Recently, the growth in per capita GDP of India has been in the news. The government statistics claim that per capita income of India has almost doubled in the past nine years. This claim has generated intense discussion over the economic performance of the incumbent government; especially relative to the previous UPA government (2004-2014).
Without getting into a political argument and keeping the statistics aside for a while; I would like the popular debate to take the following into consideration:
· The last census of India was done in 2011. Therefore all “per capita” data points are using an estimated number of the population. There is a possibility that the actual number could be different from the estimates.
· In the past twelve years there have been significant changes in the socio-economic and demographic structure of the country. The youth population has increased materially. Millions of professionals (engineers, doctors, management & accounting professionals etc.) and other graduates have passed out of colleges and millions have dropped out of colleges. Not all of these are fully or partially employed.
Besides, demonetization of high value currency (2016), implementation of GST (2017), and Covid-19 pandemic (2020) accelerated the trends towards formalization the economy and digitalization of trade and commerce stressing millions of the micro and small businesses (mostly self-owned) and migrant laborers.
The rise in inequalities and dispersion of income and wealth must be factored while using “per capita” data to measure the welfare, quality of life and purchasing power of the bottom 75% of the population.
· Traditionally, the primary sources of data on the workforce and employment have been the (i) decennial population census and (ii) nationwide quinquennial surveys on employment and unemployment by the erstwhile NSSO under the Ministry of Statistics and Programme Implementation. The latest Census data is available for the year 2011. Similarly, the quinquennium NSSO data on employment and unemployment is available up to the year 2011–12 only.
From 2017-18 National Statistical Office (NSO) of MoSPI started publishing Periodic Labour Force Survey (PLFS). PLFS data is published annually for both rural and urban and the total population; and quarterly for the urban households.
For the purposes of PLFS, the Labour force includes persons aged 15-60yrs who were either working (or employed) or those available for work (or unemployed). Some persons in the labour force may be abstaining from work for various reasons. Subtracting that number from the labour force gives the number of actual workers. These workers are further categorised as persons who are engaged in any activity as self-employed or regular wage/salaried and casual labour. The difference between the labour force and the workforce gives the number of unemployed persons.
As per the latest data NSO PLFS available (FY21), India has a low labour force participation rate of 41.6%. The rate is lower for urban labour force (38.9%) vs Rural labour force (42.7%); and for female workers (25.1%) vs male workers (57.5%). In urban India the female labour participation rate is dismal 18.6% vs still poor but higher 27.7% for rural female workers.
Clearly, (i) the data availability and quality is of not very high quality; (ii) employment conditions cannot be termed as good; and (iii) India is wasting the demographic dividend.
· Unlike other developed economies, we could not create enough unskilled and semi-skilled jobs in the manufacturing and construction sector during the transition of economy from agrarian to industrial. In fact, unlike the US and Europe, we jumped from agriculture to services mostly skipping the industrial part. Now we are trying to fill the gap by encouraging manufacturing. However, the unfortunate part is that manufacturing is no longer labor intensive now. It is not feasible to transit a large number of unskilled or semi-skilled agriculture workers to industry or even construction. Consequently, there remains massive disguised unemployment in agriculture.
At the same time we do not have enough highly skilled people needed for globally competitive manufacturing. The corrective action to encourage manufacturing is thus not working well, at least so far.
The only feasible way to correct the occupational structure of the country is to focus on accelerated development of the agriculture sector and make the farm workers more productive.
