In his Budget speech of 2006, P. Chidambaram pulled the idea of inclusive growth from out of the groves of academe into the public imagination.
Focusing on financial inclusion as a precondition of “inclusive growth”, a term that was to gain wide currency subsequently, Chidambaram virtually created a new discourse that no policymaker worth her salt is able to ignore: growth had to be inclusive.
Now, once again, Finance Minister Chidambaram broadens our comprehension of the excluded constituency; not just the rural poor but women and youth. These were the three faces of India that he singled out for special “promises” redolent of an enriching inclusion. Sceptics could be forgiven for assuming this section of the speech to be pure politics. But it is instructive because the “inclusion” measures will become talking points in political discourse. No party will now talk of just the poor; they will look upon the youth and women as the ‘poor’, the underprivileged inhabitants of an occluded space.
Promises for women
Promising “collective responsibility” for the girl-woman-wife-mother-homemaker’s safety and dignity sounds dangerously like hot air. In a rough-and-tumble participative democracy it is only public conversations on the streets, however unruly and enraged, that can mould action. If the Budget makers had to think up a Nirbhaya Fund, it was not responsible policymaking but the result of public fury that shamed the Government into making the “promise.” Its redemption will obviously also depend on the public’s capability to hold accountable those charged with the fund’s operation.
The Finance Minister’s promise to the youth has huge problematic stresses that should have been noticed but never are, by policymakers, time and again. Nothing excites the urban middle-class imagination as much as the idea of a demographic “dividend”, the notion of a young India resonating with all the right catechisms of an ancient land’s modernisation. “He is impatient, she is ambitious, and both represent the aspirations of a new generation.” The subject clause in the Finance Minister’s attempt at allegory does more than assert gender equality; impatience is not as productive or becoming of modernity as ambition, yet both —impatience and ambition — are appropriate core values for a growing nation blessed by the demographic dividend.
For the youth then, the Finance Minister promises skill development. What is the point of the youth dividend, captured in the second chapter of the Economic Survey if not its transformation into a vast reservoir of skilled talent? Age is just a number, the young may have more energy surely, but do they have the requisite skills that India’s organised sector demands?
Chidambaram promises Rs 1,000 crore to train nearly a lakh youth in the right skills that will help “employability and productivity.” That has been industry’s demand and policymakers have been made aware of the gap that has developed between the expectations of high growth rates and their fulfilment. That sense of hiatus and the opportunities therein has leached into a widening public imagination; that explains the demand for specialist, professional centres of higher learning; on the outskirts of tier-two cities such as Pune, large landowners, farmers or builders with land banks are happy to oblige; management schools dot the dreary landscapes of an avaricious and mindless “ambition” and “impatience”.
To what end?
Evidence from the organised sector’s rapid growth over the past two decades does not lend credence to the promises of the skills-gap challenge. In a detailed study of comparative growth rates for India and fast-growing Asian economies on, among other things, sectoral employment rates, we get an illuminating picture of employment’s dark future.
India has comparable rates of inter-sectoral labour re-allocation with its East Asian neighbours at similar stages of growth. But one problem, as the Economic Survey says, “is that while industry is creating jobs, these have been relatively low-productivity jobs. As a result, per capita income in India has not benefited as much from inter-sectoral migration of workers out of agriculture as other Asian countries have.” The second problem: “…high-productivity services sector is not able to create employment commensurate with its growth…”
The Economic Survey confirms a couple of observations that have been made on the nature of employment in these columns, citing independent studies such as the one by the US Department of Labour’s Bureau of Labour Statistics. For one, most of the employment in India comes from the informal, unorganised, that is the MSME sector; this means that the organised, large-scale sector has not lived up to the promise of higher employment: “organised industry creates few jobs compared to unorganised industry” is how the Survey puts it.
For another, growth in jobs in the informal sector in 2009-10, for instance, emanated from the Construction industry; this is in line with the data the Survey cites from NSSO surveys for the preceding five years when employment in the construction industry increased by 70 per cent.
What we now find is that the largest driver of growth, Services and within it, Construction is the biggest employment driver but of the informal kind; that nature of work precludes social security of any kind or benefits that would accrue to, say, employees of public sector banks or corporate offices in south Mumbai.
Informality in the formal
The Survey points to 2009-10 as an exceptional year when employment in the organised sector picked up: “However, two points may be of note. First, this growth is characterised by adding mostly to ‘informal’ jobs within the formal sector with little increase in productivity…” “Second…unorganised-sector employment still constitutes more than 95 per cent of overall industry employment…”
What should be revealing for policymakers, and of little surprise to industry representatives, however, is the following: “…within manufacturing, unorganised-sector employment comprises 70 per cent of overall employment.”
So what do the youth, impatient and ambitious, have to look forward to? Low-productivity jobs in the construction or manufacturing industry with no benefits, if that.
Did someone mention ‘skill development’?
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