Many reactions to the sad death of 20 young Indians only wanting to offer their services to the ITBP focus on labour market and skill-enhancing reforms,and are very valid. Yet these need to be followed up with more convincing policies promoting the conditions for sustained and harmonious growth.
I have consistently argued for skill development policies. When the original Goldman Sachs paper on the demographic dividend appeared,I argued that the demographic dividend was largely conjured by assumptions and the inevitable part was actually contingent. Dividends come to the brave,to those with an operative vision of the future. Otherwise,frustrated young persons can be a liability.
Skill development was a major strategy in the Eleventh Plan; the answer chosen was relying on local plans to cover skill deficits,with some certification of the skills developed. The National Skill Development Corporation is now history,and a skill development adviser to the PM
S. Ramadorai from a company which has done it TCS is great. I hope he will release the governments programme from only helping state-run ITIs and start helping the many good NGOs that are doing it.
But this is a long-haul story,and the faster we do it the better off we will be. Companies like TCS,or some agro-based groups,take university graduates and train them for well-paid jobs; but the typical skill development module in the labour ministry/ Planning Commission capsules gives you Rs 3,000 monthly after a few weeks of training,and more if certification is from a kosher group,like the City Guild of London. Face it: the ITBP aspirants were from another layer.
For some,labour market reform is an article of faith. But jobs in the organised sector have not been rising. In fact,labour market reform of a kind has taken place because more than two-thirds of jobs in the organised sector are outsourced to badly paid casual workers. It was left to Arjun Sengupta to show that they only aspire to a wage that is frequently even below the official poverty line. What the vapid labour market reformers dont tell you is that this is,from all accounts,a very unstable situation. And the more thoughtful corporates are getting out of this trap,in which they can be held responsible for tweaking the law,or be held hostage to militancy by unorganised workers,as events in places as far off as Surat and Bengal showed.
Meanwhile,the situation on the macro front particularly the prospect of wage-goods inflation is not all that easy either.
India was late by a few months,but finally got a Keynesian stimulus which worked. All talk of reining in deficits was not practical; and the economy,after a few hiccups,responded. But by now our deficits are the highest in history,unstable borrowed money is large,and food/ fuel inflation has the unmistakable character of wages chasing prices. A slew of companies has reported bad news in the third quarter,and stocks are taking a drubbing. Meanwhile,our competitors in the rest of the world are recovering with inflation largely under control. Government economists in India are much too good to not know the bad news. More of the same will not work.
One of the last professional exchanges I had with the late Rajiv Gandhi was on the need for a sensible stand on reservations. He argued in the Lok Sabha as leader of the Opposition I think in September 1991 that the need was not just reservations for OBCs in non-existent government jobs,but for an economic policy which created many,many well-paid jobs for the agriculturists,dairy herdsmen and artisans of India. I am all in favour of reasonable,well-earned wages together with an NREGA wage which acts as a self-selection mechanism so that only the genuinely needy benefit.
We have to now squarely face the fact that resources are limited,and everybody has to share the burden of sourcing non-inflationary growth,and not just unorganised workers. If per capita income,in real terms,is rising by 6 per cent a year,one of the lessons of macro theory and policy is that real incomes for wage-earners,entrepreneurs and farmers cannot rise more than a weighted average of 6 per cent,as you approach capacity constraints.
In other countries this is called an incomes policy,and tax breaks only to one section are contested. But in the woolly world of liberalisation in erstwhile colonies,sab chalta hai. Used intelligently the market can be a good handmaiden; otherwise it can be a cruel master. Young men desperately wanting a well-paid job require out-of-the-box reactions.
The writer,a former Union minister,is chairman,Institute of Rural Management,Anand,express@expressindia.com
