Opinion Solutions to India’s jobs problem lie in creating better regulatory conditions for private sector while protecting rights of workers

An analysis of the annual reports of companies for the previous financial year (2021-22) has thrown up a stark, albeit unsurprising, trend: Most of the job creation that happened in India during 2021-22 was in the private sector while the government-owned enterprises saw a decline in the total number of people they employed. When this paper reviewed the top 15 listed public sector undertakings (PSUs) by market capitalisation, it found that a majority saw a reduction in the number of people employed. This trend was witnessed across several sectors and included PSUs such as State Bank of India, Coal India, ONGC, NTPC, BPCL and HAL. A similar analysis for the private sector found that eight out of the top 10 private sector firms by market capitalisation added to their workforce. Together these firms added 3 lakh new jobs in the last financial year.

These reports point to two main conclusions. One, the era of looking at PSUs to solve India’s joblessness is long over. Last year, India’s GDP grew at almost 9 per cent. For the best positioned public sector companies to be able to even hold on to existing jobs in such a year — leave alone create new ones — says a lot about where the solutions do not lie. The analysis also shows what part of the economy can create jobs. This should put in perspective how government jobs are demanded and promised in India. Every day, there are demands from the government to recruit more people. In turn, governments, too, promise to create lakhs of jobs in a bid to either come to power or retain it. In the recent past, it was reported that the prime minister’s office had instructed that recruitment of 10 lakh people be done by the government in mission mode in the next year and a half. The newly minted Bihar government has also promised 10 lakh jobs within the government fold.

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India has been experiencing persistently high levels of joblessness for the past few years. Despite a high rate of growth, last year was no different. Data from the Centre for Monitoring Indian Economy shows that the total number of employed people in India went up by 5.55 lakh in FY22. But the working age population went up by 55.35 lakh over the same period. Effectively, between April 2021 and April 2022, India’s employment rate actually fell. This trend tends to get repeated every year. The solution lies in the government creating better regulatory conditions for the private sector while at the same time protecting the rights of the workers.