Vijay Kumar Gaba

Friday, November 3, 2017

Trust your own people

Thought for the day

"Try not to have a good time... this is supposed to be educational."

—Charles M. Schulz (American, 1922-2000)

Word for the day

Bonce (n)

Head, Skull

Malice towards none

Any nomination for Twitter Vibushan award for Pidi?

First random thought this morning

Only 4years back, a brigade of enthusiastic youth driven by an septuagenarian ex-soldier had made politics an acceptable profession for Indian elite as well as middle classes. We saw a large number of people from across the social spectrum joining active electoral politics and committing to change the political landscape of the country.

But that momentum seems to have dies completely. The political ethos have recommenced their descent.

Who is to blame for the midterm abortion of political renaissance —Congress, BJP, AAP and other regional parties, or all of them?

Trust your own people

Before I discuss my view on public expenditure any further, let me ask you "what would be your reaction to the following situations?"

(1) Your housemaid comes to you and tells, "I have cleaned more than half the utensils. As you yourself told me that before hiring me, you were cleaning the utensils yourself and would do the job only every alternative day. In that light my performance is excellent. So, appreciate my effort and order a pizza for me".

(2) You are a branch manager of a bank. your clerk comes to you and tells, "I have cleared more than 65% of the checks presented today. In my view, it is an outstanding performance. Please allow me to leave early today."

(3) A young girl in your neighborhood gets molested and killed by goons. The area police inspector comes to the condolence meet and claims, "this year the number of heinous crimes in your area is lower by 30% as compared to the average of previous five years".

While you contemplate your responses, I may tell you mine - I will be incensed. My education & training that makes me obsequious may not permit me to react with violence, but if someone does it may not be totally unjustified.

Now extrapolate these conditions to the claims of our political establishment. After 70yrs if someone wants appreciation for partial execution on essential services like clean drinking water, primary health, electricity, access of all weather roads, education, two decent meals a day, clean toilets etc., it is deplorable in my view. I think the entire political establishment should be apologetic about it and commit to a time bound program for provision of a standard quality and quantity of all basic amenities to all the citizens.

Coming to specific suggestions for public expenditure reforms, I have been giving numerous suggestions from time to time. Some of these suggestions have in fact been implemented but in a more convoluted way. I would like to reiterate the following in particular:

(a) The government (both state and central) may exit all industrial activities. If under the present circumstances it is not found feasible to sell out all PSEs, consider transferring all PSEs under a listed holding company. Majority voting power in this listed holding company may be owned by Indian citizens with no individual owning more than 1%. All these companies should be professionally managed with no intervention from the government whatsoever. Dismantle all departments and ministries managing these PSEs.

(b) From my experience gained through extensive travels across the length and breadth of the country, I understand that there are numerous democratic assemblies within various communities and localities in our country. Most Indians not only feel comfortable working with the members of their own community, but are usually honest, dedicated and more productive when operating within the network of their “Own people”.

This “communalism” is arguably a key strength of Indian society. Therefore, in my view, the social ecology model suggested by author and activist Murray Bookchin which advocates a “stateless, classless, decentralized society consisting of a network of directly democratic citizens' assemblies in individual communities/cities organized in a confederal fashion” appears relevant in our context.

Unfortunately, our politicians and social activists have dissipated the term “communalism” to mean intolerance and hatred towards other religions, especially amongst Hindus and Muslims. This debauchery has introduced many distortions in our socio-political order. In my view this needs to be corrected as pre-condition before we begin working on any course correction.

Allocating resources to these democratic assemblies within the society for creating social infrastructure and managing it for the larger benefit may not only minimize the cost of administration materially but also enhance the efficacy of the expenditure.

For example, if the government funds XYZ Samaj (a registered association of people belonging to same ethnic or religious community) construct and manage an educational institution or healthcare center for the members of their community and others as well, the outcome is more likely to be positive than the government doing the job itself.

Let SC/ST/OBCs construct schools and colleges for their kids and manage these as well. The impact, in my view, would be phenomenal.

Similarly, management of water bodies, rural roads, primary health, skill & training etc. may also be assigned to local Panchayats.

(c) The rise in aspirational consumption; distortion of social customs (especially marriage, death, birth) for the sake of vanity, ignorance, and misguidance; rise in crime and litigation expenses; rise in cases of chronic diseases and hence prohibitive healthcare expenses form an overwhelming part of "household" debt". This debt usually has nothing to do with asset creation, education or skill enhancement.

To solve this conundrum, it is important that economic reforms are implemented with social reforms.

The social initiatives like focus on cleanliness, cooking gas connection to BPL families are commendable. But what we need is a social renaissance. Small correction and incremental improvement might not be enough given the serious nature of the problem, in my view.

