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Why does the FM ignore JOBS issue?
By Mahesh Vyas
February 08, 2021 07:58 IST



The Economic Survey will remain a documentation of the government's resolve to not recognise the severe stress on the labour markets and on the livelihoods of Indian households arising out of the pandemic and the consequent lockdown, observes Mahesh Vyas.




IMAGE: The scene at a wholesale market in Delhi, February 1, 2021. Kindly note the image has been posted only for representational reasons. Photograph: Adnan Abidi/Reuters



The Economic Survey rightly celebrates India's V-shaped recovery from the stringent lockdown imposed initially.
It boasts of India's success in containing the spread of the COVID-19 virus and thereby saving lives.
The Survey explains in detail the kind of research that was accessed by the government to decide its strategy.
It chose to first hedge against the worst possible scenario and then update the strategy step-by-step, taking into account feedback on the outcomes.
In this, lives took precedence over livelihoods because, it explains, lives lost cannot be recovered while livelihoods can.



The option was to choose short-term pain for long-term gains.
The Survey concludes that the lockdown was a critical instrument in flattening the curve and saving lives.
Further, the economic recovery has been impressive as the economy contracted by 23.9 per cent in the first quarter but by only 7.5 per cent in the second quarter.
The Survey, however, fails to address the problem of employment adequately.
Volume I ignores the current problems in India's labour markets completely.
It briefly discusses the labour laws passed by the government, but does not discuss labour markets.
This conspicuous absence of an important problem of the country makes Volume I of the Survey guilty of cherry picking subjects of convenience, or omitting the inconvenient ones.
Volume II follows a somewhat set pattern every year and so omissions there are difficult.
Choices are made in Volume I and the omission of employment here stands out like a sore thumb.
The discussion on employment in Volume II would most likely leave us with an impression that the employment scenario in India has improved as per latest data available with the government.
It records the increase in the size of the labour force (by 8.5 million) and workforce (by 16.4 million) and a fall in the unemployed (by 7.9 million) between 2017-2018 and 2018-2019.
These estimates are based on the Periodic Labour Force Survey conducted by the NSSO.
The Survey also boasts of an improvement in the quality of employment.
The proportion of regular wages and salaried employees increased in rural and urban areas and for both men and women.
This increase, it notes, was more among urban women.
The proportion of casual labour has declined.
The quarterly PLFS show an increase in the proportion of urban males engaged in regular wages/salaried employment in the March 2020 quarter, compared to the proportion in the March 2019 quarter.
If you were looking for a discussion on the labour markets in India during the pandemic you will be disappointed.
Volume I ignores employment.
Volume II ignores employment during the lockdown.
While there is widespread discussion about the sharp gyrations in the Indian labour markets during the lockdown -- the very sharp increase in unemployment in April and May and then its quick recovery in the following months -- both volumes of the Survey have chosen to give this discussion a complete miss.
We have noted that the recovery in labour markets has lost steam before reverting to pre-lockdown levels and that this is a matter of concern.
The Survey will remain a documentation of the government's resolve to not recognise the severe stress on the labour markets and on the livelihoods of Indian households arising out of the pandemic and the consequent lockdown.
These problems are not the government's faults or failures.
Acknowledging them is harmless.
Acknowledging would be useful as then it could begin to think of solutions.
The Survey has missed a chance to investigate the impact of the pandemic, the lockdown, the government's initiatives and the relaxation of the lockdown on India's labour markets and on household incomes when it could have.
Perhaps, the most enduring picture of pain of labour during the lockdown was the hapless migrant.
He (yes, they are mostly males) is completely absent from the Economic Survey.



Mahesh Vyas is MD & CEO, CMIE P Ltd.
Feature Presentation: Ashish Narsale/Rediff.com




Why does the FM ignore JOBS issue?
 

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Budget: Nothing but Housekeeping
By SHREEKANT SAMBRANI
February 01, 2021 19:26 IST

The Budget would have been the perfect vehicle to introduce some bold initiatives.
That opportunity has been lost through this Budget, observes Shreekant Sambrani.



Illustration: Dominic Xavier/Rediff.com

A Budget commentary can follow two, not mutually exclusive, approaches: Subjecting the numbers to reality checks and parsing them for consistency and accuracy, or analysing the proposed measures for their relevance and consequences.
This columnist has always been more inclined towards the latter, because as we have seen time and again, the numbers can be subject to accounting legerdemain, and interpreted according to one's convenience.
No Budget is free of such finesses, and despite professing transparency, Finance Minister Nirmala Sitharaman's speech had clear instances of this kind.
Her allusion to the coronavirus stimulus in the current year being 13 per cent of the GDP is one such.
By every yardstick, the net additional stimulus by the government (over and above earlier budged provisions and the quantum provided by the Reserve Bank of India) was in the region of 1 to 2 per cent of the GDP.
Be that as it may, since taking such liberties is now a well-accepted practice.

