Private Sector alone cannot be expected to create jobs.

 The long queue of job seekers - AFP photo

Despite racing ahead in economic growth, surpassing China’s slowing economy; India is unable to keep pace when it comes to creating jobs. A survey by Labour Bureau shows that job growth has declined in the third quarter of 2014-15.

During the quarter October-December 2014, only 1.17 lakh jobs were created in eight key sectors of the economy. A careful perusal shows that job growth has been steadily on the decline in the first three quarters of the year. From 1.82 lakh jobs created in April-June, it came down to 1.58 lakh jobs in July-September; and further slid to 1.17 lakh jobs in October-December 2014.

Total jobs created in the first three quarters of 2014-15 therefore add to 4.57 lakh. At this rate, even if take the highest figure of job creation in 2014 for the first quarter of 2014 as the likely jobs to be created in the fourth quarter January-March 2015, the total jobs created would be somewhere around 5.40 lakh. India needs to create about 1.2 crore jobs every year to cater to the needs of the aspiring workforce waiting to enter the job market every year.

The dismally low job growth is being witnessed at a time when economic growth has been revised upwards for 2014-15 fiscal. The government has pegged economic growth for 2014-15 fiscal at 7.4 per cent.

The declining rate of job creation at a time when the economic growth has been on an upswing defies the academic assumption that the higher the growth more will be the employment generation. Recall the period when Dr Manmohan Singh became the Prime Minister in 2004. Between 2004 and 2009, India’s GDP grew at a stupendous rate of over 8 per cent, and clocked 9.3 per cent at its best. Going by the general economic prescription, the high growth rate should have created a large number of jobs.

It didn’t happen. On the contrary, India witnessed a jobless growth when its GDP was galloping ahead. A Planning Commission study shows that 140 million people left agriculture in the period 2005-09. Those quitting agriculture are generally believed to be entering the manufacturing sector. But even in the manufacturing sector, 53 million jobs were lost.

The question that crops up is where the 140 million who quit agriculture, and the 53 million who were shunted out of the manufacturing sector, finally go to? The only plausible answer is they joined the ever-growing army of daily wage workers in the cities or became landless farm workers. 

More recently, CRISIL, a global analytical company has shown in a study that since 2007 over 37 million Indian farmers had abandoned agriculture and migrated into the cities. But in the last two years – between 2012 and 2014 – when economic growth had remained sluggish, an estimated 15 million have returned back to the villages in the absence of job opportunities. This establishes the argument that more and more people are joining the daily wage worker class, whether on the farm or in the cities.

If providing more and more workforce with jobs that are akin to daily wagers (dehari mazdoor); what becomes obvious is that the fruits of economic growth are simply not benefitting the common man. It is time to rethink and revisit the economic growth model to see where an economically-secure employment environment can be created. When I look around I am baffled to find that millions of jobs in the formal sector are lying vacant, and in fact such vacancies are growing every month. Government as well as public sector institutions are being starved to death in the process. Appointments in place of those who are retiring are not being filled.

Almost all universities and government colleges have anything between 40 to 60 per cent of the jobs lying vacant. In schools, both primary and secondary, over 5 lakh jobs as per a conservative estimate are lying vacant. Add to this the jobs required in hospitals, police, postal services, and other government institutions, several million employment vacancies exist.

Filling these jobs will also raise GDP besides making these dying institutes functional. I fail to understand why are government bodies/institutes as well as public sector undertakings deliberately and systematically being killed. This cannot continue like this anymore. Job creation cannot be left to private sector alone. 

Where are the jobs? ABPLive.in May 3, 2015.

http://www.abplive.in/author/devindersharma/2015/05/03/article575966.ece/Where-are-the-jobs

Why does the world need SHG's, just ask World Bank to perform the rope trick !

For 60 years, India made a half-hearted attempt to reduce poverty. Why I say a half-hearted attempt is because the way the Planning Commission worked out a stringently low poverty line all these years, aimed more at ensuring a low budget outlay for fighting poverty, it lacked any meaningful commitment to make poverty history.  

Let me explain why it didn’t work. Perhaps this story will better explain. A poor person fell down in a 100-feet deep village well. Listening to his cry for help, a number of villagers collected and were exploring the options of pulling him out. Meanwhile, an economist, who happened to be passing by, saw the crowd and walked it to know what was happening. He told the villagers to step aside as he could be of help. Looking at the depth of the well, he immediately worked out that the man in the well probably had to energy to climb the walls to about 50 feet. So he told villagers to bring a rope of 50 feet that can pull out the man to safety.

