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Is 69% of India About to Become Jobless?

Oct 6, 2016

In this issue:
» Upcoming IPOs may be the highest in six year
» Should you be buying gold?
» ...and more!
00:00
Rahul Shah, Co-Head of Research

Three happy friends on our way back from an insanely fun Euro trip when a rather strange sight greet us at the Paris airport. We'd reached the point where the big bags we were lugging would be checked. Our airline had twenty or so counters for the purpose. This was where they would check our details, weigh our bags, and take them in.

But we couldn't see a single staff behind any of the counters.

A strike? A smoke break? Perhaps we're too early...

Luckily, I managed to spot one airline staff loitering around. I showed him my ticket and asked him where I had to go. His instructions were simple. 'Go to any of the kiosks you see around you, and then proceed to the counters.'

Yes, the empty ones.

A swipe of my passport on the kiosk, and out came not just my boarding pass but a strip of barcoded luggage tag. We had to strap the tags on to our bags and proceed to the counters. At the counter, a 'friendly' screen was waiting for us. It had us weigh our bags, scan the tags with handheld laser devices, and put the bags on the conveyor. Before we knew it, our bags were sliding away from us.

And just like that, swarms of passengers were being made ready to proceed for boarding. Whereas our airline once required perhaps twenty or more human beings to conduct the whole process, it now did it with a grand total of zero.

My friend was fascinated much more than me. 'Dude, if things keep moving in this direction, there'll soon come a time when the whole airport will barely need any staff!' I think he wasn't sure whether he should be excited, or scared.

Back in the office after my vacation, many of my team mates seemed to harbour similar feelings. But since, unlike my friend, we're finance people and all, it is hard statistics that does it for us.

A colleague forwarded the team a link to an Economic Times article. It was more a warning actually. 'Looming threat! Research based on World Bank data has predicted that the proportion of jobs threatened in India by automation is 69%'.

Ha! A vast majority of people in India jobless?

The next email hit closer to home. Finance professionals have a very high chance of being replaced by computers it seems. What are the odds? They've put it at more than 75%!

And then, another email. An article in Fortune points to a new level of automation. The last year or two has seen major advances in voice and image recognition by machines. That has led to new techniques that are enabling computers to improve at performing tasks with experience. It seems computers are now in a position to teach themselves. It's like software writing software. They are calling it 'machine learning'.

Robots doing all the manufacturing...autonomous drones...self-driving cars... They even claim computers will soon be able to read and interpret X-rays, MRIs and CT scans more rapidly and accurately than radiologists!

What do I make of all this? Are large swathes of human beings about to become jobless? Is the economy going to go down in the dumps?

Well, I think it all started with the invention of the wheel. One person was needed to push an object that needed six earlier.

And then came the steam engine for transport and industrial uses. One engine replaced the manual labour of hundreds.

And then the telegraph took over the jobs of long distance messengers.

And then the first commercial computers. Across industries, they took over thousands of processes earlier conducted manually by humans.

You get the drift.

All that has happened is that humans have gotten smarter. And progressively higher levels of tasks have gotten all too mundane for us. And with time, we've figured out ways in which we can relegate those to machines. And we have moved on to occupying ourselves with even smarter things to do.

I think the current move towards higher levels of automation is no different. The song, pretty much, remains the same.

Yes, like other inventions and advances, it will cause a whole lot of shuffling of jobs and skillsets. But no, a large population of the human race is not going to become jobless.

For all the things that machines can and will be able to produce, what they do not do is consume. And if all the consumers are jobless, who on Earth will all the robots work for?

And that, I believe, is an equation that is not about to change.

In a recent interview with Rahul Goel, one of our senior economic thinkers decided to take on the role of showing where India's job crisis would lead us. To view the complete interview and get his views on the future of jobs in India, just click here.


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------------------------------

02:30 Chart of the day

Barely a week goes by these days where there's no stock making its debut on the bourses. And if data from a leading daily is to be believed, it is likely to remain this way for some more time to come, by the end of FY17 to be precise. A research on the upcoming IPOs for the rest of the year puts the tally at US$5.8 bn, the highest in the last six years. And which are going to be the busiest sectors? Well, as today's chart of the day highlights, the financial sector is going to account for a little over 2/3rds of the total funding up for grabs. With the mega IPO of Vodafone on the cards, telecom is not far behind as the firm is expected to raise a strong US$ 3 bn.

Then there's energy and power, consumer products and services and industrials making up the rest of the list. We would like to add here that since IPOs are mostly sentiment driven, any significant correction in the global markets and quite a few of these IPOs would either be shelved or postponed. And this is the case because most IPOs aren't designed to make the investors rich but the insiders. In order to identify the few that genuinely try to leave some money on the table for investors, do download our Handbook on IPO investing.

Which Industry Will Account for a Bulk of the Upcoming IPOs?


03:35

Everybody wants to go to heaven but nobody wants to die and that's the problem. Well, there have been few more creative statements as this one in explaining the US Fed's dilemma. And it comes from none other than the perennial gold bull Peter Schiff. Schiff is of the view that the Fed has no doubt offered an advance warning but there's no way it can shock markets with an interest rate hike. After all, who would want to take all the flak for the wealth destruction that is likely to follow post the hikes. And therefore, the onus is on individual investors to prepare themselves for any financial Armageddon, the possibility of which keeps getting stronger with each passing day.

And what better way to do so than investing a small portion of your wealth in gold. Gold has been observed to hold on to its purchasing power enormously well over the years and there's no reason why it won't keep up with this historical trend. We are of the view that Schiff certainly has a valid point here and it will do an investor no harm if he allocated a small part of his savings to the yellow metal.

4:10

Here is an update from HelpYourNGO on Daan Utsav...

  • A big thank you to Equitymaster readers - you have made the difference between life and death for children in need! In just two days, concerned donors have contributed over Rs 30,000 to tackle the problem of acute malnutrition in young children. Once again, thank you for your contribution! Your support is crucial in fight hunger and malnutrition in children who have no other help.

    We believe in enabling everyone to be independent and stand on their own feet. Unfortunately, many of India's poor are unable to contribute to their families because they cannot afford simple treatments like cataract surgeries. India has the world's largest population of people with preventable blindness. Many Indians turn permanently blind and suffer till the end of their lives even though their condition is actually treatable. Nav Bharat Jagriti Kendra provides cataract surgery for the poorest of the poor in Jharkhand at free or subsidised rates. It's not just their vision they regain, but a second chance at a full and productive life. You can restore sight to a person in need by sponsoring a surgery at their hospital for just Rs2,275. Let's make this Daan Utsav a really memorable one by changing someone's life. Our actions have the power to make the world a better place!

    About Nav Bharat Jagriti Kendra: Nav Bharat Jagriti Kendra believes in putting the last first. Their education, health and livelihood programmes reach over 2 lakh people in some of India's poorest districts. Read more about their work here.
04:48

The Indian stock markets were trading strong today. At the time of writing, the BSE-Sensex was trading up by around 80 points. Thanks to gains in stocks like GAIL, Reliance and ONGC, energy and oil and gas stocks were the standout performers. BSE Mid and Small Cap indices were also trading strong.

04:56 Investment mantra of the day

"If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don't need extraordinary intelligence to succeed as an investor." - Warren Buffett

This edition of The 5 Minute WrapUp is authored by Rahul Shah (Research Analyst).

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1 Responses to "Is 69% of India About to Become Jobless?"

KD

Oct 6, 2016

Looks like Sci-Fi novel. Read age of spiritual machines and other books by Ray Kurtzweil.

I think this website deals with economics. Tell me what Urjit Patel will do. Will he print money?

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