I am not a social scientist. I may therefore not be an appropriate person to suggest the steps that could be taken within the Indian sociological framework. But this does leaves me at freedom to throw some thoughts that may not belong to the box. For example, consider the following:

(i) The government should take strong affirmative steps to eradicate social distortions that have crept in over a period time in our social, religious and cultural events.

To begin with the government may totally nationalize the religious part of the birth, death and marriage ceremonies.

The government may appoint qualified religious persons (QRP) who can perform these ceremonies at the designated venues established by government in every Block of the country . All the expenses like salary of QRP, cost of performing the rituals, food offered to QRP, cost of feeding upto 25 close relatives of the person for whom the rituals being done, etc. may be borne by the government.

The designated officer at Block level may be appointed to supervise all such ceremonies and issue certificate (Birth, Death, Marriage) on the spot.

The government may actively discourage any profligate spending on the social part of these events. All expenses on marriage & birth related parties and social functions relating to death, shall be taxed @100%. Meaning, if anyone wanting to spend Rs10,00,000 on marriage party of his/her child, shall be required to pay an equivalent amount as tax. This money may be used exclusively for performing the religious ceremonies stated above.

(ii) A dignified birth and death shall be made fundamental right of every citizen.

In case of birth, the government should assume responsibility of the child from the conception stage, for upto two children for each mother. This includes good diet for mother, medical tests, medicine, delivery expenses and immunization of the child. This should be done on a global standard basis not the way typical government medical facility is run by the government.

In case of death, the final rights of the deceased should be performed in a dignified manner, as per his/her religious traditions. This should apply to all unclaimed and unidentified bodies also.

The insurance companies may be directed to make the claim payments on the spot when the final rituals are done on 13th, 17th or 40th day as the case may be, in cases where the deceased's life was insured, either individually or under some government group scheme.

The corporates may be required to fund this initiative under their CSR obligation.

Also see

My 2 cents for PMEAC

Economic Growth: Goals are important, so are means

Jobs will come from services, don't stress manufacturing

Informal sector is core to Indian economy

Focus on farms, leave industry alone

Fiscal & monetary policy - avoid adhocism, focus on reforms

Don't mistake corrections for reforms

Public expenditure declining in quantity and quality

Thursday, November 2, 2017

Public expenditure declining in quantity and quality

Thought for the day

"My life has no purpose, no direction, no aim, no meaning, and yet I'm happy. I can't figure it out. What am I doing right?"

—Charles M. Schulz (American, 1922-2000)

Word for the day

Psychomancy (n)

Occult communication between souls and spirits

Malice towards none

All those who termed Elphinston stampede as a national disaster, are distraught is Army is helping to reconstruct the bridge!

First random thought this morning

The only tangible underperformance of the incumbent government seems to be its inability to deliver on the expectations it keeps raising almost on hourly basis. Otherwise everything else is part of a linear trend that perhaps started two decades ago.

DeMo is a classic example. If the government had simply stated that we are replacing old 500 and 1000 rupee bills with new 500 and 2000 rupee bills to weed out the fake currency coming from Pakistan and Bangladesh, it would have been a much simpler and smoother exercise. Projecting it as a panacea for all corruption and non-compliance has made it look like a disaster.

Public expenditure declining in quantity and quality

PMEAC has identified reform in public expenditure as a key focus area for stimulating the economic growth in the country.

In administrative parlance, public expenditure is a complex subject. It involves many classifications and sub-classifications like capital and revenue & capital expenditure, plan and non-plan expenditure, social & economic expenditure, recurring & non-recurring expenditure, etc.

I though like to view it in simple terms. In my view, public expenditure is the amount of money a government spends on (a) managing the administration; (b) creating assets; and (c) discharging its social, political and economic obligations.

The ideal situation for a developing economy, especially an economy that is at a take off stage, is that public spending should be higher. The incremental rise in public expenditure should ideally be used for creating assets and enhancing social services, and administrative and financing costs should gradually decline.

However, this has not been the case in India so far:

(a) The public expenditure as a percentage of GDP has declined in past three decades, from a high of 19% of GDP in FY87 to 12% in FY17.

(b) Share of investment (capital expenditure) in public expenditure has fallen materially in past four decades from a high of 43% of GDP in FY79 to 14% in FY17.

(c) The public expenditure on subsidies (From 1.29% of GDP in FY79 to 1.72% in FY17) and interest payments (From 1.73% of GDP to 3.18%) has risen sharply in past four decades, while allocation for defense has almost halved (from 2.28% of GDP to 1.11%) in this period.

