28 May


More work for skilled and wealth for entrepreneurs as Modinomics cuts bloated government

“We have tried to give new perspective to employment as it is not possible to provide employment to everyone in a country of 125 crore people. We are promoting self-employment and the government has made eight crore people self-employed.”

—Amit Shah, BJP President, on May 26

The test of the true politician is not just establishing ownership of an idea, but about how it is repackaged and sold. Selling the means of livelihood is the time-tested power pitch of leaders, but the Narendra Modi-Amit Shah team has re-engineered the paradigm of political marketing by replacing sponsored employment with self-employment, thereby giving a new twist to the politics of economics. Modi’s 2014 Lok Sabha campaign flew high on the promise of creating one crore jobs every year. Now, it seems he never meant government jobs. Three years after the BJP thundered to power, job creation is lower than what it was eight years ago.

According to official statistics, less than half-a-million jobs were actualised during the first two years of NDA government as against about a million in 2009. A government survey also found jobs were dwindling in most large scale employment-generating sectors such as textiles, handloom, leather, metals, automobiles, gems and jewellery, transport and information technology. With over 1.3 crore new job seekers flooding the market every year, vanishing employment opportunities are bound to damage the credibility of a government which has engineered over 7 per cent GDP growth—the highest in the world.

As the government celebrated the completion of the third year in office, critics found the sluggish pace of job growth a convenient stick to beat the government with. But Shah and his team have  perfected the art of converting adversity into opportunity. Buoyed by electoral victories in various states, he unfolded the government’s new economic model of producing maaliks (owners) instead of naukers (servants). A New Deal is being prepared to make India self-reliant.

A mechanism is almost in place to empower entrepreneurs who create both wealth and employment. Shah’s exposition fits well with the BJP’s economic ideology, which doesn’t believe in public sector dominance. The campaign promise of every political party since Independence had been to eliminate unemployment. All the 12 Five Year Plans failed to create any favourable environment for absorbing surplus labour. However, a plethora of government institutions, PSUs and unnecessary departments were created to accommodate both eligible and ineligible youth to prevent social unrest.

From the time of Jawaharlal Nehru to Rajiv Gandhi, the government was the biggest job provider even though productivity and utility were going downhill.  The Indian political establishment has thrived and survived by breeding government jobs for their admirers and followers. Seeking vote-for-naukri has been their winning instrument. But as the incapacity of the government to bloat limitlessly sucked in, the focus shifted to its redundant and underemployed workforce. It was former prime minister

P V Narasimha Rao who first understood the government’s disadvantageous compulsions over work viz vocation. He decided to shrink the public sector and encourage private entrepreneurs to create wealth and work. Rao tweaked government policies to ensure large-scale projects were increasingly given to the private sector. His government cleared a record 200-plus new power projects. Since 1991, the number of new government jobs is in free fall.

Unfortunately, the nation has been let down by the corporate sector, which has basked in the warmth of massive tax concessions and irresponsible bank loans without creating enough jobs. Inexplicably, the economy has grown at an average rate of over 6 per cent since economic reform began, but job market expansion has slowed. The fault lies with the skewed New Indian Economic Model in which the contribution of the labour-intensive agriculture and manufacturing sectors has plummeted by more than half in 25 years. On the other hand, the services sector accounts for more than 55 per cent, but has failed to compensate by adding new jobs. Capital and technology have replaced labour.

The Modi-Shah road map envisages liberal grant of capital and powerful use of technology to produce a line of entrepreneurs who can become mini-capitalists in the long run. For the past three years, Modi’s discourse has been more about technology and ease of doing business rather than pushing government agencies to create employment velocity.

He has realised it is more productive to form new wealth creators and self-employed innovators than adding to the existing phalanx of unproductive babus, stenographers, drivers, peons and subordinate government staff. Incremental salaries and perks of a burgeoning government is a massive burden on national revenues. Shah’s recent promise to expand the entrepreneurial horizon recalled the spectacular success of two innovative schemes launched by Modi. India’s economic growth has suffered, lacking enough skilled labour. In July 2015, Skill India campaign aimed to train over 40 crore people in different disciplines by 2022. Modi allocated an amount of `17,000 crore; the highest-ever in this sector.

Subsequently, many multinationals set up similar projects. Every year, both the government and private institutes will be training over one crore youth as professional electricians, plumbers, carpenters, masons and commercial painters so that there is no shortage of skilled labour. Construction, retail, transportation, logistics, automobile and handloom sectors will need an additional estimated skilled workforce of over 12 crore by 2022. Modi’s success in creating a gigantic non-government job market can dilute the demand for caste-based reservations since a skilled labour force from unprivileged sections of society will get better paying jobs post skill training.

Finally, Modi’s real trump card is the Micro Units Development and Refinance Agency (MUDRA) Bank for development and refinancing activities relating to micro units. Over `1.50 lakh crore has been distributed to over three crore beneficiaries so far. The BJP’s non-welfare state ideology insists on opening up government coffers to facilitate the creation of a new army of small and mid-level capitalists who will employ skilled young Indians, and thereby minimise unemployment. By facilitating such creation of new entrepreneurs, Modi has expedited the delivery of his promise of Minimum Government and Maximum Governance.