The Budget has come at a less fraught point of time than was anticipated.
The virus infection numbers are dramatically lower now than they were a few months ago, leading many impartial experts to believe that India may have passed the peak.
India is also assured of adequate and reliable supply of vaccines enabling the government to launch an ambitious programme of mass inoculations.
And best of all, the economy is showing signs of robust revival, which is also reflected in surging tax collections.
All these have created an atmosphere of quiet confidence on part of the government notwithstanding the Mexican stand-off on the farmers' prolonged agitation and siege of Delhi.

That was reflected in the Budget.
The finance minister spent a fair amount of time at the start of her speech on self-congratulations and incantations of the aatmanirbharta mantra.
She did not lose any composure while she announced that the fiscal deficit for the year 2020-2021 would be a massive 9.5 per cent of the GDP and that for the next year would be 6.8 per cent.
Such assertions would have, in normal times, sent the minister stating this scurrying for cover.
She also did not propose levying any COVID cess, which was widely anticipated, much to everyone's relief, especially the commentariat.
Some Budget measures should be welcomed without reservations.
The capital expenditure is proposed to be raised to Rs 5.5 trillion from Rs 4.1 trillion of the previous year, an amount higher by one-third again.
The proposed new institutions for stressed asset management and restructuring would be the beginning of what is popularly referred to as Bad Bank, much needed for restoring financial institutions to some semblance of health.
Moves to monetise idle assets of the government and public sector companies -- mainly prime land -- have been long overdue and could augment the government coffers very nicely.
A much more comprehensive statement about disinvestment in both strategic and non-strategic public centre enterprises, as well as advice to states to do the same for their own public sector companies also falls in the same category.
The expectation is that the government will realise Rs 1.75 trillion, or 5 per cent of the proposed expenditure of over Rs 34 trillion.
This columnist will not at this stage enter arguments such as we have heard this before and the real test is actual numbers.
The boldly stated intent is welcome, especially when the government is daily subjected to a barrage of criticism of being overly business-friendly, even nurturing crony capitalism.
The first pillar of the Budget as designated by the finance minister was health and sanitation.
Yet it is not clear if the measures announced, such as the creation of more rural and urban primary health and wellness centres, or critical care centres, would, by themselves, lead to dramatic improvements in the health and sanitation status of the country.
The piped water scheme is a pet project of the second NDA government and expectedly, it received a substantial allocation of Rs 2.7 trillion over the next four years.
It remains to be seen whether creating the physical infrastructure of pipes and tanks would actually bring clean and potable water sufficient to quench the thirst of our burgeoning towns and cities.
Ms Sitharaman also announced a slew of simplifications to streamline taxation matters, which, if fully carried out, would help improve compliance.
That by itself would generate a substantial quantum of tax revenues, as she herself observed, was the case with both direct taxes and especially, GST.
All of these, by and large, add up to good housekeeping practices in this columnist's opinion.
And there is nothing wrong with it either.
I have long argued that any budget, even that of the central government of a country, is basically an accounting and auditing exercise, a statement of receipts and expenditures of the government for the coming year and a review of what happened in the previous year.
In that sense, Budgets ought to be seen as rather dry and dull exercises, of interest primarily to accountants and economists, but of little interest to ordinary citizenry.
But we in independent India have seen our Budgets in an entirely different light.
For the first four decades, a period of shortages and ever more stringent government controls on all economic activities, Budgets were anxiously awaited for what they would tax next, leading to hoarding and artificial shortages not just essentials but also such items as razor blades.
Since the 1990s, successive governments have used Budgets to announce their policy priorities.
A veritable industry of Budget watchers and commentators has thrived in this atmosphere, with post-Budget analyses fiercely competing for viewer and reader eyeballs.
In that context, the current Budget has to be termed a somewhat more routine exercise.
That said, I must enter a caveat.
The past year was no ordinary year.
The COVID crisis was the worst shock in more than a century to all economies across the world barring none.
The government revenue-expenditure arithmetic turned topsy-turvy with the pressing need for emergency relief and virus containment expenditure.
Catastrophic business failures and job losses in the wake of lockdowns and restrictions became the norm everywhere.
World trade shrank, and globalisation, already in retreat for several years, became something of a curse.
Economic nationalism became the defining trait of most countries, including in matters such as sharing the new vaccines.
India was no exception to this.
One need not repeat here all the economic woes - contraction of the economy, job losses, plight of migrant workers and so on.
Many of the structural and institutional weaknesses of the Indian economy stared us in the face: poor labour productivity, abysmal state of health and education facilities, inadequate infrastructure, inefficient logistics, bewildering array of administrative and regulatory practices, growing chasm between the town and the country and the haves and the have-nots, all became painfully evident in the year.
One would have been right, therefore, in expecting that the government would use this unprecedented crisis as an opportunity to try and address systematically as many of these shortcomings as possible, especially since the somewhat upbeat atmosphere of the last several months had given it much needed breathing space.
The Budget would have been the perfect vehicle to introduce some bold initiatives.
That these would attract criticism from Opposition parties should not have deterred the government.
That would happen anyway, even with a workman-like going-on-as-before Budget.
And this government has not shied away from taking extremely controversial decisions in the face of stiff political and popular opposition.
That opportunity has been lost through this Budget.
The prime minister said it was the next in the series of mini-Budgets presented since the onset of the pandemic (the finance minister dutifully repeated this).
Tinkering is fine if the machine is purring along fine, with only an occasional sputter.
We have instead a machine where breakdown is the norm and smooth running is the exception.