The poor man, who was crying for help, finally was drowned.

This story tells you how all these years a futile half-hearted attempt was made, despite substantial budgetary outlays, knowing well that the poverty eradication strategy will not work.

In the last three decades, policy makers found a still better way of removing poverty. Knowing that much of the half-attempts being made was going waste, they realized the best way to remove poverty is to sweep the number of poor under the carpet. I still remember when Pranab Mukherjee was the deputy chairman of the Planning Commission (1991-96),  he brought down poverty in one shot from 37 per cent to 19 per cent. It was only after the next government took over, and replaced the Planning Commission members, that poverty was once again restored back to 37 per cent.

The business of poverty that actually extends to sweeping the poor under the carpet has now grown worldwide.  

Over the years I find that while most governments across the world have failed to stem poverty (except in countries like China), the international financial institutions are bending backwards to demonstrate that economic liberalisation helps in reducing poverty, and often drastically. This is being achieved by tampering with statistics, and often providing social indicators that don't actually measure up. One such classic example is the dollar a day measure adopted by the World Bank to define the percentage of the population living in extreme poverty.

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty."

Not even caring for such voices, World Bank has found another magic rope trick to remove poverty. Using the Purchasing Power Parity (PPP) index, it has in its latest poverty vanishing trick reduced India’s poverty in one stroke from 400 million in 2005 to a very impressive 98 million in 2010. What Planning Commission could not do in 60 years, World Bank has done remarkably well in just five years – between 2005 and 2010.

I find the World Bank behaving like a pigeon when comes face to face with a cat. By closing it eyes, the pigeon fatally pays for its mistake thinking that the danger has gone away. Similarly, removing poverty by a statistical jugglery is a dangerous exercise. It’s therefore time for India not to bask in the glory of fake poverty reduction figures but to accept the dark reality.

Poverty in India is actually growing. If you raise the existing global poverty line from 1.25 dollars a day to just 1.5 dollars a day, as Asian Development Bank has shown, India’s poverty line swells to 584 million or 47.7 per cent of the population. In simple words, if the poverty line extends to Rs 90/day, which is a more realistic benchmark, the number of people below poverty line in India will be at least five times more than what the World Bank has estimated.

And makes me wonder. Why does the world need to move towards the next series of targets under the SHGs? Just ask World Bank to play around with statistics. 

Making Poverty History: All it needs is statistical jugglery. ABPLive Jan 21, 2015.

bit.ly/1yKY93b

The Poverty Game. World Bank, Asian Development Bank and India's Planning Commission comes out with three magical figures.

Does it really matter if these children earn an equivalent of $ 1.51 or $ 1.25 or less than that per day? 

Picture Ankesh Kothari (from web)

The magicians are out on the stage. The challenge before them is to compute poverty. performing the vanishing trick, and that too without any compassion, they perform the statistical jugglery. Leading the pack is the World Bank. In its latest poverty vanishing trick the World Bank revisits its Purchasing Power Parity (PPP) index, and in one stroke it reduces India’s poverty from over 402 million in 2005 to a very impressive 98 million in 2010.

On the other hand, the Asian Development Bank has revised its poverty line to $ 1.51 per person (from the existing $1.25), and India's poverty in 2010 rises to 584 million or 47.7 per cent of the population. The gap between 584 million and 98 million is so huge that one is forced to dismiss both the estimates as unreal.

Here comes the third magician. An expert committee under Prof C Rangarajan, a former economic advisor to the Prime Minister, submitted its report to India's Planning Commission in July this year. By revising the poverty line to Rs 32 in rural areas and Rs 47 in urban areas, Rangarajan committee actually added another 93.7 million thereby raising the number of total poor to 363 million or 29.5 per cent of the population. 

So now we have three estimates: 98 million, 363 million and 584 million.

Isn’t this shocking? While not many Indians will believe that Rangarajan committee’s estimates are anywhere near the reality, and in fact is a gross underestimation of the extent of poverty in India, the World Bank’s latest estimates only shows that poverty does not require Millennium Development Goals (MDGs) targets to be achieved or any real effort to combat poverty and squalor. All it needs is a few economists who can play around with statistics. These economists can perform the vanishing trick much better than the Indian rope trick.

According to the World Bank’s latest estimates, global poverty has come down overnight from 1.2 billion to 571 million.

