ANALYSIS
A national urban employment drive will not only create more livelihood options, but also boost consumption
The decibel levels have suddenly shot up. The lament of jobless growth is a long-debated one. The last quarterly GDP growth print (at 5.7 per cent) has now seemingly thrown up risks of significant economic slowdown too. To be sure, quarterly GDP numbers are estimates that are prone to massive revisions in the best of times, and we have a still-stabilising method of national income accounting. The issue is even starker for jobs, where almost no standardised, empirically robust data is available on a high frequency basis to make sure determinations.
However, policymaking cannot wait for perfect data. What is certainly verifiable are some indicators that point towards enduring weakness the economy. Capacity utilisation of Indian industry has hovered around the early 70 per cent range for many quarters now (RBI Capacity Utilisation Survey shows a slight decline in Mar 2017 from Mar 2016, at 74.1 per cent). Aggregate credit growth, while much higher than the oft-quoted bank credit growth, is in high single digit levels, and at the margin lower than previous year. Topline sales (and profit) growth numbers of listed firms display the same trend — and are generally undershooting beginning-of-the-year forecasts. On jobs, with the general collapse of private investment (especially Real Estate, the biggest jobs-creating sector), and struggles in the big employment-intensive services (IT and Financial Services) — it is safe to assume that we have a problem.
What should the policymaking response be? While there is never a dearth of ideas in India, is there something that can boost growth and generate additional employment at the same time, and quickly? Often, lessons are closer home than we realise. The National Rural Employment Guarantee Programme (NREGA) provides an interesting template. NREGA by design is an employment generating programme, and by many accounts was a big factor in India quickly bouncing back from the effects of the Global Financial Crisis in 2008.
There is, therefore, merit in considering a National Urban Employment Programme (NUEP) on similar lines. A well-funded NUEP will provide a soak for the urban and semi-urban unemployed, and provide an immediate Keynesian consumption boost to the economy. In principle, the consumption boost should enhance capacity utilisation levels, and hasten a revival of private investment, which is really the big driver of growth and employment. There are three big questions to be addressed though.
First, why a cash transfer programme (which is what employment programmes are), and not enhanced infrastructure expenditure? A couple of reasons. First, NUEP-type programmes are quicker on execution than large infrastructure projects, and hence would tend to have more immediate macro impact. And second, this provides for an immediate employment safety net to the most vulnerable, again something that would come only with a time lag in an infrastructure investment programme. Above all, some of the traditional assumptions around employment-intensity of infrastructure spending have been revisited in the last few years — it takes far fewer people to build a 100 km of highways than used to be the case a decade back.
Second, what would be the sort of jobs created under this programme? NREGA is designed around basic earthworks projects in rural areas, targeting employment for primarily untrained, barely literate farm labour. The workforce available in urban areas is likely to be better educated, and equipped to be trained for more.
They can, therefore, be deployed in auxiliary units for a range of urban services — municipals, schools, traffic control, even elements of basic policing – with a certain amount of training. India suffers from very large capacity gaps in all these areas.
For example, there is one police officer for every 720 Indians. The UN-prescribed standard is one for every 454. While a semi-permanent workforce with rudimentary training cannot be used for cutting-edge frontline policing duties, they could certainly be used for basic administrative and support services to enhance capacity.
Third, and perhaps most important, what should be the size of this programme? Targeting to create how many jobs? As a benchmark, the allocation to NREGA in the current year is Rs 48,000 crore. Let us assume that NUEP has a similar outlay. At an average wage of Rs 1.2 lakh/job (the approximate level at which a single wage-earner can ensure a family of 4 is above the urban poverty level), and assuming a 20 per cent support cost (ie, part of the outlay not accruing to wages, NREGA average is 30-35 per cent), this would create around 32 lakh jobs. India has around 1 crore new entrants into the jobs market every year. 32 lakh vacancies-on-demand will create a material tightness in the labour market to make a dent in wages and opportunities.
The last point would be, is it affordable? The amount in question would represent around 0.3-0.4 per cent of GDP. In a scenario where the banking system is flush with post-Demonetisation liquidity, that amount of excess government borrowing can be easily funded. It will have an electrifying message politically, while giving an instant consumption boost to the economy, with all-round multiplier effects. It is an idea whose time has come!
