Last week, I mentioned that unemployment in India is a multidimensional problem and it would require a multipronged strategy. The traditional “industrialization” strategy may not yield much significant results in the modern Indian context as the industries are now mostly capital and technology intensive and offer significantly lower opportunities for unskilled and semi-skilled workers, which form a large part of the Indian workforce. Implementing the traditional Keynesian model of creating employment through public spending is also challenging due to stressed fiscal conditions, focus on privatization of public enterprises, and diminishing labour intensity of construction activity.
In the past fifteen years
MNREGA (Rural capacity building) and PMGSY (Rural roads to improve
accessibility) have been extremely successful in generating rural employment. These
two schemes have not only supported the rural economy during the period of
stress, but also created much useful capacities in the rural areas. Especially,
the connectivity provided through roads built under PMGSY has been
transformative for the economy of numerous villages in hinterlands and remote
hills. However, these jobs are mostly seasonal and meant for unskilled rural
labour. Their productivity and sustainability has been questioned by various
studies.
Surfing through social
media for a couple of hours, one could easily find out how the youth of our
country are dissipating themselves in frivolous activities. It is therefore
imperative that more productive and sustainable solutions are found to solve
the unemployment problem of the country.
I would like to make the
following three suggestions for improving the employment situation in India.
Admittedly, these are random thoughts based on my personal explorations and
understanding of India’s socio-economic milieu. In a typical bureaucratic
manner, these ideas could be rejected as impractical or even flimsy. Else,
these could be evaluated as starting points for developing something useful.
1. Bring factories to farms
The employment elasticity
of growth in manufacturing, agriculture and construction sectors has been
decreasing consistently. This trend shall only accelerate in future. 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. The number of jobs, especially unskilled and low skill
jobs shall remain limited.
Implementation of a common
GST, nationwide agriculture market, ecommerce, automation (AI) etc., is leading
to business consolidation in a major way. This may also potentially eliminate
millions of unskilled and low skill jobs in the next decades or so.
The historical transition
of farm workers to industry during the developing stage of growth may not work
in the current Indian context. The so-called developed economies have transited
the labour from farm to factories, when industry and mining were still labour
intensive and global competition was not much. The productivity gains were
immediate and tangible. It is no longer the case. The industry in India is
already capital intensive. Even traditional labour intensive industries like
gems & jewellery, textile, leather, mining and construction are becoming
increasingly automated to stay viable against the global competition.
The ambitious Make in
India program mostly aims to substitute imports. We are trying to compete with
manufacturing powerhouses like China, Vietnam, Taiwan, etc. This defies the
basic principle of making economic decisions, viz., everyone should do what
they can do best to optimize the resource utilization.
Emulating China model may
not work in India, as our political and economic model is entirely different.
Moreover, the skill and training requirements for modern industry do not allow
a straight farm to factory transition. So the options get limited to unskilled
construction sector jobs and building industry around farms where the skill of
the farmers could be suitable employed.
While MNREGA and the ambitious
rural road program is taking care of unskilled construction jobs, there is
little effort to take factories to farms. Encourage
industry to partner with farm cooperatives to set up food processing units at
the farms. The farmers' cooperative allots land and provides farm produce,
whereas the entrepreneurs contribute capital and undertake marketing and sales
responsibilities. Both share the profit in pre-agreed ratio. This should
maximize profit of both the industrial enterprise as well farmers, and create
ample employment opportunities close to villages.
Allow corporates to develop waste and barren
land for farming purposes. For example, many corporates from India and the Arab
world may be interested in developing Rajasthan and Gujarat desert and barren
lands for growing dates, palm, aloe etc.
2. Initiate public sector agriculture
Since independence
the government has focused on development of industrial infrastructure in the
country. It has actively participated in the endeavor through a large number of
public sector enterprises; besides offering a myriad tax and other concessions
to the private entrepreneurs. Now, the country has a reasonably strong
industrial base. Many of our industries are globally competitive. We have a
strong set of entrepreneurs and risk takers. It is therefore high time when the
government should reset its priorities and turn its primary focus on agriculture.
To meet this end, the government may consider:
·
Exiting
all industrial and banking activities and actively undertake agricultural
activities. It should develop barren lands; develop water bodies and irrigation
facilities; develop and use technology for enhancing productivity; give
employment to landless farmers; take risk with new technologies & crops;
partner with marginal farmers in consolidating their land and do farming on
that land - just the way it undertook industrial activities immediately after
independence.
·
Undertake,
on mission basis, the task to re-skill the underemployed farmers and farm
labor. The farmers and their family members may be trained as dairy workers,
domestic help, nurses, tourist guides, artisans, etc. Expecting the construction
sector to absorb all surplus farm labor is a bad idea.
·
Develop
at least 5 very large special agri export zones in rocky and desert areas of
central and western India and undertake export of farm produce as a commercial
activity. These zones may be developed in public, private or joint sectors.
Besides, it may acquire farm assets, especially rice farms, overseas to reduce
water intensity of Indian agriculture.
·
Encourage
various states to make bilateral or multilateral agreements for procurement,
processing and trading of farm produce and movement of labor within states.
·
Nationalize
all rivers. Develop a national water grid. Set up a national water regulator,
who shall work out a water sharing formula for all states and union territories
every three year and maintain adequate provisions for managing droughts. The
idea should be to ensure that not a drop of river water flows into sea from
India. Develop a water distribution grid on the models
of roads and power grids on a mission basis.
It has taken seven
decades for Indian industries to reach a stage where the government may
consider fully exiting the industrial activities. It may take 2-3 decades for
Indian agriculture to reach a stage where the government will be able to exit
farming activities completely.
Please note that I am
also not suggesting nationalization of the agriculture sector. I am just saying
that the government should undertake the activity on a commercial basis to
provide the sector with much needed escape velocity in terms of capital,
technology, and risk taking capability.
3. Engage youth in nation building
The government must on priority prepare a
comprehensive strategy for engaging youth in the nation development endeavor. A
nationwide MNREGA type scheme may be launched for youth, whereby they could be
engaged in socially useful productive work (SUPW). Millions of jobs like
traffic management, night patrolling in areas susceptible to crime against
women, enforcement of cleanliness of public areas, old age care, social forestry,
teaching & skilling to unschooled, etc. could be assigned to the youth not
having a regular job. This shall help in developing a sense of nationalism,
belongingness, and responsibility amongst youth, besides keeping them occupied
in productive jobs rather than leaving them on their own to waste time or take
to the path of crime and unlawful activities.
Also read
Unemployment – misdirected policies
Few random thoughts on unemployment
in India
No comments:
Post a Comment