The earlier poverty line figure in India was Rs 27 for rural areas and Rs 33 for urban areas as computed by the Tendulkar committee a year back. This had raised a storm over the faulty and impractical estimates necessitating the setting up of yet another committee under C Rangarajan. And if the recommendations of the Rangarajan committee are to be believed, it tells us that there is something dubiously wrong with the way India is trying to deliberately keep poverty low. In all fairness, the new poverty line is nothing but a starvation line. It only tells us how many people need emergency food aid.

World Bank’s projections are still worse. In order to justify economic liberalization, it has been trying to fiddle around with social indicators as well as the poverty line to establish that the market mantrais working. World Bank’s chief economist Kaushik Basu defends the exercise by saying: “In case a dollar in Ghana can buy three times what it can but in the United States, then a person who earns 1,000 dollar each month in Ghana is said to earn 3,000 in terms of PPP-adjusted dollars”. But the reality is that even in the United States, despite being a privatized economy, hunger has shattered 25 years record. A record 49 million people, one in seven, depend upon food coupons to meet their daily food needs. One in four lives in poverty in America.

The World Bank is wrong. In case of India, with or without the new PPP index of the World Bank, I would like to know what can a poor with a daily income of Rs 47 in urban areas buy three times more than what he can buy in America with the same money. It therefore tells us that economists are no different from the famed Indian magicians. They too can perform the vanishing magic trick with alacrity. 

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies (ECLAC 2002, 2011) have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol published in the Journal of Sociology concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty."

In India too, the entire effort of policy planners as well as the numerous expert committees constituted over time to estimate poverty have simply tried to brush the realities under the carpet. While Rangarajan Committee tabulates a new poverty line, way back in 2007, Arjun Sengupta committee report had estimated that 77 per cent of the population or 834 million people were unable to spend more than Rs 20 a day. But more recently, the consumer expenditure data presented by the National Sample Survey Organisation (NSSO) 2011-12 paints before us the grim realities.

Accordingly, if you are spending more than Rs 2,886 per month in the rural areas and Rs 6,383 in the urban areas you are part of the top 5 per cent of the country’s population. In other words, those spending more than Rs 6383 in urban areas are in the same category as Mukesh Ambani, Ratan Tata, Nandan Nilekani et al. For the rest 95 per cent, roughly 118-crore people, life in any case remains tough. With or without the growth trajectory, their life hasn’t changed. In fact, with the aggressive pitching by the corporate-controlled media, the growing social divide is getting completely ignored. Poor have simply disappeared from the economic radar screen.  

Another estimate exposes the glaring inequalities. The economic wealth of 56 people is equal to the economic wealth of 600 million people. No wonder when we take averages like the rising average income, it hides the rapidly growing inequalities. The mainline economic thinking is that the 600 million would benefit from a trickle-down impact. Now with the number of absolute poor being reduced with a magic stroke, the World Bank will succeed in painting a rosy picture by brushing the poor under the carpet in one single sweep hides the truth. With the passage of time, these unchallenged statistics will be repeatedly used and get accepted over time.

Unless the World Bank makes an immediate correction, all projections of removing 'extreme poverty' by 2030 would be as farcical as the new poverty estimates are. But I doubt if there would be an international uproar forcing the World Bank to redraw the poverty line. At this rate, in the next five years when the World Bank will revise its PPP index, poverty in India on paper will disappear. The poor in India will one day suddenly wake up to find themselves bracketed with those living in opulence. That’s the power of statistical jugglery. #

Painting a rosy picture, Deccan Herald, Sept 9, 2014.
http://www.deccanherald.com/content/429821/painting-rosy-picture.html

गरीबी पर आंकड़ों का खेल Dainik Jagran, Sept 6, 2014
http://www.jagran.com/editorial/apnibaat-figures-on-poverty-11609424.html

Indian farmers: Living on a thin edge

Will their fate ever change? 

In the coming months, about 1.5 crore farmers who quit agriculture in the past seven years, are likely to trudge back into the villages. In normal circumstances such a massive reverse migration – from the cities back to the villages – would have been a sign of inclusive growth. But economists are taking this U-turn as a sign of economic slowdown. A report by CRISIL put this as an indicator of the slowing economy as a result of which people are being forced to return to their villages.

