"Mediocre minds
usually dismiss anything which reaches beyond their own understanding."
—Francois de La
Rochefoucauld (French, 1613-1680)
Word
for the day
Longanimity (n)
Patient endurance of hardship, injuries, or offense; forbearance.
Malice
towards none
After Congress now SP hires
an election strategist with experience of US elections!
What does this reflect?
First random thought this morning
Would it not be appropriate if someone from this side of the
border also takes responsibility for loss of precious life in Uri (Jammu)?
After all some General, Minister, Politician, Bureaucrat must be
accountable for the grave security lapse, especially after Pathankot had
happened.
Is it too much to ask from those who routinely speak of morality,
ethics, accountability and transparency in public life, beside claiming to be
brave and potent enough to tackle the enemy?
Make growth employment elastic
Continuing from the last Friday (see here), in my view it is critical to take note the June
2014 working paper on Employment Elasticity in India.
In the said working paper RBI
highlighted many interesting facts about the status of employment and its
elasticity to the GDP growth.
In particular the change in
occupation structure of the economy in past 15years is worth noting; because it
helps setting up the agenda for future growth. It is important to note that one
of the key promise of incumbent government is to make growth job oriented
(hence inclusive) as opposed to jobless growth (therefore exclusive) growth
achieved during past few years.
The working paper found that
aggregate employment elasticity (change in employment due to economic growth)
of Indian growth has fallen considerably in post 1991 period. In this period
for every 10 per cent change in real GDP, there had been about 1.8-2 per cent
change in employment. The current statistic is even poor.
Moreover, elasticity varies
considerably across sectors. While agriculture has witnessed negative
elasticity, services including construction have generally been employment
intensive. Manufacturing employment elasticity has hovered in the range
0.29-0.33.
Within manufacturing, the
employment elasticity for organized manufacturing sector based on various
estimates seems to be higher, in the range 0.42-0.57 for 2000s and it has risen
over the previous two decades. Given the huge productivity and wage
differentials between organized and unorganized sectors, greater employment
generation in organized manufacturing is crucial as it has larger multiplier
effects.
Subsequent to 2011, India has seen
significant moderation in its GDP growth rates. While employment numbers are not
yet available for the recent years, Labour Bureau quarterly surveys as well as
various private agencies’ information point towards moderation in employment
generation. If these data sources are any hint, then one might see some changes
in employment elasticity depending upon the relative pace of moderation in
employment generation vis-à-vis growth.
The working paper suggests that
going forward, it is the relative cost of capital vis-à-vis labour and the
nature of investment demand that will determine to what extent growth would be
job-creating.
Increased capital to labour ratio
in the organised sector for a labour abundant country like India is a concern
that has been well-highlighted. I have also been highlighting this rather
frequently and to the annoyance of some of my government readers.
If India has to meet the
demographic dividend challenge, focus should be on industries where employment
elasticity is higher. On a rough basis, about 10 million people would need a
job every year for the next 15 years. Finding productive jobs for such huge
numbers is a big challenge, and clearly the answer lies in stepping up growth,
and importantly, stepping up the employment intensity of growth....to continue
tomorrow
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