India just can’t figure out how many jobs it has created

Sparks are flying.
Sparks are flying.
Image: Reuters/Anindito Mukherjee
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The Narendra Modi government is trying hard to disprove the charges of jobless economic growth during its tenure.

The official numbers say more than three million jobs have been created in recent months, but these figures are far higher than the findings of other independent agencies, leading to a heated debate on the issue.

Despite the doubts raised  over the veracity of the findings, Rajiv Kumar, vice-chairman of Niti Aayog, the government’s policy think-tank, insists that the situation is not as grim as projected by private institutions.

“It’s not a crisis. It is a challenge, it will always remain a challenge, given the numbers (of people joining the workforce). I think in the last four years, enough jobs have been created to absorb a very large majority of those who are entering the workforce,” Kumar told Quartz in an interview late last month.

On April 26, the Modi government said that 3.11 million jobs were added between September 2017 and February 2018 based on employee payroll data. Critics, however, are unwilling to buy the number.

The Centre for Monitoring Indian Economy (CMIE), a research firm that tracks business and economic data, believes that only 1.8 million jobs were created in 2017. That’s a fraction of the government’s claim.

KLEMS India, a research project supported by the country’s central bank, has come out with an even more troubling report. The job growth in Indian economy fell in the financial years 2015 and 2016, it stated.

Kumar discards the KLEMS findings. “They (KLEMS data) are still based on the old annual survey of industry source, which doesn’t cover all the new industries that have come up, like the Ola and Uber and the Snapdeals and the Amazon. And they also don’t cover growth in transport and so on,” he added.

The Modi government, which came to power with the promise of creating 10 million jobs every year, is aware that the unemployment scenario in the country is a ticking time-bomb and can prove to be disastrous in the impending elections.

The World Bank estimates that India needs to generate at least 8.1 million jobs every year to maintain its employment rate.

The bone of contention

The strongest argument against the government’s findings is that it takes into account only the jobs created in the organised sector, and, therefore it can’t present an accurate picture. The formal sector accounts for only 15% of the total jobs in India, according to Mahesh Vyas, managing director and CEO of CMIE.

It’s a problem that even the Niti Aayog has acknowledged in the past. Kumar’s predecessor, Arvind Panagariya, had accepted that there are serious limitations to using only the payroll data. In order to expand the scope of the survey, Panagariya had set up a task force to conduct a ground report survey every quarter to try and capture a more complete picture of employment growth.

“You’ll get a pukka answer for that (employment figures),” said Kumar, referring to the upcoming Niti Aayog-led jobs survey. “So, just wait till October and you’ll get that answer.”

Vyas argues that the CMIE has already been relying on household surveys with a sample size of over 500,000 respondents every month to arrive at the jobs data. “We follow the door-to-door survey method and it is the most comprehensive way of finding out where jobs are getting created or not because it does not distinguish between the sectors, kinds of jobs, etc,” he said. 

India’s jobless rate rose to 6.23% in March, the highest monthly rate in the past 15 months, according to CMIE. The government jobs data based on a similar procedure will be closely watched for how different they are from the  CMIE’s findings.

But the sheer demand for employment in Asia’s third-largest economy is unmissable. Last month, the Indian Railways received 23 million applications for just 90,000 vacancies, underlining the paucity of jobs. Nonetheless, Kumar believes that the government has done its bit.

“We have created large number of jobs that has prevented this from precipitating into a crisis. But the jobs being created may not meet the aspirations of the people, either in terms of the stability, or in terms of the quality of the job,” said Kumar.

With no clear picture in sight, the jury is still out.