Editorial 1 : Joblessness & skill gap
Introduction: Most economists agree that a lack of good-quality jobs, particularly for India’s burgeoning young population, is one of the urgent priorities to address. It is also generally perceived that in the recent elections, joblessness was a critical issue. Election results in some states show that welfarism is not enough to placate large sections of the electorate.
Joblessness is a consistent and socially explosive problem
- It is well-known that joblessness has been a persistent problem over many decades and across all regimes.
- Those who think growth will automatically solve the job problem overlook that 50 years of national surveys on employment and unemployment have made it clear that India’s job availability has not, in general, kept pace with the rate of economic growth.
- If left unattended, this is a socially explosive problem.
- It is high time that all political parties, both at the Centre and the states, give concentrated attention to details of design, cost-effectiveness and implementation issues for different types of job-promoting policies.
The minimal manual labour guaranteeg under MGNREGA is not fully achieved
- We have some accumulated experience of running rural employment guarantee schemes introduced at the central level in 2005.
- These schemes are for manual, often back-breaking, work, under a scorching sun for the very poor.
- But even here, parts of the original law remain as yet largely unimplemented — such as the worker rarely receiving unemployment benefits if the job is not provided within 15 days, or the inordinate delays in wage payments; in most cases, work has been provided on average for much less than the stipulated 100 days per household, and so on.
The interesting case of “Decentralised Urban Employment and Training” (DUET) scheme
- There has been talk of having a central programme of employment guarantee in the urban sector (beyond scattered attempts in some states).
- This requires serious consideration — there has been some discussion around a proposal on this by Jean Dreze titled “Decentralised Urban Employment and Training” (DUET) scheme.
- One may particularly think of ways of putting people to work on improving urban infrastructure, water and other environmental resources.
- It’ll be, of course, costly; estimates for giving jobs to 20 million urban casual workers easily run to above Rs 1 trillion.
These employment guarantee schemes are relief at best
- But such rural and urban employment guarantee schemes are mainly concerned with relief or “distress” employment, however necessary, for the poor.
- We actually need, on a long-term basis, an array of sustainable programmes of reasonably good jobs which go beyond short-run relief.
Ways to solve the employment problems in India
1. Address the employability concerns
- A part of our unemployment problem is really a problem of employability at the current level of low skills and training.
- A mass-scale vocational educational programme with links to apprenticeship in business firms needs to be started on a war footing to make up for decades of negligence.
- There are a great deal of successful cases to learn from: The German case, where potential employers contribute to vocational programmes into which school-leavers stream, saving worker-screening costs for those employers, or the California community college-cum-vocational system working in partnership with local firms.
- Even in developing countries, there are now relatively successful cases like the Kenya Youth Employment and Opportunities Project, Generation India programme, Youth Building the Future Programme in Colombia, the Harambee Youth Employment Accelerator projects in several African countries, etc. Coordination between firms, local governments, business associations and civic organisations are essential in most cases.
2. Targeted industrial subsidy for new job creation
- In India, there is a plethora of capital subsidies in different sectors in the name of encouraging investment.
- They distort investment in a labour-replacing capital-intensive direction.
- We should take stock of these capital subsidies and replace many of them with wage subsidies, particularly for large firms in the organised sectors on the condition that they create new regular jobs.
3. Focus on non-farm household enterprises of rural sectors
- We are familiar with agricultural extension services, but now we should pay equal attention to technical assistance and extension services (including management training) to non-farm household enterprises to help them in productive job-creating directions.
- There have been similar cases of helping community health and caregiving workers (like the case of software aid to ASHA workers in some districts of UP).
4. Workout some incentive like minimum basic income for low-income groups
- Much of the usual discussion on job promotion seriously ignores the demand deficiency problem that our private investors face in the mass consumer market.
- This problem has been accentuated by our large income and wealth inequality, where the benefits of growth are concentrated at the top and people at the bottom suffer from stagnant wages and employment.
- Raising incomes of these latter sections will boost demand and thus create more jobs on a large scale, and one relatively efficient way to do it is to give all such groups (not just the farmers) a basic income supplement.
- A minimum income also gives a poor worker trapped in a “bad” job the means to seek better jobs.
Where will the money come from?
- A modest basic income supplement can be funded by drastically reducing the direct and indirect subsidies that the government currently gives to the better-off.
- This can be supplemented by more taxation of the rich.
Conclusion: Welfarism is not the solution for India’s job problem, skill creation is. For sustainable and lasting growth in jobs, mass-scale educational vocational services, wage subsidies, and technological assistance are required. These actions will require political courage and imagination.
Editorial 2 : Trade policy needs a reset
Introduction: India’s active participation in the WTO discussions is crucial, even for successful bilateral engagement subsequently with major markets. Recent events at WTO, where India’s interest was at odds with the larger interests of developed world, shows that India need a better policy formulation vis-à-vis trades.
India's Stance on “WTO Expansion”
- India resists expanding WTO’s negotiation agenda in areas like e-commerce, trade, climate change, and investment facilitation
- This stance aims to preserve policy flexibility for economic development
- May hinder opportunities in digital economy and high-tech manufacturing
Vision 2047 and Global Economic Governance
- India aims to become a technology-driven developed economy within 25 years
- Global economic governance rules are being reshaped by geoeconomics, emerging technologies, and sustainability
- India’s rising stature demands a constructive role in managing global differences
India’s Economic Integration and Opportunities
- Domestic policy reforms promote global integration and sustainable growth
- India ranks third in attracting FDI after the US and China
- Aims to boost goods exports to $1 trillion by 2030
- E-commerce market expected to reach $350 billion by 2030
- Current e-commerce exports are only 1% of total exports, Globally, e-commerce routed exports are predicted to reach $2 trillion by 2030, offering India a substantial opportunity for export growth.
Regulatory Reforms and Commitments
- E-commerce driving regulatory reforms in data protection, consumer rights, competition, and taxation
- India committed to net-zero carbon emissions by 2070
- Significant achievements in improving energy access and reducing emissions
Evolving Export Strategy
- Need to shift from unrestricted domestic policy rights to policy predictability in key markets
- Should actively participate in WTO negotiations on e-commerce, trade, climate change, and investment facilitation
Historical Context and Current Landscape
- 1991 economic crisis led to policy reforms, breaking down trade barriers
- Current landscape requires focus on digitization, sustainable development, and resilient value chains
Importance of WTO Engagement
- Crucial for bilateral engagement with major markets
- Allows India to build leadership position in Global South
- Non-engagement hasn’t prevented other nations from forming consensus on new regulations
Future Approach
- Need to break away from traditionally defensive positions
- Between 2000 and 2007, India’s trade-to-GDP ratio surged from 12 per cent to 23 per cent, stabilising at this level.
- To achieve the ambitious export targets and accelerate GDP growth, the country aims for a higher trade-to-GDP ratio (ideally 30-35 per cent).
- Extend proactive engagement strategy from G20 and bilateral negotiations to WTO negotiations
Conclusion: India’s forward-looking approach to shaping multilateral disciplines in trade and investment matters has been demonstrated through its active participation in G20 forums and bilateral trade and investment negotiations with economically advanced nations. A similar proactive engagement strategy should also be extended to WTO negotiations.