Rising Unemployment: An Analysis

Unemployment at the highest Peak: An analysis

[Sept 20 2019, Greater Noida]

Not many days accruing to the General Elections of 2019, the NDA-1 government boasted of the highest employment rate in 45 years against the ground reality of the youth already feeling cheated with jobs and job opportunities. The opposition had already been confronting the National Statistical Commission (NSC) data with the claim of government producing false facts and figures, but the claim was sought with less fervour, until a leaked report prepared by Periodic Labor Survey Force (PLSF), working under the aegis of the National Sample Survey Organization, evaluated the unemployment rate at a meagre 6.1%. This proved to be a huge blow to the government claiming high figures against reality, and to the credibility of NSC, resulting which two NSC officers had to resign.

According to the mentioned PLSF leaked report, the unemployment rate is 5.3% in rural and 7.1% in urban India. With 10.8% unemployment rate among urban females and 7.1% among males, the desire to bring equality between sexes does not seem to meet. To deeply understand the reason of rising unemployment, the policies implemented and the decisions taken by the government need to be considered.

1. Impact of Demonetization

            Demonetization has slowed the economy down and has degraded the Rupee, resulting which the exchequer has little to give affecting the number of jobs created.

2. Decisions promoting Digital Economy

            Agriculture contributes to about 20% in GDP of India, up from 17.8% in 2019-2020. Unorganized sector has a contribution of 50% to GDP while contributing 90% of the total workforce in India. The unorganized sector provides financial stability to a number of self jobs i.e. recharge shops, grocery stores, merchant stores, weavers, hosiery makers, crockery, cable operators, et al, which are often miscalculated for their contribution to the economy. Promoting digital economy with the agenda of infrastructure development and urban development has gains lesser than the losses. Let us consider some of the direct impacts on unemployment:

1. Digital currency is virtual. The more the currency is digital, the lesser will be the number of bank branches and lesser will be the work force, infrastructure and services required to handle day to day errands. This is one of the reason, number of bank jobs have taken a toll after 2013. Apart from a few private MNCs, private companies dealing with financial sector are also hit.

2. With major players like Reliance and Paytm coming into the business of digitization, the cable operators are hit as so are the established cable providers along with small businessmen.

3. CSR being a legal offence

            With sluggish economy, start-ups find it difficult to survive. A number of start-ups shut down being financially insufficient to carry on the burden of CSR being a legal offence. The result of the recent easing in compliance norms of the CSR describe the adverse impact CSR policy had.

4. Crackdown on NPA's

            In the recent times, the government has advised the banks to crackdown on NPA's from all sectors including the MSME's. The crackdown coupled with legal notices made the market panic, adversely affecting the development with insecurities in expending money and taking new loans. It took the government a while to rethink its decision of declaring the MSME's bad loans as NPAs to be the reason for less expenditure and has late but never advised banks to restrict from doing so for some time.

Clearly, the economic policies and decisions of the government have not lived up to the expectation of creating a trillion dollar economy with the government itself reversing a number of its decisions. Digital economy is a good approach but it would take some time to implement it in a full on a diverse and highly populated country like India which depends more on unorganized sector than organized. The NSSO data figures the number of people getting jobs after 'Skill India' initiative more into self-owned businesses. If small businesses are continuously hit, then the purpose of the initiative is also directly hit.

As has always been the need of the hour, individuals with impact, caliber, foresight and knowledge are needed at the helm of policy making affairs. Otherwise, it would not be long when we will be a democracy on papers but 'Capitalist' nation in reality.