What the Indian Economy Needs to Do Right Now: Create Jobs, Jobs, and More Jobs
The Demographic Dividend can turn into a Demographic Nightmare
With nearly a Million young people entering the workforce every month in India, there is an urgent need to create jobs for all these workers and ensure that they remain gainfully employed and engaged in occupations.
Already the much touted Demographic Dividend or the much-touted term used to describe how India can reap the rewards of its youthful population and emerge as the primary driver of the global economy through absorbing these workers into occupations that lead to economic prosperity and actualizing higher growth is starting to fray at the edges.
Indeed, as can be seen from the agitations by the various communities for inclusion into the reservation lists, there is a trend of youth from these communities as well as across India finding it hard to be gainfully employed.
The Situation of Jobless Growth
Contrast this with the higher growth rates that the Indian Economy has been registering and one can see a conundrum or a paradox wherein jobless growth or the phenomenon of higher growth without higher employment can be discerned.
The writing on the wall for the Indian Government and the broader economic and social stakeholders is clear, and that is that without creating jobs for all these Millions of youth, the result would be social unrest and societal chaos.
Already we are seeing this happening across India where the lack of jobs is fueling communal tensions as well as violence by disaffected sections arising from the frustration of not being able to reap the benefits of the New India model that favors some over the others.
In other words, while some sections of society have been doing well, the reality is that the majority of people are yet to see any meaningful benefits and gains from the emerging economic paradigm.
In turn, this is leading to anger and violence from the sections that have lost out and hence, there can be no urgent task for the Indian Policymakers but to create jobs by the Millions.
Apart from this, the lack of reliable data on how many jobs are being created and which sectors are hiring and whether the type of employment is seasonal or full time or part time means that policymakers are groping in the dark where initiatives and policies to tackle joblessness are concerned.
This is another concern that needs to be resolved soon if India must avoid Implosion due to income and social inequalities and inequities.
What the Indian Government is Doing
Having said that, it is not the case that the Indian Government and the wider social and political and economic stakeholders are not doing their bit to create more jobs.
Indeed, policies and initiatives such as Make in India, the Digital India Push, and the concomitant Skill India are all aimed at creating jobs.
Also, the fact that easy loans are being made available to entrepreneurs and startups means that there are some movements towards encouraging and nurturing such people who can then create jobs for others.
Apart from this, states such as Andhra Pradesh and Telangana are in a frenzy to create as many jobs as possible by attracting investments and providing incentives and subsidies for corporates and other entities to set up their operations in their states.
Reasons for the Present Jobs Crisis
So, what exactly is going wrong in the midst of all this activity? To start with, the Indian Economy has yet to fully recover from the Global Economic Crisis of 2008 and the years in the run-up to the crisis when corporates borrowed heavily and became indebted to the extent that they are yet to deleverage fully.
In other words, Indian corporates have yet to pay down the debt that they accumulated before the crisis, and this is impeding investment and capacity creation.
Moreover, the fact that even those corporates that are profitable and sitting on huge cash reserves are not spending capital on fresh initiatives is another reason for the apparent contradiction where corporates report profits and the stock and equity markets are booming, and at the same time, there is high joblessness on the ground.
In other words, India risks becoming a country with high inequality and disparities if the present situation of gains accruing to a few and the losses for many is allowed to continue.
Further, the fact that Demonetization and GST have crippled the SMEs or the Small and Medium Enterprises that employ the most number of people is another reason why despite impressive economic growth, there has been no tangible improvement in the lives of ordinary citizens.
Thus, what we have is an urgent and potentially deadly situation where the lethal cocktail of high growth and high joblessness can have serious repercussions down the line.
Lastly, the fact that India is staring at a jobs crisis is evident from the data as well as anecdotal evidence from the ground and hence, the urgent need for the Indian Economy is to create jobs, jobs, and more jobs.
Towards this end, the Indian Government must embark on a massive infrastructure spending drive as well as prod private businesses to invest in job creating initiatives.
Moreover, it must not neglect Agriculture as it is still the mainstay of the Indian Economy. At the same time, it must provide incentives for the software and financial services sector which is a huge employer and which is facing a temporary slowdown due to various reasons.
To conclude, the window of opportunity to act is closing and we hope that the broader stakeholders and policymakers introduce policies towards this end.
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