I have never understood the economic rationale behind this. In the 7-year period between 2005 and 2012, an estimated 3.7 crore farmers quit agriculture. Economists view this trend as a sign of economic growth. In other words, while 50 lakh farmers are forced out of agriculture every year, growing farm unemployment is being considered as assign of economic growth. How can creating unemployment in the agriculture sector and then find an alternative employment to the millions displaced from agriculture constitute economic growth?

Nevertheless, we are told that an estimated 70 lakh jobs are created in the non-farm sector. Considering that most of the non-farm jobs are in construction, what is not being told is that these are menial jobs are temporary and do not carry any social security. Construction sector employs daily wage earner, and for the farmers who find employment in the construction industry, this is no stable employment.

All this is happening at a time when a bountiful monsoon has resulted in a record foodgrain production this year. In fact, agriculture is going to be the savior of the Indian economy in 2013-14. At a time when there is an all around doom and gloom -- industrial output failing to keep pace, manufacturing sector declining, joblessness growing, fiscal deficit mounted and the current account deficit grew to a worrisome level -- it is only agriculture that provides a glimmer of hope. And yet, all out efforts are being made to shift the population out of agriculture.

During the year, foodgrain stocks of wheat and rice soared to an all time high of 823 lakh tonnes. Grain exports increased to 200 lakh tonnes. India emerged as the world’s biggest exporter of rice, and the farm exports zoomed exponentially. And yet the fact remains that agriculture is the most neglected sector. Even Prime Minister acknowledges that India is faced with a terrible agrarian distress.

For the 60-crore farmers 2013 has been like any other year. Every time when the dawn of the New Year strikes, there is an expectation of a better year for the annadata but I have seen their plight worsening with each passing year. The year that has gone into history was no exception. In fact, at a time when the government employees have been promised a further pay rise from the 7^th Pay Commission, farmers remain at the bottom of the pile, neglected and forgotten. On an average, 2,500 farmers quit farming every day to join the army of landless workers.

As I said earlier, I have never understood the economic logic behind this deliberate move to drive out farmers from their meager land holdings, which is their only economic and social security. Since agriculture sector happens to be the biggest employer why don’t the policy makers try to make agriculture a more productive and economically viable profession? Why can’t farmers be provided with a higher income so that they stay on the farm? Translocating a massive population from the rural to the urban areas is only leading to the collapse of the cities and at a time of jobless growth, these farmers are only providing cheap and readily available labour force for the real estate and construction industry.

With joblessness growing and the policy thrust on reducing subsidies for the poor and needy, the number of poor in absolute terms has been increasing. By reducing the poverty line to Rs 28 in urban areas, and Rs 24 in rural areas, the government can play around with figures but the fact remains poverty is on an upswing. Uprooting more people from agriculture will only add to more and more people to poverty, and lead to underemployment.

The enactment of the Food Security Act ensuring a monthly entitlement of 5 kg of rice/wheat/millets to 67 per cent of the population or 830 million people is not only aimed at offsetting the additional burden of the unprecedented price rise. But more importantly, it is aimed at minimizing the possibility of food riots that can erupt when a large section of the population is being deliberately displaced from an assured livelihood. Food security requirements can be met by food imports, and given the emphasis on land acquisition for the industry, real estate and highways, the task of producing food for the population will become more and more difficult. Already there are indications that India will turn into an importer of rice in the next three years.

From a high of 9.3 per cent two years ago, the GDP has fallen to less than 5 per cent in 2013. With agriculture growth expected to provide a push to GDP in 2013-14 financial year, the deceleration in growth is because of the poor performance of the industry and manufacturing sectors. With no jobs being created in the manufacturing sector, why should we deprive people from their only means of livelihood – farming.

A Planning Commission report released early this year underlines the contradictions in India’s growth story. At a time when GDP was galloping at 8-9 per cent between 2005 and 2010, the report shows 140 lakh people were displaced from agriculture. Generally it is believed that those who quit agriculture would be joining the workforce in the manufacturing sector. But the report showed that even in the manufacturing sector 57 lakh jobs were lost. A clear pointer to the jobless growth the country is witnessing.

Nothing has changed in 2013 to bring back the focus on creating employment. Let’s be very clear. More investments do not necessarily lead to more jobs. With the new land acquisition law coming into force, more people would be driven out of their meager land holdings and left to migrate to the cities looking for menial jobs. Agriculture too will not be able to sustain its role as the biggest employer in the country given the push to bring in corporate agriculture linked to foreign direct investment in multi-brand retail. There can be nothing more disastrous, both politically and socially, and I wonder when will growth economics be replaced by some sensible economics?  #

Part of this article appeared in Deccan Herald, Jan 16, 2014

Living on a thin edge http://www.deccanherald.com/content/380743/living-thin-edge.html

Agriculture was the saviour of Indian economy in 2013. But farmers live in misery. Will 2014 be the Year of Aam Kisan ?