(d) The public expenditure on social services has been generally lower in past 3 decades (averaging 3.8% against a high of 5% in FY90). During the global financial crisis it rose to 5.2% in FY11, and has declined steadily since.

...to continue tomorrow

Wednesday, November 1, 2017

Don't mistake corrections for reforms

Thought for the day

" That's the secret to life... replace one worry with another."

—Charles M. Schulz (American, 1922-2000)

Word for the day

kobold (n)

A spirit or goblin, often mischievous, that haunts houses.

Malice towards none

Does the government has any clue how to clean rivers?

First random thought this morning

Let’s say a person kindly agrees to give me Rs100 every day but on the condition that I have to deliver 15% annualized return for all the tranches. I will probably start expecting Rs100 every day for the rest of my life but that’s not the point. Let’s carry on and assume that I do manage to find a stock with a price of Rs80, consensus target price of Rs92 (15% higher than CMP) and in my view, fair value more like Rs100 (on a 12-month basis).

So, I start buying the stock. Of course, others have also cottoned on to the idea and the stock moves to Rs90 after a few days (as discussed, my buying alone does not matter).

I am comfortable buying up to 15% below Rs100 as per the condition of my investor. However, the consensus target price has meanwhile moved to Rs104 (15% higher than new CMP) but my fair value is still Rs100. What should I do?

Should I still buy the stock? (Reproduced from "The bogus argument of liquidity", report of Kotak Securities)

Don't mistake corrections for reforms

Reform is the most abused buzzword in Indian context at least. The governments, policy influencers and opinion makers, politicians, popular commentators, and media experts have misused this terminology to classify all administrative changes and corrections, including as insignificant steps as eliminating or adding few columns in the return to be filed annually by the tax payers.

I have been insisting that the reforms must be distinguished from mere administrative corrections. A policy measure in order to qualify as "Reform" must change the status quo materially.

I f I may reproduce what I wrote few months back:

When faced with the task of catapulting the economic activity to a higher orbit it is imperative for the policy makers to distinguish between "administrative corrections", "systemic efficiencies" and "reforms".

For example, 100% FDI in insurance per se may not qualify as a reform if it merely enhances the capacity of insurers to take more business on a larger capital base. Making health and accident coverage compulsory for all employees and petty service providers, including domestic helps, drivers, porters etc., compulsory would be a reform.

From this view point, I suggest the following illustrative reform measure that may change the status quo materially.

(1) To exploit the demographic dividend fully and generate demand, accelerate the wealth transfer process. Defining the upper bound of wealth and introduction of material estate duty on people above the upper bound could be one method.

(2) Transfer the power to impose and collect direct taxes to the local governments. Local governments (Municipality or Panchayat) should be empowered to decide appropriate taxation structure and incentive formulae to achieve the objective of social, economic and gender equalities, sustainability and development.

For example, each local government shall determine which are the minority communities, or socially and economically backward classes in that locality and extend reservation accordingly. Similarly, each local council shall determine the development priorities and allocate resources accordingly. Given the diversified demographic, ecological and socio-economic profile, efficient policies for energy, education, employment, industrial development, ecology conservation etc could be worked out only at the local level.

(3) The ownership of public resources should be earnestly handed over to “the public”. Instead of few feudal ministers controlling the resources, the trusteeship of all the natural resources should be vested in the local governments. The local people should determine how these resources should be exploited. Industry based on these resources should be developed on co-operative model with equitable ownership of local people.

Also see

My 2 cents for PMEAC

Economic Growth: Goals are important, so are means

Jobs will come from services, don't stress manufacturing

Informal sector is core to Indian economy

Focus on farms, leave industry alone

Fiscal & monetary policy - avoid adhocism, focus on reforms

Tuesday, October 31, 2017

Fiscal & monetary policy - avoid adhocism, focus on reforms

Thought for the day

"There's a difference between a philosophy and a bumper sticker."

—Charles M. Schulz (American, 1922-2000)

Word for the day

Guisard (n)

A person who wears a mask; mummer

Malice towards none

Is P. Chidambaram batting for BJP?

For obvious reasons, of course.

First random thought this morning

Telecommunication, especially digital communication is inarguably at core of almost every economic plan and program in the country. You can't even imagine any development without digital communication capabilities strengthening its foundation.

If the font size of newspaper headline is any indication, the imminent retrenchment of 1200 RCom employees is a major national concern. A number of HR experts and recruiters have apparently opined that these employees with 5-10 years of experience will find it extremely hard to get alternative jobs and might have make significant compromise with their pay and expertise.

Do you see the paradox?

