Editorial 1 : Questions over employment
Introduction: In recent years, there has been a steady increase in the labour force participation rate, the share of the population that is either working or willing to work.
About Periodic Labour Force Survey
- It is a survey conducted by the NSO under the Ministry of Statistics and Programme Implementation (MoSPI) to measure the employment and unemployment situation in India.
- The NSO launched the PLFS in April 2017.
Evidence Supporting the rise in female labour force participation rate
- At the aggregate level, the participation rate (for all ages) rose from 36.9 per cent in 2017-18 to 42.4 per cent in 2022-23 as per the periodic labour force surveys.
- This increase has been largely driven by women entering the labour force in great numbers, more so in rural areas.
- In rural India, the female participation rate surged from 18.2 per cent in 2017-18 to 30.5 per cent in 2022-23 — an increase of more than 12 percentage points over a five-year period.
- Roughly speaking, this translates to around 56 million women entering the rural labour force during this period (this is an estimate based on population projections).
- The state-wise data shows that female participation increased in both high-income states such as Karnataka and Gujarat as well as in low-income states like Odisha and Rajasthan.
- And, it occurred across all levels of education.
- Among the uneducated, the worker population ratio (ages 15 years and above) rose from 29.1 per cent in 2017-18 to 48.1 per cent in 2022-23 — an increase of 19 percentage points in five years.
- Among graduates, it increased by almost 10 percentage points, rising from 18.6 per cent to 28.3 per cent during this period.
Worrying signs of rise in female participation in workforce
- Some have argued that female participation rates have in the past tended to rise during times of financial stress as women stepped out to augment their household incomes.
- Such a trend was observed during the period 1999-00 to 2004-05, a time of rural distress.
- Most of these new entrants in the work force were engaged not in regular salaried wage employment or casual wage labour.
- They were rather self-employed, either in “own account enterprises” or as a “helper in household enterprises”.
- This indicates the absence of wage/salaried employment opportunities.
- The share of the self-employed women in rural areas rose from 58 per cent in 2017-18 to 71 per cent in 2022-23.
- Within this category, a greater number were employed as “helper in household enterprises”.
- These workers do not receive any regular salary or wages for the work they undertake.
- For the remaining self-employed, the average earnings (in the last 30 days) rose from Rs 3,921 during April-June 2018 to Rs 5,056 during April-June 2023.
- This increase in incomes was barely in line with the inflation during this period, implying that real incomes stayed flat or were lower.
- Under NREGA, women person-days out of the total increased from 53.5 per cent in 2017-18 to 57.5 per cent in 2022-23.
- As wages under NREGA are less than those paid for female casual wage labour in private markets, this only underlines the absence of alternative, more productive forms of employment.
Other significant trends picked up by PLFS
- As the Periodic Labour Force Survey is carried out every year, it allows us to see whether these changes in the labour market follow a steady trend or are there particular years when the jump in the participation rate is more pronounced.
- As per the data, the sharpest increases in the female participation rate took place during 2019-20, followed by 2022-23 and then 2020-21.
- Now, the agricultural sector had grown at a fairly healthy rate during this period.
- Value added by the sector rose by 6.2 per cent in 2019-20 and 4.1 per cent in 2020-21. In 2022-23 as well, the sector grew at 4 per cent.
- However, overall GDP growth slowed down from 6.5 per cent in 2018-19 to 3.9 per cent in 2019-20, contracting thereafter by 5.8 per cent in 2020-21, as the non-farm sector decelerated sharply.
- This slowdown in the non-agricultural sector, which began in 2019-20, was in part due to the collapse in the flow of funds to the economy, especially the MSMEs — a consequence of the NBFC crisis, triggered by the fall of IL&FS and DHFL.
- This MSME-driven employment/income distress only worsened during the pandemic years. Alongside, reverse migration during those years further pressured per capita farm incomes, while also depressing remittance flows to rural areas.
- Wage growth also remained subdued during this period.
- As non-farm income accounts for a sizeable share of household incomes in rural areas, this financial distress would have pushed up female labour force participation rates.
Optimistic scenario for future
- There are now some indications of the situation perhaps changing.
- The flow of funds through the NBFC channel has picked up.
- The quarterly results of several NBFCs point towards healthy credit growth in the personal retail and business finance segments in rural areas.
- This would grease the wheels on both the consumption and production sides.
- There are also signs of the smaller firms faring better.
- In its quarterly results, FMCG major HUL has spoken about the strong performance of smaller players.
- In the tea segment, for instance, the smaller players are growing at 1.4 times the larger players, while in the detergent bars segment, they are growing six times as fast.
- This would have implications for employment/income prospects. Alongside, there are also some signs of wage growth picking up.
