If you've somehow managed to wrench yourself away from witnessing the ever plunging new lows during the ongoing election campaigns, including name calling, mud (and ink) slinging and repeated exchanges of the same accusations between political rivals, you will surely have noticed the exuberance in the markets — the Sensex has touched a record high and the long-languishing rupee has strengthened to within striking distance of sub-Rs 60 to the dollar. We are told the markets have risen because investors, mainly foreign ones, expect the outcome of the elections to be good for the economy.
These expectations are likely based on pre-election opinion surveys, which say that the ruling Congress-led UPA is at a disadvantage and the BJP-led NDA has an edge. No matter who gets to form the next government, while sentiment and perception can make or break financial markets, a great deal more than those are needed to make a difference in the real economy. If there is a core issue at the heart of any effort to bring the growth story back, it has to do with the problem of growing unemployment.
During the UPA 2 years of 2009 to 2014, average GDP growth slipped to 6.7% (from the previous five year's 8.4%) and at the end of 2011-12, the overall unemployment rate, according to government data, was 11%. But more alarming is the unemployment rate for graduates aged 20-24: Nearly 24% of females are unemployed and nearly 17% of males have no jobs. With 15 million people joining the job market every year, these are not merely static figures but growing ones that can have serious consequences.
The seriousness gets compounded some more: In the five years between 2005 and 2010, the number of people with jobs in manufacturing shrank by more than 5 million; and those with jobs on farms by more than 14 million. In sectors where jobs actually grew, they barely did so: In mining and quarrying a mere 0.31 million new jobs got created; and in the fast-growing services sector, they went up by 3.53 million.
Nearly a third of Indians, or 350 million, are 15-29 years old. They have big hopes and dreams that can get destroyed if jobs don't grow. This is something that every political party has to realise. In the pre-election political discourse, sadly, no party, the biggest ones included, seems to be offering well-thought-out strategies to create jobs. In its manifesto, the Congress promises to provide "skills-training" to 100 million youth and provide them with jobs over the next five years but doesn't say how. Its track record in the past five years doesn't elicit much confidence in its ability to do so either. Remember, jobs shrank during its last regime. Leaders of the BJP, whose manifesto is still not out, also insist that jobs and skill-building will be top-priority on the party's economic agenda but offer little by way of strategies.
Jobless growth is a time bomb, particularly in India where young people greatly outnumber the old. And while it is easy to proffer lip service in election manifestos, creating millions of jobs is no easy challenge. First, the bulk of additional jobs will not be created in large industries where employment growth has already plateaued; that can happen mainly in the small and medium industries, which need to be boosted with specially designed strategies. Second, the farm sector needs de-clogging; nearly 250 million people have underpaid and unproductive farm jobs and many of them have to be trained and re-skilled to find jobs in small and medium industries.
In the intense election campaign that is underway, we have heard leaders of all political stripes trade rhetoric, homilies and abuse, but none has convincingly told us what they're going to do for the most hopeful and populous segment of the population. That could be a big mistake.