India, despite being the second most populous country in the world (now most populous) has completely missed the mass industrialisation bus.
CVoter has been tracking elections for decades. There has not been a single one in which unemployment (and also inflation) have not featured as serious issues that engage and worry voters. In the most recent Mood of The Nation survey conducted by CVoter for India Today, about 72% of the respondents singled out unemployment as a serious issue. So it did not come as any surprise to the authors when CSDS-LokNiti released results of a pre-election survey that shows unemployment and the perceived difficulty in getting jobs is a major issue. Chronic unemployment has dominated the Indian landscape since before Indira Gandhi imposed the Emergency in 1975. The authors grew up in that era and have vivid memories of a brilliant movie called Mere Apne, where a generation of urban youth is wasted because the young simply couldn’t find any jobs. The authors also recall the iconic movie Deewar in which an enthusiastic, bright young Shashi Kapoor goes around knocking on office doors with his degrees but returns empty handed.
The authors are also convinced that the unemployment issue will not go away in the future. In fact, AI and the Digital Revolution could make matters even worse when Lok Sabha elections approach in 2029. There were many disdainful comments and remarks when Prime Minister Narendra Modi had referred to frying and selling “pakodas” as a means of livelihood. The authors will explain in a while why the remark is important in the Indian context. There are reasons why the unemployment issue has persisted for so long and will likely persist in the years ahead. Economists use fancy jargon and often cherry-picked data to project their ideological worldview on the issue. In reality, you don’t need to be an economist to understand why unemployment has and will remain a contentious issue. All you need is common sense and respect for credible data. There are essentially three reasons why unemployment has stubbornly remained a serious issue for so many decades.
The first is overall economic policy. The rot started when Jawaharlal Nehru—in good faith, mind you—decided that the state will dominate the “commanding heights of the Indian economy” and the private sector will be reluctantly allowed to play second fiddle at the best. Across the world, it is the emergence of large factories that has enabled people dependent on agriculture to move to jobs in the industrial sector. For a long period, these workers were ruthlessly exploited. But the growth of communism and trade unions compelled capitalist societies to ensure workers get fair wages and better working conditions. The East Asia and South East Asia (including China) economic miracle is a result of this historic process. India, despite being the second most populous country in the world (now most populous) has completely missed this mass industrialisation bus. Sure, state-owned public-sector giants did offer hundreds of thousands of jobs. As did many large private sector companies. But it has never been enough. Look at contemporary data. The total work force in India is more than 600 million. The “state” has just 40 million jobs.
There is very little chance of that number increasing. The “organised” sector as a whole has about 60 million jobs. The other 550 million are at the mercy of fate and God. Labour policies in India, while seeking to protect and promote the rights of workers have become so perverse that no investor even today is willing to set up mega factories of the kind you see in China and Vietnam. Even when large factories are set up, investors prefer using what is called “capital intensive” technology where machines do the tasks that workers can do. Perhaps the only successful “manufacturing jobs” ecosystem created in the 21st century has been under the PLI scheme for mobile phones, and to some extent in the automobile and auto-ancillary sectors. But that’s rare and mega factories remain elusive. No wonder, the percentage of Indians still dependent on agriculture (low productivity-low wage) is scandalously high.
The second reason is the mindset of Indian families. As mentioned earlier, there was both derision and outrage when Narendra Modi referred to “pakoda” seeing as a source of livelihood. For generations, middle class and aspirational Indians have remained obsessed with government jobs and with the “Holy Trinity” of engineering, medical and management degrees. In Delhi alone, you will find hundreds of thousands of young Indians struggling in vain to prepare for “civil service” exams, losing their best years in the bargain. As mentioned earlier, the “state” has just 40 million jobs on offer while the entire “organised” sector has 60 million jobs on offer while the size of the workforce is more than 600 million. There are multiple options available in terms of other career opportunities that are ignored by Indian families as below their dignity. But that mythical dignity is of no use. Millions working in “undignified” jobs are doing well and are happy. Take the family of the driver of the co-author. The co-author gives him a salary of Rs 22,000 a month. His wife is registered as a beautician with a digital app and earns about Rs 30,000 a month. The driver’s father works as security guard and earns Rs 12,000 a month. They stay as a joint family and earn close to Rs 8 lakh a year—multiple times the per capita income of India. They are happy and have just invested in a flat of their own. The authors are not suggesting at all that educated young Indians become drivers. But they need took at other career options and remember this is the age of the “gig economy” where a majority of jobs will be fleeting.
The third reason has been a complete mismatch between the education system of India and the kind of skills that are required for productive jobs. A common refrain of entrepreneurs who create jobs in India is that they have to train fresh recruits with engineering and or management degrees from scratch as most are “unemployable”. Right from early school level, the emphasis for generations has been on rote learning without the acquisition of worthwhile skills. But it is here the authors see some cause for hope and optimism. The New Education Policy has been the subject of many ideological controversies. “Secular” and “liberal” Indians are up in arms against this rewriting of history. Let that debate go on. What impresses the authors the most in this policy is the big emphasis on skill development and acquisition from senior school onwards. Students will be encouraged to pursue skill acquisition of a kind that is different from getting a graduation degree. It will be about a decade before the real positive impact of these path retaking policy changes will be felt as skills and job requirements match each other.
Till then, be prepared to see unemployment as a serious issue during Lok Sabha elections in 2029 and 2034.
Yashwant Deshmukh is Founder & Editor in Chief of CVoter Foundation and Sutanu Guru is Executive Director.