Across the aisle: No jobs, no credit growth, no private investments

The most pressing concerns that are uppermost in everyone’s mind are: jobs, credit growth and investment.

Written by P Chidambaram | Published:November 27, 2016 12:00 am
hiring, diwali, happy diwali, jobs, recruitment october, fmcg, snapdeal, latest jobs, jobs in india, education news, indian express he present is represented by the demand for jobs and for credit. The future lies in investments made today and in the following days.

Between the gathering storm on the India-Pakistan border and the massive disruption to the economy, Saturday, November 26, passed almost unnoticed. The day marked the exact mid-point of the tenure of the government led by Prime Minister Narendra Modi. It is a natural and opportune moment to take stock of the government, its promises, the delivery and the state of the economy.

I made a list of the economic concerns of the average citizen, then I struck out each concern that was not as important as the remaining concerns. Ultimately, I was left with three and there was no way the list could be pruned further. In my view, the most pressing concerns that are uppermost in everyone’s mind are: jobs, credit growth and investment. The past is the view in the rear mirror — noticed but unalterable. The present is represented by the demand for jobs and for credit. The future lies in investments made today and in the following days.

Jobless growth

‘Jobs’ is a good starting point. Almost everyone is either employed or self-employed. The employed earn a wage or salary, the self-employed earn an income. The data on jobs created in the last 30 months is stark, revealing and worrying. I cannot do better than quote the words of a former finance minister: “Fresh job creation continues to suffer and will lose its connect with economic growth… What is important for us politicians to remember however is that the aam aadmi is not concerned with theories. He wants results, and if we fail to provide the people with job opportunities in adequate numbers, they will be disappointed.”

The former finance minister is Mr Yashwant Sinha. His son, Mr Jayant Sinha, was minister of state for Finance for a little over two years in the present government and is now MoS, Civil Aviation.

Jobless growth has severely dented the claim that the Indian economy is the fastest growing large economy in the world. By one estimate, 15 million persons enter the job market every year. Among Mr Narendra Modi’s election promises, the one that attracted millions of young men and women to vote for his party was the promise that he would create 20 million jobs a year. There is empirical evidence that, in the last two years, India has witnessed a period of jobless growth:

  • Employment generation in eight labour-intensive sectors was 4,90,000 in 2014 and 1,35,000 in 2015 compared to 12,50,000 in 2009 (when the Labour Bureau’s survey began);
  • Contract jobs declined by 21,000 during January-September 2015 compared to an increase of 1,20,000 during January-September 2014;
  • A study by Care Ratings showed that jobs growth was near zero in 2014-15 — only about 0.3 per cent;
  • Employment generation in manufacturing companies was negative at -5.2 per cent in 2014-15 compared to 3.2 per cent in 2013-14.

Job creation is not easy. According to estimates, 15 million jobs were created during 2005-2012, but it still left millions unemployed. The situation has become worse. On jobs, the government has comprehensively failed.

Low credit growth
Next, credit growth. Self-employment or job-creation is closely linked to availability of credit. MSMEs (especially micro and small) create the largest number of jobs. The table gives the rate of credit growth in the last three years of the UPA government and the first two years of the NDA government. Apart from other consequences, the immediate impact of low credit growth is lack of new jobs and, in some sectors, loss of jobs. As on November 11, 2016, year-on-year credit growth was just 8.25 per cent. Low credit growth is directly reflected in the index of industrial production (IIP) and in exports. Both IIP and exports are languishing. The government has utterly failed to find an answer to the question why overall rate of credit growth is the lowest rate in 20 years.

Dismal investments
Lastly, investment. The best measure of investment is growth in Gross FIxed Capital Formation (GFCF). In 2014-15 and 2015-16, it was 4.85 per cent and 3.89 per cent, respectively, which is low and which is directly reflected in the IIP. The last GDP estimates put out by the CSO show that in Q1 of 2016-17, GFCF shrunk by 3.1 per cent over Q1 of the previous year. According to the Centre for Monitoring of Indian Economy, new private sector project announcements dropped by 21 per cent in July-September 2016 compared to the corresponding quarter in 2015. The growth rate of credit to large industry was 5.33 per cent and 4.24 per cent in the last two years, the lowest in many years (see table). The Finance Minister has repeatedly urged the private sector to invest, but there are no takers either for his exhortation or for bank credit!