With a bountiful monsoon, and a record foodgrain production, agriculture has been the savior of the Indian economy in 2013. At a time when there is an all around doom and gloom -- industrial output failing to keep pace, manufacturing sector refusing to look up, joblessness growing, fiscal deficit mounted and the current account deficit grew to a worrisome level -- it was only agriculture that provided a glimmer of hope.

Foodgrain stocks of wheat and rice soared to an all time high of 823 lakh tonnes. Grain exports increased to 200 lakh tonnes. India emerged as the world’s biggest exporter of rice, and the farm exports zoomed exponentially. While the value of India’s farm exports has nearly doubled from around Rs 12,000-crore in 2010-11 to Rs 20,000-crore in 2012-13, it is primarily because of meat exports. Basmati exports too have increased and farmers have realized a much better price this year.

But that is where the brightness ends. For the 60-crore farmers 2013 has been like any other year. Every time when the dawn of the New Year strikes, there is an expectation of a better year for the annadata, but I have seen their plight worsening with each passing year. The year that has gone into history was no exception. In fact, at a time when the government employees have been promised a further pay rise from the 7^th Pay Commission, farmers remain at the bottom of the pile, neglected and forgotten. On an average, 2,500 farmers quit farming every day to join the army of landless workers.

With farm production looking up, and with no indication of any supply constraints, 2013 also witnessed an unusually high food inflation. With the Wholesale Price Index inflation of 7.4 per cent, and with Consumer Price Index remaining in double digits for most part of the year, all explanations to assuage the rising anger of the consumers failed. Reflected in the overwhelming debacle of the ruling party in the recently concluded State Assembly elections, failure to check runaway inflation cost the ruling party dear.

In fact, inflation dealt a big double-whammy. With a massive trade deficit of over $ 203.6 billion hovering on the horizon and a rising fiscal deficit, the government’s scissor fell on the employment programmes, along with rural infrastructure and agricultural investments. With joblessness growing and the policy thrust on reducing subsidies for the poor and needy, the number of poor in absolute terms has been increasing. By reducing the poverty line to Rs 28 in urban areas, and Rs 24 in rural areas, the government can play around with figures but the fact remains poverty is on an upswing.

The enactment of the Food Security Act ensuring a monthly entitlement of 5 kg of rice/wheat/millets to 67 per cent of the population or 830 million people is primarily aimed at offsetting the additional burden of the unprecedented price rise. The laudable objective of providing a legal entitlement of foodgrains every month without making adequate investments in agriculture clearly shows that the annadata will continue to go to bed hungry. Food security requirements can be met by food imports, and given the emphasis on land acquisition for the industry, real estate and highways, the task of producing food for the population will become more and more difficult. Already there are indications that India will turn into an importer of rice in the next three years.

From a high of 9.3 per cent two years ago, the GDP has fallen to less than 5 per cent in 2013. With agriculture growth expected to provide a push to GDP in 2013-14 financial year, the deceleration in growth is because of the poor performance of the industry and manufacturing sectors. At a time when non-performing assets of public sector banks have grown to Rs 6 lakh crore plus despite a tax exemption of Rs 5.73 lakh crores provided in 2013 budget, the fact remains that the Indian Corporates are slush with money. It only points to the poor performance of these sectors, and the tax exemptions coming in handy to add on to assets/profits. 

A Planning Commission report released early this year underlines the contradictions in India’s growth story. At a time when GDP was galloping at 8-9 per cent between 2005 and 2010, the report shows 140 lakh people were displaced from agriculture. Generally it is believed that those who quit agriculture would be joining the workforce in the manufacturing sector. But the report showed that even in the manufacturing sector 57 lakh jobs were lost. A clear pointer to the jobless growth the country is witnessing.

Nothing has changed in 2013 to bring back the focus on creating employment. Let’s be very clear. More investments do not necessarily lead to more jobs. With the new land acquisition law coming into force, more people would be driven out of their meager land holdings and left to migrate to the cities looking for menial jobs. Agriculture too will not be able to sustain its role as the biggest employer in the country given the push to bring in corporate agriculture linked to foreign direct investment in multi-brand retail. #