Fiscal & monetary policy - avoid adhocism, focus on reforms

PMEAC has identified Fiscal framework and monetary policy as two key focus areas for stimulating faster economic growth and employment.

Monetary policy

I am not sure about the role of monetary policy in stimulating economic growth. To me the role of monetary policy is to ensure the stability & sustainability of the financial system; improve its efficiency; and catalyze necessary corrections in markets wherever demand-supply equilibrium is deviating from the desired path.

An efficient conduct of monetary policy does eventually help the objective of economic growth. But designing monetary policy to stimulate economic growth could at best be an emergency short term measure not a sustainable solution.

This argument may look out of place in light of the dominant role monetary policy has played in the economic recovery in post global financial crisis (GFC) period since 2009. But the fact remains that post GFC non-conventional monetary policy measures were emergency steps, never intended to be integral to the monetary policy design of respective jurisdictions. Moreover, the monetary policies in almost all jurisdictions, with very few exceptions, is conducted by autonomous monetary authorities with no interference from the executive branch of the government.

PMEAC may therefore be better off leaving the conduct of monetary policy to MPC and RBI.

Fiscal policy

Now coming to fiscal policy framework, the efforts of the successive governments have so far been focused on improving tax to GDP ratio and improving fiscal discipline. Besides, fiscal policy has been used to incentivize (or otherwise) investment and consumption in specific regions and products.

Tax incentives

While there is evidence to suggest parochial development as outcome of fiscal incentives, I am not aware of any holistic impact analysis on overall economic growth of the country as a result of a particular fiscal incentive. For example, tax exemption on new investments in a particular industrially backward area may have resulted in development of that area and creation of additional employment. But I have not seen an impact analysis that shows what would have been overall economic impact if that investment was not made at all or made in an industrially developed area.

A few years back a report in Business Standard highlighted that many small and medium size pharmaceutical manufacturing firms located in Baddi (Himachal Pradesh) are facing the threat of closure. These units were lured into this location a decade back by tax concessions and capital subsidy given under special status state category. Despite huge influx of benefit seekers, the infrastructure in this area could not be developed. The connectivity remained poor.

As the tax (Excise and income tax) concessions begin to expire, many of the 250 odd units face closure. In our view, many industrial units in Kashipur and Rudrapur areas of Uttrakhand may also meet similar fate.

We feel, this should initiate a serious nationwide political debate over the efficient allocation of scarce resources vs. parochial regionalism, and even more important “enablement vs. provision”.

Gujarat model of development based on enablement has attracted more investment and hence created more growth opportunities, rather than the model based on “provision” adopted through special status mechanism.

Fiscal deficit

In recent months a whole lot of commentators have (over)emphasized on the extent of fiscal deficit India can or should or cannot or should not afford. I do not think I can add anything useful to the arguments in favor or against the need for expansion of fiscal deficit to support the efforts for revival of investment cycle in the country.

My point is that the government's fiscal policy needs to be in harmony with the popular mandate it has received.

I strongly believe that the mandate of this government is unmistakably for pragmatism, development, inclusivity, nationalism and good governance. Accordingly, I feel the budgeted estimate of ratio of fiscal deficit to the GDP should actually not figure very high in the priority list of the government. In my view there are a multitude of deficit that needs to be bridged on a higher priority.

In particular the following deficits (not necessarily in the given order) need to be assigned priority over the budgeted fiscal deficit:

1. Capital deficit

2. Demand deficit

3. Skill deficit

4. Employment opportunity deficit

5. Trust deficit

6. Social infrastructure deficit

7. Physical infrastructure deficit (

8. Productivity deficit

9. Compliance deficit

10. Corporate governance deficit

Fiscal prudence is good. But that discussion could wait for a sunny day. In overcast conditions, as forecasted for this Saturday, we need to bother more about leaking roof and broken umbrella.

....to continue tomorrow

Friday, October 27, 2017

Focus on farms, leave industry alone

Thought for the day

"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.

Also see

My 2 cents for PMEAC

Economic Growth: Goals are important, so are means

Jobs will come from services, don't stress manufacturing

Informal sector is core to Indian economy

Thursday, October 26, 2017

Informal sector is core to Indian economy

Thought for the day

"For my part I know nothing with any certainty, but the sight of the stars makes me dream."

—Vincent Van Gogh (Dutch, 1853-1890)

Word for the day

Rapprochement (n)

An establishment or reestablishment of harmonious relations, e.g., a rapprochement reached between warring factions.

Malice towards none

The latest opinion polls suggest BJP sweeping both Gujarat and Himachal elections.

You may trust these polls or reject them outright. Who cares!