Good housekeeping is a must at all times, but what was needed now was rearranging, if not actually redesigning, the house.


Budget: Nothing but Housekeeping
 

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Not a Budget for Employment
By Mahesh Vyas
February 12, 2021 10:53 IST

It is important to increase employment in general.
It is even better to increase good quality jobs.
Strategically, it is important to move people from farms to factories to improve overall labour productivity.
It is important to improve job opportunities for women, for urbanites and for the educated.
The Budget does not contain ideas to do any of this, points out Mahesh Vyas.




Photograph: Amit Dave/Reuters



The Government of India does not recognise any employment problem in the country.
Two important statements it made related to the economic situation in the country over the last four days -- the Economic Survey and the finance minister's speech -- did not recognise, in any manner, the fact that scores of millions of Indians lost livelihoods in 2020-2021.
Most people found ways to reduce their misery with or without help from the government.
The government does not recognise this phenomenon and therefore it does not directly address it in the two documents released by it recently.
The finance minister's speech contained no specific scheme to help the unemployed or to generate employment directly.



Hopes of an urban version of MGNREGA were belied.
The finance minister did not mention MGNREGA in her speech.
The scheme was a major saviour of employment in rural India during the lockdown.
Budgetary allocation for the scheme was raised from Rs 615 billion to Rs 1,015 billion because of the lockdown and the need to provide employment.
The revised estimate is raised further to Rs 1.115 billion.
The budgetary allocation for the scheme in 2021-22 is Rs 730 billion.
A scheme to promote textiles proposed by the finance minister could generate employment.
The government proposes to set up seven Mega Investments Textiles Parks over three years.
Textiles is the largest manufacturing sector employer in India.
Even if this scheme is successful, it is unlikely to move the needle on employment much.
Similarly, the higher allocation for roads or housing is unlikely to make a material difference to employment.
The challenges on the employment front are much bigger.
Budget documents presented in Parliament tell us that central government employment would be 3.41 million in 2020-21.
This implies a 3.4 per cent growth in central government employment over the 3.31 million it employed in 2019-2020.
But last year's Budget documents of the government had told us that employment in 2019-2020 would be 3.62 million.
So, the government has revised its employment estimate of 2019-2020 down by about 310,000.
Interestingly, last year, they said that the employment in 2018-19 was 3.49 million.
But now they tell us that employment then was 220,000 lesser at 3.27 million.
So, the employment in 2020-2021 at 3.41 million would be lower than what they said the employment was three years earlier in 2018-2019 at 3.49 million.
This is if the estimate for 2020-2021 is not revised downwards.
Historical data tell us that central government employment has been stable at about 3.3 million since at least 2000-2001 when it was at this level.
The average employment in the 19 years, from 2000-2001 through 2018-2019, has been 3.26 million in a year.
Central government employment maxed at 3.42 million in 2001-2002 and was at its lowest of 3.15 million in 2011-2012.
The last five 'final' estimates of 2012-2013 through 2018-2019 show a steadily declining trend of central government employment.
Given this historical record, the projection of employment of 3.4 million in 2020-2021 and 3.3 million in 2019-2010 seem like tall claims.
Meanwhile, labour markets recovered in January 2021 from the setback they suffered in December 2020.
Employment increased by 11.9 million in January to reach 400.7 million.
This is the first time since the lockdown that employment crossed the 400 million mark.
The increase in employment in January is concentrated in the construction and in agriculture sectors.
Employment in construction increased by 8.6 million -- from 62.1 million in December 2020 to 70.7 million in January 2021.
The growth in employment in agriculture was relatively modest at 4.2 million.
It increased from 144.9 million to 149.1 million over the same period.
The manufacturing sector saw a marginal improvement in employment from 29.3 million to 29.7 million.
Services industries saw a fall in employment during this period.
Some of these monthly changes reflect seasonality and also the monthly changes in the sample.
Because of the highly disruptive nature of economic growth in recent years for a variety of reasons, deciphering the seasonal components of growth is not possible.
A year-on-year comparison helps overcome both problems.
Because of the panel nature of the CMIE's Consumer Pyramids Household Survey, the sample of January 2020 is the same as it was in January 2019.
Compared to a year ago, employment in January 2020 was lower by 9.8 million.
The sector-wise breakup shows that the employment grew in agriculture and it fell in industry and services.
It grew in agriculture by 10.6 million but it fell by 14.3 million in manufacturing and by 10.1 million in services.
It is important to increase employment in general.
It is even better to increase good quality jobs.
Strategically, it is important to move people from farms to factories to improve overall labour productivity.
It is important to improve job opportunities for women, for urbanites and for the educated.
The Budget does not contain ideas to do any of this.












Mahesh Vyas is MD and CEO, CMIE P Ltd.


Not a Budget for Employment
 
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