The Concise Oxford Dictionary defines ‘interview’ as a face-to-face conversation between a journalist and a person of public interest. Keeping that in mind, the several ‘interviews’ published by newspapers two weeks ago with Prime Minister Narendra Modi should be called ‘intraview’: the Prime Minister answered in writing pre-submitted questions. It is difficult to say if the questions were prepared first and the answers later or vice versa. The answers were good, in fact too good: good and complete sentences, good grammar, good syntax, and good reproduction of Press Information Bureau handouts.
In this essay, I wish to deal with only one set of answers. It was to a question about jobs; it is the question that I am asked every day, especially when I travel out of Delhi: Where are the jobs? I appreciate Mr Nitin Gadkari’s candour. Without blinking an eye or looking over his shoulder, he said, “There are no jobs”. He could afford to say that without fear of a reprimand.
MUDRA loan myth
One sentence in the answer of Mr Modi should have ended the debate. He said, “12 crore MUDRA loans have been given in last four years. Even if each loan had created one job, that means 12 crore jobs were created.” If the premise is correct, the answer is unassailable, but did each MUDRA loan create a job?
The facts relating to MUDRA loans are broadly the following: since 2015-16 and until August 15, 2018, 13,37,85,649 loans had been given by the banks. The total amount disbursed was Rs 6,32,383 crore. Impressive, until you work out the average size of the loan: the average amount was Rs 47,268. The Prime Minister claimed that each loan created one job, so 12 crore jobs (actually 13,37,85,649 jobs) were created in three years and four months! Certainly more than the promised 2 crore jobs a year!
There are too many hurdles to the conclusion. Firstly, the number of people actively seeking jobs in a year is about fpur crore and, if 13 crore have got jobs, unemployment in the country ought to have been wiped out in the first full year of the BJP-led NDA government! Secondly, the unemployment rate should be zero. On the contrary, the Centre for Monitoring Indian Economy reported that the rate of unemployment in 2017-18 was 4.7 per cent. Thirdly, how do we explain that a total of 4,26,53,406 persons were registered in all employment exchanges at the end of June 2018? And finally, how do we explain that the total number of employed has fallen from 40.32 crore in July 2017 to 39.75 crore in July 2018?
Jobs at Rs 47,268!
The reality is that a loan of Rs 47,268 is not sufficient to create a job. That amount may be enough to buy some tools or furniture or install an airconditioner or a refrigerator. It may be used as additional working capital. By no stretch of imagination will Rs 47,268 create an additional job. Even if an employee is hired at less-than-minimum wage (say, Rs 3,000 per month), the loan amount will not be able to generate an additional income of Rs 3,000 per month to pay the wages. Mercifully, no economist has endorsed the Prime Minister’s claim that each MUDRA loan created a job.
The truth is that jobs are not being created. There is empirical as well as anecdotal evidence in support of that conclusion. The survey done by the CMIE shows a fall in the total number of employed persons. Besides, intuitively, it is increased investment and increased credit that will create jobs, but both investment and credit are languishing. Gross Fixed Capital Formation has fallen from a high of 34.3 per cent in 2011-12 to 31.3 per cent in 2013-14 to 28.5 per cent during the last three years. Besides, in 2017-18, announcement of new investment projects declined by 38.4 per cent and completion of new projects declined by 26.8 per cent compared to the previous year. Credit growth seems to have revived in recent months, but y-o-y credit growth to industry is 0.9 per cent and to MSMEs is 0.7 per cent (June 2018). Notwithstanding MUDRA loans, between March 2015 and March 2018, the outstanding loans to MSMEs declined from Rs 5,04,564 crore to Rs 4,76,679 crore.
Anecdotal evidence is more depressing. I have asked my audience at several places if anyone among them had added one more employee to his or her rolls. Not one hand went up at Thoothukudi or Thane or Kolhapur or Nashik. Ten days ago, the managing director of a construction company (turnover Rs 2,000 crore) employing designers, architects and engineers told me that, far from adding to employment, he had retrenched over hundred employees in the last two years. The government asked the Labour Bureau to discontinue its quarterly report of the number of jobs created in the economy (why?) and, instead, relied on enrolment data under EPF, ESIC or New Pension Scheme. Several economists and statisticians have torn apart those fluctuating numbers.
The proof of the pudding is the mood of the nation. Every survey has revealed that the topmost concern of the people is ‘jobs’. They are not dazzled by the GDP growth number and they seem to know, unlike the Prime Minister, that there can be normal growth without creating employment. Jobless growth is a ticking time bomb.