The author is Managing Partner of ASK Wealth Advisors.
Views expressed are personal.
Delhi: All primary schools closed, classes shifted to online mode due to rising pollution levels
BIG trouble for Anil Ambani, criminal charges against his Rs 14422 crore company over...
Bhool Bhulaiyaa 3 producer calls Singham Again team 'unfair' after the box office win
From Play to Pay, Gaming Is Big Business And A Genuine Professional Prospect
Leasehold vs Freehold: Exploring Options for Expats and Investors in Dubai
Mukesh Ambani's Reliance, Disney complete Rs 70352 crore media merger, to be headed by...
Badshah lands in legal trouble, case registered against rapper for...
GRAP III imposed in Delhi: What is allowed, what is banned amid 'severe' air quality
'Throwing me in deep end': Ricky Ponting takes fresh dig at Gautam Gambhir over Virat Kohli remarks
Revolutionizing Inventory Management in the Cloud Era: Pradeep Kumar’s Strategic Innovations
Delhi: AAP's Mahesh Khichi elected mayor as party defeats BJP in MCD polls
Delhi Air Pollution: GRAP 3 to be imposed in national capital from Nov 15, strict ban on...
WATCH: Inside Rinku Singh's Rs 3.5 crore luxurious house with rooftop bar, private pool
Renowned Yoga Guru Sharath Jois passes away at 53 after suffering heart attack
NASA alert! Giant 'God Of Chaos' asteroid set for close approach to Earth, may trigger astroquakes
UPPSC protest BIG update: RO-ARO exam postponed, PCS prelims to be held in one day
This man earned more money than Mukesh Ambani and world's richest man Elon Musk in one day, he is...
'World's best....': Japan vlogger's reaction to Bengaluru airport goes viral
Sania Mirza named Sports Ambassador of THIS city, not Delhi, Hyderabad, Jaipur
Shloka Mehta turns heads in sleek white gown at Tira store launch, see pics
Amid Abhishek Bachchan and Aishwarya Rai divorce rumours, Jaya Bachchan surprises everyone with...
IND vs SA: Arshdeep Singh goes past Bhuvneshwar Kumar to become Indian pacer with most....
Mukesh Ambani, Isha Ambani’s luxury retail chain opens new store at...
PM Modi to receive Dominica’s highest national award for...
Shraddha Kapoor says people with big foreheads are…
'Busy making...': Kanhaiya Kumar sparks row with remarks on Devendra Fadnavis' wife; BJP hits back
'Full baarati vibes': Vietnamese man's epic 'nagin dance' steals show at Mumbai event
Tilak Varma credits THIS player for his century against South Africa, says 'He gave me...'
UPSC IFS Mains Admit Card 2024 to be released today at upsc.gov.in, check direct link to download
'Be prepared for...': Rupali Ganguly's stepdaughter Esha Verma REACTS to Rs 50 crore defamation case
Saudi, Iran: Cautious dance toward détente?
Anushka Sharma shares glimpse of Children’s Day special dish for daughter Vamika, son Akaay
Jaw-dropping! Man wraps massive green anaconda around his shoulders, internet says...
Donald Trump plans to end Russia-Ukraine war with THIS move, is expected to 'soon' appoint...
As pollution worsens in Delhi with AQI at 'severe' level, experts at COP29 urge India to...
SDM Assault Case: 60 people arrested in Rajasthan's Tonk
Veg thali cost more than non-veg thali in October, here's why
Land drug trafficking patterns in North-Eastern Region
Shillong Teer Result November 14, 2024: Know updates on lucky winning numbers
Mukesh Ambani's SUPERHIT offer for Jio users: Get unlimited validity for 84 days at just Rs...
Delhi air quality dips to 'severe' category as AQI nears dangerous...
Bigg Boss OTT-fame Bhojpuri actress Akshara Singh receives extortion threat
‘All I do is…’: After Arjun Kapoor confirms breakup with Malaika Arora, her cryptic video goes viral