So, mid-term, there is no job creation; abysmally low credit growth; and dismal private sector investment. Having failed in the three main subjects, the government claims that it has passed the exam with distinction! Now, you can understand why the Prime Minister chose to dramatically alter the narrative with so-called demonetisation.

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  1. H
    Hemant Kumar
    Nov 27, 2016 at 5:04 am
    It is easy to find faults but difficult to implement solutions as Mr. Modi has done after taking a huge risk and responsibility. Only a selfless leader can do it. We should be able to differentiate between pinpricks and bullet wounds and not be distracted by small difficulties to make huge gain. Opposition parties are trying their best to distract our attention from real culprits under the pretension of fighting to remove the hardships of common man. Showing like ostrich mentality.
    Reply
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      Anonymous
      Nov 27, 2016 at 11:55 am
      The person has not standing. He cannot be trusted on anything.
      Reply
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        Anonymous
        Nov 27, 2016 at 5:56 pm
        let him piut his poison pen to letter. May be in time he will have to eat his own words.
        Reply
        1. G
          Gauravways
          Nov 27, 2016 at 3:48 am
          What piece of selfish misleading bile. His son's hawala business in middle east is suffering clearly
          Reply
          1. H
            Haru Mandal
            Nov 27, 2016 at 7:06 am
            BTW: whatever are the 'weapons' for the 'ongoing fight against corruption' lt;br/gt;-- the PAN card, Pan card for Jewellery and gold purchase, the mive computerisation in Income TAX etc, computerisation of the PSU banks, the ATMs of PSU Banks, NEFT, IMPS,net banking etc etc.lt;br/gt; One can be sure - there was his (Shri Chidaambaram sahab) hand of efficiency and his administrative pushes behind all these - which were PLANNED with foresight and in advance 5-10 years ahead and implemented EFFICIENTLY .
            Reply
            1. H
              Haru Mandal
              Nov 27, 2016 at 7:03 am
              Nothing escapes his eyes for details. "The day marked the exact mid-point of the tenure of the government ".
              Reply
              1. K
                Kevin
                Nov 27, 2016 at 8:54 am
                Can you and your Italian Madam return all the loots made through mega scams like 2G, Coalgate, CWG, National Herald, Agusta, etc., and there will be jobs and growth in India? Can you and your Italian Madam at least invest your loots in India?
                Reply
                1. S
                  S.K. Express
                  Nov 27, 2016 at 5:36 pm
                  The policy of disrupting the parliament was started by Sonia Ghandy when Mr. Vajpayee was the PM. Under MMS, the family and their slaves were looting the country and they had to be stopped. The GST of this days would have also been converted to looting under The Ghandy family.
                  Reply
                  1. S
                    SubbuI
                    Nov 27, 2016 at 9:35 am
                    MR CHIDAMBARAM . MOST AUTHORATIVELY WRITTEN FACTS WHICH NEITHER NALAYAK HITLER NMODI NOR HIS BHAJAN MANDALI CAN EVEN GIVE A PROPER REPLY. THIS TUGHLAQ NMODI CAN NEVER EVEN UNDRESTAND THE NATURE OF PROMISES AND LIES HE TOLD PEOPLE TO GET VOTES.REALY THIS MAN DON'T DESERVE TO BE EVEN ENTER THE PARLIMENT THE MOST HOLY PLACE WHERE CONSUTION IS THE BIBLE. KORAN AND GITHA AND TRUTH IS THE GOD. HE IS A INSULT TO BOTH AND MUST BE IMPEACHED TO REMOVE FROM PRIME MINISTER OFFICE.
                    Reply
                    1. V
                      V.O.C. Trichy
                      Nov 27, 2016 at 7:28 am
                      The article is a Political Poem, considering its lucidity, humane concern and powerful appeal to the hearts and minds of the people simultaneously. PCji brings out beautifully how jobs and credits become the two wheels for development, by ensuring productive engagement of our people and the lack of these highlighted by lack of private investment is impending danger which needs to be addressed. As the person who has lead this country so long, he is beyond partisan politics and need to be listened with great care. The Deception of Demonetization will not help much. This government has so far been only culturally messing up and now in economic front also they will take us to a greater mess. PCji has to come back to clear this mess. Thanks sir for a wonderful article.
                      Reply
                      1. V
                        V.O.C. Trichy
                        Nov 27, 2016 at 7:18 am
                        One of the greatest Stateman of our times, with a incredible skills and expertise to lead the nation to economic properity. PCJi has proved many times, that he is the most effective leader to manage this country and make it as a global economic power house. If he taken on some issues it is better for every one to listen to it patiently and try to understand what he is saying. Blind sloganeering will not do. This economics and we need to be very very careful since it affects livelihoods of people, especially youth. Our sincerest thanks to P.Chidambramji for highlighting core issues that need atmost concern.A great service to the nation, even to his adversaries.
                        Reply
                        1. Y
                          Yogesh
                          Nov 27, 2016 at 7:20 am