First random thought this morning

The government has reassured people that (a) PSBs shall meet Basel III capital adequacy norms well within the 2019 deadline; (b) the physical infrastructure development program is on track with maximum focus on transport logistics (railways, roads, waterways and ports); and (c) all GST related problems are being evaluated with open mind.

This shall heal some of the ruffled feathers, ignite hopes of recovery in investment cycle alive and keep markets busy for few months. Overall, a happy Diwali.

Informal sector is core to Indian economy

Integration of informal sector to economy's mainstream is stated to be one of the focus areas.

To understand the criticality of this issue, it is pertinent to note the following findings from 6th Economic Census conducted during 2013-2014.

* There were about 58.5mn commercial establishments in operation in the country, employing 131.29mn people.

* 34.8mn establishments (59.48%) were in rural areas and 23.7mn establishments (40.52%) were located in urban areas. During 8yr period between 2005-2013 the number of establishments grew 41.8% from 41.25mn to 58.5mn. The growth was higher at ~48% in urban areas.

* Out of 58.5mn establishments, about 77.6% establishments (45.36mn) were engaged inØnon-agricultural activities (excluding public administration, defence and compulsory social security activities) while the remaining 22.4% establishments (13.13mn) were found to be engaged in agricultural activities (excluding crop production and plantation).

* Out of the total establishments, 22.6% belong to primary sector of which agriculture sectorØ constitutes 22.45%, mining and quarrying constitutes 0.15%, 19.72% belongs to secondary sector (including construction which contributes 1.66%) and 57.68% pertain to tertiary sector.

* 41.97mn (71.74%) were Own Account Establishments (i.e. establishments without any hiredØ worker) and the remaining 16.53mn (28.26%) were establishments with at least one hired worker.

* Own Account Establishments grew at the rate of 56.02% while the growth of establishments with hired workers was 15.11%, since 2005.

* Out of 58.50mn establishments, around 96.4% establishments were under private ownershipØ and remaining 3.6% establishments reported their ownership as Government or PSU.

* Proprietary establishments were 89.39%. More than one third (36.19%) of all the establishments in the country were home basedØ establishments i.e. inside household. Another 18.44% establishments were operating from outside household without fixed structure, and the remaining 45.37% establishments were operating from outside households with fixed structure.

* Top five States viz. Uttar Pradesh (11.43%), Maharashtra (10.49%), West Bengal (10.10%),Ø Tamil Nadu (8.60%) and Andhra Pradesh (7.25%) together accounted for about 50% of the total number of establishments in the country.

* Livestock was the major economic activity (86.74%) of agricultural sector. Retail TradeØ (35.41%) followed by Manufacturing (22.77%) were the dominant ones within the nonagricultural sector.

* Among the States, maximum growth rate of establishments during 2005-2013 was observed inØ Manipur (121.07%) followed by Assam (107.99%) and Sikkim (100.07%).

* Around 131.29mn persons were found employed in 58.5mn establishments. 67.89mn persons (51.71%) were employed in rural areas and 63.4mn persons (48.29%) in urban areas. While employment in Own Account Establishments was of the order of 58.15mn persons (44.29%), the employment in establishments with at least one hired worker was about 73.14mn persons (55.71%).

* The growth rate of employment since 2005 was of the order of 38.13%. Around 57.14mn persons (43.53%) were hired workers and the remaining 74.14mnØ persons (56.47%) were not-hired workers. Among the total workers, 74.83% were male and 25.17% female.

* Manufacturing sector was the largest employer providing employment to 30.3mn (23.1%)Ø persons. This was followed by retail trade employing 27.19mn persons (20.7%) and livestock sector employing 19.4mn persons (14.8 %).

* Around 55.86mnØ establishments (95.50%) were having 1-5 workers, around 1.83mn establishments (3.13%) were having 6-9 workers, while 0.8mn establishments (1.37%) employed 10 or more workers.

* Highest growth rate of employment was, however, observed in Manipur (93.57%), followed byØ Assam (89.32%) and Uttar Pradesh (79.94%).

* Total number of Handicraft/Handloom establishments was 1.87mn (1.71%). TheseØ establishments provided employment to 4.20mn persons (3.12%). Out of the total establishments, 78.9% were without hired workers. About 67.0% of the handicraft/handloom establishments were outside the household without fixed structure or inside household. Majority of establishments i.e. 96.6% were owned by proprietors.

This is the true depiction of the employment conditions and current business paradigm.

Any policy solution that does not account for this reality is bound to be ineffective.

....to continue tomorrow

Also see

My 2 cents for PMEAC

Economic Growth: Goals are important, so are means

Jobs will come from services, don't stress manufacturing