When Gandhiji came back to India in 1915, Gokhale asked him to “Make India proud of herself again”. As we approach 100 years of the articulation of that dream, it’s useful to inventory India’s three projects at Independence in 1947: nation building, social justice and poverty reduction.
The first one is something we should be proud of, the second is work in progress, but the third still needs massive energy and imagination. Poverty is about productivity and the key inputs are the 3Es (education, employability and employment). India has made a new appointment with her destiny and this is one she will keep with radical surgery to her five geographies of work; physical, enterprise, sectoral, legislative and education.
In political imagination taking jobs to people trumps taking people to jobs. But India only has 50 cities with more than a million people while China has 350. It is unlikely that our 6- lakh villages will become job magnets. But instead of shoving more people into Delhi and Mumbai, we need to target growing 250 existing cities to handle more than a million people each. To fix urban governance, we need real and elected mayors for all our big cities. Today the only real mayor in India is the chief minister of Delhi and that is why that election is wonderfully fought on issues like electricity, traffic, water, etc.
Our 6.3 crore enterprises only translate to 7,500 companies with a paid up capital of more than Rs 10 crore. More than 80% of our manufacturing is done in companies with less than 50 employees. Our missing middle (enterprises with 200-500 employees) is related to our massive informality. Nobody likes informal sub-scale enterprises; they are not competitive, don’t pay taxes, find it hard to attract and retain employees and can’t access credit. This needs GST and a massive program of improving ease-of-doing business.
Three labour market variables have not changed since 1991; 12% manufacturing employment (the same as post-industrial US), 50% agricultural employment (producing only 15% of GDP) and 50% self-employment (the poor cannot afford to be unemployed so they are self-employed). This needs the massive formal private sector job creation that will arise from massive infrastructure creation so non-farm job creators are no longer required to substitute for the state. We need to shift the focus of reform from the sins of commission (what the government was doing wrong) to the sins of omission (what the government is not doing).
Our education system is torn by the conflicting objective of cost, quality and scale. We have all our children in K-12 school but don’t have learning outcomes and our gross college enrolment ratio is 18% versus 50% for developed countries. Our vocational system is not tightly aligned with what employers want. This needs converting the Right to Education Act to a Right to Learning Act, massively deregulating higher education and making sure the Rajya Sabha passes the Lok Sabha Apprentice Act amendments because we only have 3-lakh apprentices and China has 2 crore. We also need to create vocational universities that pray to the one god of employers, create mobility by modularity between certificates/diplomas/degrees and have multi-modal delivery via physical campuses, apprenticeships and distance learning.
Ninety per cent of India works informally because our labour laws make employment contracts a marriage without divorce, our benefits regime confiscates almost half of low wage employee salary, trade unions are highly politicised, and given poorly drafted laws, it is impossible to comply with 100% of our laws without violating 10% of them. We have made a good start with the inspection regime and some laws at the Centre and must encourage states to be bold in amending laws to generate their individual job creation visions.
The next phase of labour reforms must take on the benefits regime with three changes; making employee contribution to Provident Fund voluntary, granting two choices to employees about paying their employer provident fund contribution to EPFO or NPS, and paying their health premiums to ESI or an IRDA regulated insurance plan.
I memorised Pt Nehru’s Tryst with Destiny speech when I was a child. But we must be honest and recognise that we missed our tryst with destiny; there are 300 million people who will never read the newspaper they deliver, sit in the car they clean, send their kids to the school they helped build, nor drive the tractor they unload. Handling our demographic dividend of 1 million new entrants to the labour force every month for the next 20 years is complicated by the 300 million people already in the labour force who need to be relocated from low productivity.
But this is not a problem like cancer or climate change where the solutions are unknown. A policy window in the 3Es — alignment of politics, policy and problem – has emerged in 2014 because getting things done is not about brains but brains connected to backbones.
(The writer is Chairman, Teamlease Services)