Conclusion: The Indian economy is showing signs of resistance to global slowdown. In this scenario, there is a pickup of economic activities in India. It will be a matter of interest to see whether this growth in economic activities will percolate into the growth of female participation in labour force.
Editorial 2 : A matter of integrity
Introduction: The Comptroller and Auditor General of India (CAG) plays a crucial role in this democratic framework by ensuring transparency, accountability, and financial integrity in government’s functioning.
About CAG
- CAG is a constitutional body that is created under the constitutional provision mentioned under Article 148-151 under Part V of the Indian Constitution.
- He controls the entire financial system of the centre and state.
Significance of CAG
- CAG helps maintain the separation of powers between legislature and executive by ensuring that the government’s financial activities align with legislative intentions.
- Through its audit findings and recommendations, the CAG promotes good governance practices and helps governments streamline their operations, reduce inefficiencies and adhere to financial discipline.
- As India’s democracy matures, the CAG’s role becomes even more vital in promoting good governance and safeguarding the people’s interests.
CAG’s citizen-centric approach and its benefit
- To effectively discharge this responsibility, it is important for audit to actively work in tandem with citizens, appreciating their concerns and feedback.
- Citizen engagement guides audit in identifying high-risk areas of possible mismanagement and inefficiencies in governance, thereby improving focus and effectiveness.
- In India’s federal, multiparty democracy with both Union and state governments responsible for implementation of numerous schemes, projects and programmes, enhancing engagement with stakeholders is imperative for audit.
- This need is further heightened with the paradigm shift in the government delivery system, using Direct Benefit Transfers for flow of funds, and ensuring accurate targeting of beneficiaries.
Use of ICT for better results
- Leveraging technology and digital solutions make audit’s citizen engagement more effective and scalable.
- With increasing mobile density, smartphone applications may be used to solicit society’s suggestions.
- Digital reports with interactive data visualisation tools lead to better understanding and appreciation of our audit products. Deployment of 5G connectivity will transform governance.
- There is a need to harness the potential of these new technologies in our stakeholders and citizen engagement as well as overall audit strategies to make processes more efficient and effective.
Social Audit and its significance
- Social audit is an interesting tool for facilitating citizen oversight.
- The Parliament passed the National Rural Employment Guarantee Act, whereby Gram Sabhas were required to conduct regular social audits of all projects taken up under the scheme within the Gram Panchayat.
- The Ministry of Rural Development in consultation with the C&AG office notified the Mahatma Gandhi National Rural Employment Audit of Scheme Rules in 2011.
- The rules envisaged social audit units in each state as well as the audit process for social audit and follow-up action.
- The ambit of social audit has been significantly enlarged since.
Local Area Governments and their role in ensuring transparency
- The 73rd and 74th Constitutional amendments marked a quantum leap in India’s democratic set up, as they created tiers of self-governance below the level of states.
- Empowering PRIs and urban local bodies and municipalities, envisions people’s participation in the process of planning, decision-making, implementation and delivery of a set of functions to be devolved to local governments by state legislatures.
- These local bodies are further empowered with the Finance Commission’s direct flow of funds.
- Also, these local bodies not only implement the schemes of both Union government and state governments, but ensure transparency and visibility as grassroot participation is envisaged.
- The primary audit of the accounts of local governments and issue of audit certificates is done by local fund auditors designated by state governments.
- Hand holding by the CAG to improve local governance, and, hence, strengthen democracy, includes capacity building of state local fund auditors in Audit Planning and Audit Methodologies, through Technical Guidance and Support (TGS) as recommended by the 11th Finance Commission.
- Over the years, CAG has issued numerous manuals/ guidance, forming the bedrock of auditing and accounting by local governments.
- Annual Technical Inspection Reports (ATIR) are issued by CAG’s state audit offices entrusted with TGS.
- The primary focus of CAG’s local government audit is an assessment of how well the delivery of the services pertaining to devolved functions have reached the last mile or the grassroots, through the efforts of the local governments.
- Responding to the dearth of competent accountants willing to work in local governments, especially in the lower tiers located in remote places, CAG in collaboration with the Institute of Chartered Accountants of India has envisaged a set of online courses to create a pool of accountants intended to be available at local level, competent to prepare urban and rural local government accounts.
- Carrying forward this recognition of local self-governance as the true manifestation of democracy and the CAG’s responsibility for ensuring accountability, an international centre for local governance has been envisaged.
- This will serve as a centre of excellence for capacity building of local government auditors, both nationally and internationally; and will serve as a knowledge centre and think-tank, addressing capacity building for stakeholders at grass-roots level across the nation.
Conclusion: Democracy’s vitality lies in its unique synergy of accountability and citizen engagement. While the CAG catalyses good governance, transparency and accountability, the responsibility to nurture and protect democratic principles falls not only on our institutions but on every citizen. It is then that the interplay of these elements fosters a mature democracy of the people, by the people, for the people.