                          Terrible written article - it would have been better if he analysed 70 years of Congress rule
                          Reply
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                            Agnimitra Kumari
                            Nov 27, 2016 at 3:59 am
                            Creation of jobs has always been a challenge. Congress gave us jobless growth in between 2004 and 2014. Modi could succeed in creating more jobs if more freedom is given to the private sector. Socialistic principles must be discarded.
                            Reply
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                              ashok s
                              Nov 27, 2016 at 1:51 am
                              This is something very serious, pm should address the problems.
                              Reply
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                                asif hassan
                                Nov 27, 2016 at 10:40 am
                                Let us not talk about Chidambaram a politician let us talk about issues and the related factual numbers that he has raised and i know very well nobody can deny those numbers as it has been put out by government or independent sources. Let us try to address the issue of jobless growth first as it is hitting hard every Indian.Last but not least UPA was thrown out precisely because of TRUST DEFICIT despite doing so many good things in the past, So what we will get on harping again and again on same thing over and over. They say,Even if the devil (of all) gives you some wisdom there is no harm in taking that, and Chidambaram is no devil(may be a bad politician) I can ure you!!!!
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                                  Chetan Gangoli
                                  Nov 28, 2016 at 2:24 am
                                  The two tables on data for credit and investment that have been referred to are not showing in the mobile web version. Please make the corrections.
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                                    crickin
                                    Nov 26, 2016 at 10:11 pm
                                    Motto of Modi...deflect one crisis to another. Deflector regime. People don't have food to eat, but, they are expected to use smartphone and pay using some app.
                                    Reply
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                                      Darkhorse
                                      Nov 29, 2016 at 7:41 am
                                      Scams will be disclosed after the tenure of NDA even UPA was all clean in the first 5 years.
                                      Reply
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                                        Against Sick
                                        Nov 27, 2016 at 8:21 am
                                        This fraudster Chidamabaram is obviously unhappy because all his ill gotten money has vanished. These people must i repeat MUST suffer heavy damages. They are a curse to humanity
                                        Reply
                                        1. R
                                          Rajesh
                                          Nov 27, 2016 at 6:35 am
                                          That there is no growth in jobs is partially correct.There are jobs which are available which no one wants and what jobs aspirants want are not available.That graduate and post graduates apply for low level govt. jobs is that these jobs give security for life time. That there is also a chance to earn more on the sly also exists is an additional benefit of a govt. job.lt;br/gt;Unfortunately we don't have studies which can predict prospective areas in which further jobs will be created.Everyone is looking in the rear view mirror.when engineers were in short supply there were thousands of new seats made available and now when graduates have come into the job market ther is a glut and now seats are going vacant and colleges are closing down. That the quality of education also is questionable also does't help.There is tremendous shortage of paramedical workers but there is no supply and nothing is done to augment the same, either by increasing the seats or educating the parents and students about the various streams. No one wants to do the hard work but is looking for short cuts. The situation is bad but not irretrivieble
                                          Reply
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                                            C
                                            Nov 27, 2016 at 2:19 am
                                            The super supreme whizkid may do well to compare the dismal record of job creationlt;br/gt;lt;br/gt;in all of those dismal 10 years he was in power with that of NDA 1. Dont you quote selelt;br/gt;lt;br/gt;ctively man, giving spurious data for 2015-16 ?? The banks were emptied by "loans"lt;br/gt;lt;br/gt;sanctioned after taking the Chennai call during your scorched earth brinkmanshiplt;br/gt; lt;br/gt;designed to maim the country forever. Carry on with your present job as a columnistlt;br/gt;lt;br/gt;till the newspaper reaches the same fate as your govt/Vasan Eye care !!! Better lt;br/gt;lt;br/gt;rename your essay---Across the Hypocrite so that readers are better prepared to lt;br/gt;lt;br/gt;cope up with nonsense
                                            Reply
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