India needs to overcome job challenge to become developed nation by 2047
The report suggests the ‘4S’ model for India to move towards becoming a higher income country. The 4S model comprises social, solid, sustainable and shared growth. With this template, it suggests the focus be on creating competitive jobs as these earn their wage in the marketplace, support employees’ livelihood and provide opportunities for developing capabilities and productivity over time
A futuristic report looking forward to [email protected] has suggested ways to improve the quality of life for people in this country noting it has not improved in line with the spurt in growth in recent years. In a realistic assessment of the challenges to be faced over the next 25 years, the competitiveness road map for [email protected] report points to job creation as being one of the biggest hurdles on the horizon.
Though most such reports giving sage advice for the future tend to gather dust in ministry libraries, this one is likely to be taken more seriously given that it has been released by the Prime Minister's Economic Advisory Council in collaboration with the Institute of Competitiveness. Harvard Business School professors have also been involved in preparing the report.
It has identified critical weaknesses in the country's economy despite headline GDP growth having been strong. These include weak social progress, increasing inequality and a lack of convergence across regions. The job creation challenge also has to be faced, given the fact that 10 million jobseekers enter the market every. It identifies these issues as roadblocks in the way of making India a developed nation by 2047, with the goal being a per capita income of 10,000 dollars.
The report comes at a time when the economy is rebounding from the effects of the pandemic as well as the disruption of global supply chains due to the conflict in Ukraine. A fragile recovery is under way and most key indicators are moving in a positive direction. In fact, India is projected to be the fastest growing economy in the world in 2022, despite many headwinds. The latest data for the first quarter of 2022-23 shows the economic growth at 13.5 per cent, though this is partly due to the base effect. At the same time, the country is continuing to face growing inequality with the pandemic having put the spotlight on the plight of migrant workers in contrast to the urban middle class which easily shifted to working from home. According to the World Inequality Report released earlier this year, India is among the most unequal countries in the world with rising poverty and the affluent elite. It noted that the top ten per cent in the country held 57 per cent of the national income while the bottom 50 per cent share had fallen to 13 per cent.
The competitiveness report, which also speaks of growing inequity, simultaneously contends that India has made headway in many areas. This includes the ability to provide enough electricity to meet the country's entire demand. Besides, enrolment rates have risen in education enabling more children to have the opportunity of schooling.
Even so, it has underlined the need for enabling social policies that enhance the employability of labour market entrants and reduce barriers for job seekers. In this context, the competitiveness road map for [email protected] suggests the '4S' model for India to move towards becoming a higher income country. The 4s model comprises of social, solid, sustainable and shared growth. With this template, it suggests the focus be on creating competitive jobs as these earn their wage in the marketplace, support employees' livelihood and provide opportunities for developing capabilities and productivity over time.
The report is timely in its emphasis on the need to create jobs rapidly to utilise the country's young workforce, as this is now being recognised as the biggest challenge for the economy right now. The latest data from the research agency, the Centre for Monitoring the Indian Economy (CMIE), shows the unemployment rate dropped to a six month low of 6.8 per cent. But the situation is different is urban India where it rose to 8.21 per cent in July from 7.3 per cent in June. Apart from July, however, the unemployment rate has been over 7 per cent in the current fiscal.
In this backdrop, the competitiveness study points out that the existing jobs are largely informal and irregular. This is challenging, it says, since such jobs do not provide the opportunities to build human capital and enhance performance over time. They also provide lower incentives to invest in physical and other assets that would drive higher productivity.
On tackling issues related to female labour, the report maintains India should work on creating better social policies. The recommendation must be viewed in the context of World Bank data which shows that female labour force participation has fallen by 30 per cent over the last 20 years. Clearly this is an issue that is resonating among policymakers in the light of Prime Minister Narendra Modi's comments recently that the concept of flexi-hours should be adapted to enable more women to continue in the workplace. Industry as well as the government needs to collaborate to ensure that policies that provide comfort to working women are implemented on a much wider scale than at present. The ramifications of improving the gender ratio are enormous especially in the light of a recent Bloomberg study which says that if India successfully closes the employment gap between men and women, the country's GDP can increase to 6 trillion dollars by 2050.
Another aspect that needs to be given greater emphasis, according to the report, is the need to strengthen and reframe its enterprise, competition and business environment policies to enable more productive firms to emerge and scale up for sustainable job creation. It has also commented on unfit regulatory frameworks that are holding the country back.
The competitiveness report has made concrete and worthwhile suggestions for policy changes to improve the quality of life of the general public. The proposals on job creation especially are valuable pointers for the future. But much will depend on whether these proposals are ultimately accepted and converted into sustainable policy changes in the long run.