"If you hear a voice
within you say 'you cannot paint,' then by all means paint, and that voice will
be silenced."
—Vincent Van Gogh (Dutch,
1853-1890)
Word for the day
Deadwood (n)
(in writing) unnecessary
words, phrases, or exposition; expendable verbiage.
Malice towards none
Have you heard of PK lately?
First random thought this morning
I asked one revenue officer "What is back money"?
He said, money has no color of its own. It takes the color of the
hand which is holding it. Money held by a clean (compliant) hand is white.
Money held by a dirty (non-compliant) hand is black.
If that is correct interpretation, then what is this
"anti-black money day"? Ain't it effectively mean "anti (non
compliant) people day"?
If that be so, how could a democratic government afford to be
"anti people"!
Focus on farms, leave industry alone
From 6th Economic Census results published in 2014, the following
things are clear:
1. There are about 6cr
commercial (non-farm) establishments in India employing more than 13cr people.
About 3.5cr of these establishments are in rural areas, but only 1.3cr are
engaged in agriculture related activities (excluding crop production and
plantation).
A visit to 10 typical Indian villages will tell you that these
establishments primarily include small shops, auto and farm equipment
dealerships, services (tailor, auto repair, salon, telecom, medical, coaching,
financing, etc.) and petty artisans like potters etc.
What is important to note is that about 60% non-farm commercial
establishments are directly impacted by farm sector, though farm sector
contributes about 15% to GDP.
2. About 4cr commercial
establishments are run without any hired worker (Own Account Establishments or
OAE). Meaning the households manage the business themselves, mostly from home
(36%) or without any fixed structure outside home (18%), e.g., from a cart,
vehicle or on pavement. This segment is characterized by huge under-employment,
disguised unemployment, low productivity and negative side effects like child
labor, pollution, non-compliance with civic rules etc.
3. The period between
2005-13 saw a massive jump of 56% in OAEs. This was incidentally the period of
highest growth for Indian economy. Labor intensive construction in particular
recorded very high growth during this period. MNREGA also started during this
period. In my view, the trend continues after 2013 also.
In my view, most of these OAEs added during 2005-13 were not
voluntary. These were direct outcome of diminishing employment elasticity of
growth, acquisition of large tracts of agriculture land for infra projects thus
rendering a large number of farm labor jobless, at a time when number of people
joining workforce is accelerated.
4. Livestock constitutes
87% of economic activity in farm sector; while retail trade at 35% is the
largest contributor in non-farm sector.
If we browse through the headlines since 2013, the governments
have made significant efforts to damage these sectors, e.g., through
encouraging large retail formats and impeding beef trade etc. There is no
evidence of any incentive or promotion for Mobile telephony related retail
trade activities which have inarguably been the largest provider of incremental
employment in past one decade.
5. Out of 6cr commercial
establishment fewer than 2mn (1.71%) are engaged in handicraft/handloom sector
employing about 4mn (3.12%) people. About 80% of these establishments are OAEs.
This is despite successive governments claiming to have worked
persistently for development of this sector.
The way I see the Indian economy today, I believe—
A. The employment
elasticity of growth in manufacturing, agriculture and construction sectors
shall incrementally decrease. Most of the growth shall come from higher
productivity through automation, innovation and consolidation. Elimination of
redundancies and economies of scale shall lead the growth effort.
B. Implementation of a
common GST is also seen as a major step in consolidation of industry and trade
in the country. This may potentially eliminate millions of jobs forcing people
to fend for themselves.
C. The programs like
MUDRA, Standup India and Startup India are great ideas, but may end up as
inadequate in addressing the bigger job problem.
The government need to refocus its strategy, in my view.
I believe that the government should leave the manufacturing
sector to grow with global trends. i.e., capital intensive with advanced
technology and low labor participation. It should rather focus on farm sector
(crop production and animal husbandry) for employment creation.
I suggest Government selling all industrial undertakings (PSUs)
and investing the entire money in farm sector, much the same way it did invest
in industrial sector in post independence era.
It should partner the farmers owning land, by investing in
technology, marketing and food processing infrastructure. If it means
nationalizing agriculture and animal husbandry, so be it. I guess the learnings
from bank, civil aviation and coal nationalization shall be sufficient to make
sure that the same mistakes are not repeated.
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