What Modi Can Learn from Indira Gandhi on How to Report Jobs Data

Like the Indira Gandhi govt publicly admitted its failure in the early 70s, Modi govt too should admit its failures.

We had a serious employment crisis in 1973-74. The rate of unemployment in rural areas was as high as 6.8 percent, and the same in urban areas was at an alarming 8 percent.

The then Indira Gandhi regime’s Economic Survey of 1973-74 had this to say on the very elevated level of unemployment: “The total number of job seekers on the live registers of the employment exchanges rose from 56.88 Iakhs at the end of June 1,972 to 75.96 lakhs at the end of June 1973, an increase of 33.5 per cent. The number of educated job seekers rose to 35.29 lakhs at the end of June 1973 from 26.11 lakhs a year earlier (an increase of 35 percent). Out of this increase of over 9 lakhs, West Bengal accounted for 2.4 lakhs, Bihar for 1.9 lakhs and U. P. and Maharashtra for almost one lakh each.”

It went on to say, “There is no other aspect of our development experience which is a matter of greater concern than the failure to generate sufficient employment opportunities. The sharp growth in the number of educated job-seekers during the year is to be particularly regretted because this represents a waste of capital that the nation has invested in education.”

There was a candid admission then of the problem at hand. The survey reads like a public apology. And the reasons for rapid deterioration in the employment scene then are all well documented: two back-to-back years of monsoon deficiency resulting in substantial fall in agriculture production, the cost of war with Pakistan in 1971, and a massive spike in global crude oil prices, from USD 3 a barrel, to USD 12 a barrel in a matter of weeks, depleting our scarce foreign exchange reserves.

Govt in Denial Mode Despite Data Suggesting Serious Employment Crisis

But that was then. Now, in the face of several reports, including the one from the government’s own National Sample Survey Office (NSSO), suggesting a serious employment crisis, the government is in denial mode. We are staring at a severe job crisis despite record food grain production, bulging FOREX reserves, healthy tax collection, very benign global crude environment, and decent domestic and global growth.

Writing about the current crisis in The New York Times titled “India Can Hide Unemployment, but Not the Truth”, former chief economic advisor, Kaushik Basu, argues, “The Modi government’s economic policy has been disproportionately focused on a few big corporations, neglecting small firms and traders, the agricultural sector and most workers. The results are now showing.”

Kaushik Basu refers to several data points to paint a grim picture. Other than the now-buried NSSO report which indicates unemployment rate at 45-year high of 6.1 percent, he quotes a CMIE report that “estimates that the country’s unemployment rate in December 2018 reached 7.38 percent”. According to the “State of Working India 2018,” a large study conducted by the Center for Sustainable Employment at Azim Premji University, the country’s youth unemployment now stands at 16 percent, he adds.

Questionable Data to Support ‘Job Expansion’ Claims

In the face of such damning reports, the government’s response has been laughable. While speaking at the Lok Sabha on 7 February, Prime Minister Modi quoted several numbers to suggest a healthy pace of job creation during his tenure. Here are some:

• National Pension Scheme (NPS) now has a subscriber base of 1.2 crore, up from mere 65 lakh in March 2014. By quoting this number, he implied an additional job creation of nearly 60 lakh as indicated by this figure alone. When did an investment-cum-pension scheme, which is what NPS is, become a barometer of jobs addition? Is investing same as getting a job?
• A report by The Times of India quotes PM Modi as saying that the purchase of 36 lakh commercial and 1.5 crore passenger vehicles since 2014 suggests rapid addition of jobs since he became the Prime Minister in May 2014. According to Society of Indian Automobile Manufacturers (SIAM), the sale of commercial vehicles stood at nearly 8 lakhs in 2012-13. We could surpass the number only in 2017-18. Is this an admission that first three years of his tenure created fewer jobs? On the sale of passenger vehicles, the level achieved in 2012-13 was surpassed in 2015-16.

Dear PM Modi, Let’s Not Brush Serious Issues Under the Carpet

• The PM gave yet another set of data, of growth in EPFO subscribers, to suggest job expansion. This has been debunked many times before and let us summarise the main arguments here. According a Mint report, “According to statutory requirements, when an organisation has 20 or more employees, it comes under the EPFO’s ambit. So, if a firm has 19 employees and it adds one more to its payroll, then all 20 will have to be registered under EPFO. This gives a false picture that 20 jobs were created instead of just one.” According to a Business Standard report, “Between September 2017 and July 2018, 6.2 million people were added to the payroll. Out of this, 1.5 million people, about 24 percent of the net payroll count, were those who exited their EPF subscription to rejoin it later, with a new job.” Can we say that addition to EPFO base means job creation?

PM sir, suggesting job expansion with the help of such data amounts to insulting all those who are well-qualified to get decent jobs. The least you can do is accept the failure like what Indira Gandhi – yet another very mazboot leader like you – did four decades ago. An acknowledgment of the problem is the first step towards solving it. Blatant denial in the face of mounting evidence to the contrary means brushing the issue under the carpet.