Three key sectors have driven the job-creating engine in the post-crisis era: auto, pharma, and apparels.

The share of all three in India’s factory workforce have risen significantly over the past decade even as that of three other labour-intensive industries --- textiles, food products, and basic metals --- declined sharply. Despite attempts to boost electronics production in the country, the share of workforce employed in the ‘computers and electronics’ industry actually shrank over the past decade, and accounts for just over 1% of the factory workforce. Electrical equipment showed a more promising trend, with its share in the factory workforce increasing 0.5 percentage points to 3.7 percent over the past decade.

The latest data point to two worrying trends in India’s industrial landscape. The first relates to growing regional imbalance. Only a few states in the country account for most factories and factory workers in the country. The top three states --- Tamil Nadu, Maharashtra, and Gujarat --- together account for four of ten factory workers in the country. And their share has risen over the past decade.

The other worrying trend pertains to the lack of investments in fixed assets. In four of the past five years for which data is available, investments in factories have declined. Only in fiscal 2016 did investments show a positive trend, rising 17%. The investment declines were particularly sharp in fiscal 2015 (-8.5%) and fiscal 2018 (-10.3%).

Unless India’s financial sector weaknesses are fixed, and overall demand in the economy recovers, factory investments could continue to suffer. This would take a toll on jobs, and the recovery in factory employment could come to a halt once again.

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