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Can the Government Provide Adequate Jobs in the Country?
Tue, 20 Jun Pre-Open

India may be the world's fastest growing major economy, but the benefits of that growth do not seem to pass down to the masses. Job creation continues to be a major problem.

According to the latest government data, job creation for the nine months running up to December 2016 for the eight labor-intensive sectors of the economy was at an abysmally low 2.31 lakhs. This was several times lower than the required target and failed to meet even the basic target of 1000 jobs a day.

The picture of jobless growth is further complicated because jobs are being extinguished even as others are being created, and the net figures don't reflect this. According to an article in The Hindustan Times, Employment in the formal sector has fallen since 1997. More and more people are being pushed into either lowest-end self-employment; or the most unprotected wage employment.

Among sectors, the worst hit was the information technology (IT)-software industry, which saw a 24% year-on-year drop in hiring. The problem of automation leading to fewer jobs is not limited to IT-software alone. A sector like manufacturing is also opting for automation to remain cost- effective.

Given this, what can the government do? Or will the long-awaited revival in private sector investment help in job creation?

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According to an article in The Livemint, economists are skeptical. They believe some level of job creation may happen in the private sector, but not sufficient to match the number of people arriving in the job market. It is not a suitable solution for a slump in employment generation that spans decades, as in India. Technological changes, automation and geopolitical changes all complicate the issue.

A healthy consumption demand in fiscal year 2018 would drive some capacity expansion and job creation towards the latter part of the year. Simplification of labor laws would also create a conducive atmosphere for job growth.

Also, the government needs to ease the country's business environment. Any firm looking to grow soon runs into a maze of rules and regulations and corrupt bureaucrats appointed by both state and central government. Jobs are created when small firms start to grow big and recruit more people.

If more jobs are to be created, the government must also provide adequate funds for the rural work program like MGNREGA to work. As of now, 22 out of 34 states have negative balances, which makes for a very bad track record.

But the lack of jobs is not a short-term problem. Without reversing the agrarian crisis, mending the broken education system, installing greater labor protections and promoting labor-intensive small manufacturing, the promise of millions of jobs will remain an illusion.

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Nov 24, 2017 03:37 PM