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Charted: Narendra Modi’s big bad jobs problem ahead of India’s 2019 elections

AP Photo/Rajesh Kumar Singh
The long wait.
  • Nupur Anand
By Nupur Anand


Published This article is more than 2 years old.

The spectre of jobless growth is haunting India.

Despite being the world’s fastest-growing major economy, India’s employment rate declined from 43.5% in January 2016 to 40.6% in March 2018, a recent report by the credit ratings agency CARE states.

Even though the pool of employed people has increased in absolute terms, the growth rate has tapered. In financial year 2018, for instance, employment grew at a mere 3.8%, compared with 4.2% in the previous fiscal.

And things are unlikely to improve next year. “There has been tepid growth this year and we don’t see any noteworthy trend for employment even in 2019,” said Kavita Chacko, senior economist at CARE Ratings.

This does not bode well for prime minister Narendra Modi who had led his Bharatiya Janata Party (BJP) to a resounding victory in the 2014 general election on the promise of bringing more jobs. Modi, whose tenure ends in May 2019, had promised to create 10 million new jobs if he was voted to power.

Former Reserve Bank of India governor, Raghuram Rajan, is among the many economists who have pointed to the disparity between India’s growth and employment. “Growth clearly is not creating enough jobs. You can see that in the kind of numbers…25 million people applying for 90,000 railway jobs…and these are not priced jobs,” Rajan said at an event in New Delhi on Dec.14.

In financial year 2018, 44% of the companies surveyed in the CARE report saw a dip in their workforce numbers, while 6% of the firms did not see any addition to their employee base. There were 1,610 companies surveyed for this report, said CARE.

Banks continue to remain the largest employers, followed by the IT sector. Next year, hiring in construction and infrastructure may gather steam on account of a government-led push. “Things may look up even for the IT sector, especially in niche roles, as rupee depreciation has led to more revenues which can lead to increased hiring,” added Chacko.

Not only are companies adding fewer employees, they are also being less generous with hikes for existing staff.

For instance, in financial year 2017, companies’ expenditure on employee wages grew 9.2%. This fell to 8.3% in the next financial year. “There can be two reasons for employee cost growing slowly even when the total number of employees have increased—lower increments, or the new hires are at lower salaries,” explained Chacko.

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