Abu Dhabi, UAEMonday 22 July 2019

Indian elections likely to show opinion of Narendra Modi's employment performance

As voters go to the polls, unemployment has become a major area of focus and concern at a 45-year high of 6.1 per cent in the year to June 2018

Five years ago, at political rallies in India, Narendra Modi was met with thunderous cheers by the crowds as he promised to create 10 million jobs annually.

It was a pledge that helped him emerge victorious to become prime minister at the helm of the right-wing Bharatiya Janata Party.

Fast forward to today, and unemployment in India has become a major area of focus and concern, as Mr Modi seeks re-election in the six-week-long national polls which began last Thursday.

“The employment situation in India has become an important topic of debate sparking some controversy in the present highly charged political scenario,” says V K Vijayakumar, chief investment strategist at Geojit Financial Services, an investment services company headquartered in Kochi. “However, the fact remains that the jobs scenario is far from satisfactory. The employment situation is grim.”

It's very difficult to find a job in India, especially something that's actually related to what you've studied for and is decently paid - you really have to struggle.

Meenakshi Sawant, unemployed Mumbai graduate

Government figures from the National Sample Survey Office that were leaked to local media in January revealed that India’s unemployment rate hit a 45-year high of 6.1 per cent in the year to June 2018.

The reports spurred questions over why the data had not been formally released. The response from officials was that it was a draft report. The issue resulted in PC Mohanan, who was the acting chairman of the National Statistical Commission, resigning from his post in protest against the government for allegedly suppressing the data, which he said were the final figures.

“It’s very difficult to find a job in India, especially something that’s actually related to what you’ve studied for and is decently paid – you really have to struggle,” says Meenakshi Sawant, who graduated in Mumbai last year with a marketing degree and is still looking for work.

There are more statistics that tell a similar story of rising unemployment. Data from think tank Centre for Monitoring Indian Economy show that the unemployment rate in February rose to 7.2 per cent. This is despite gross domestic product growth hovering at around 7 per cent in India, making it the world’s fastest-growing economy.

The drop comes as the country desperately needs to create jobs for its young population, making it a key election issue. There are a potential 130 million first-time voters aged between 18 and 22 in this general election.

Half the population is under the age of 25 and there are 1 million people entering the workforce every month in India, according to government figures.

There are many examples of jobseekers with high levels of education who find it difficult to secure suitable employment.

This was brought into sharp focus when last year state-owned Indian Railways held a national recruitment drive. It received 19 million applications for 63,000 menial roles, including cleaner and porter positions. In February, some 4,000 people – many of them with MBAs or engineering degrees – applied for 14 positions as sweepers and sanitary workers at the state assembly secretariat in Chennai, the Hindustan Times newspaper reported. The roles came with salaries starting at only 15,700 rupees (Dh834).

Government jobs are in high demand because they are perceived as being easier, secure and with better benefits.

The ruling BJP denies there is an unemployment problem. It has defended itself by saying there are a lot of jobs in the informal sector, in the form of casual labour, which are unaccounted for. Mr Modi also says that more start-ups are being launched in India, which are creating employment.

“The unorganised sector creates 85 to 90 per cent of jobs,” Mr Modi told parliament in February. “In the last four years, the country has added 635,000 professionals.”

But the main opposition Congress party has jumped on the opportunity to capitalise on the concerns about job creation.

In its manifesto, Congress outlines plans to create millions of jobs, including a promise to create 2 million government jobs by March 2020, should it come to power.

Rajesh Mudhliar runs a recruitment centre in Mumbai, Conviction HR, which works on finding employees to fill entry level to senior positions for multinationals in sectors including IT and financial services.

“There are jobs, but many graduates don’t even have basic English language and communication skills,” says Mr Mudhliar.

He says there are 10,000 positions available every month on his books. His company and other recruitment companies manage to fill many of the positions, but at the end every month a quarter of the positions remain vacant because they simply cannot find people with the right skills for the jobs available.

“The jobs crisis is the opposition trying to defame Modi because I have so many jobs to offer but we can’t find the right people with the right skill sets,” he says.

Vasim Shaikh, the group chairman and managing director of CEDP Skill Institute, a private vocational training centre in Mumbai, agrees there are opportunities in India, and he says that the government is not necessarily to blame for the current scenario.

“I think that people who are saying there are no jobs are resistant to undergoing the change to acquire skills to become job ready,” he says. “There’s no jobs crisis as such, but people need to get ready to get employed.”

The Modi government has taken positive steps to boost employment in the country, with initiatives such as launching the Ministry of Skill Development and Entrepreneurship in 2014 to co-ordinate skill development efforts across India. Skill India is one of flagship programmes that aims to train more than 400 million citizens in sectors ranging from health care to textiles.

“It’s a foundation that has been laid and things need to build up over it – probably it will take some more time,” says Mr Shaikh.

Analysts say that informal labour took a hit when Mr Modi announced his shock demonetisation move in 2016, when the two highest value banknotes were suddenly banned in an effort to reduce “black” money flows. With casual labourers dependent on cash-in-hand payments, this left many out of work.

“Demonetisation temporarily impacted the informal unorganised sector, and later the implementation of GST [the goods and services tax introduced in 2017] delivered a strong blow to this sector,” says Mr Vijayakumar

Certainly, it is not an easy process to create millions of jobs overnight, analysts say.

One way this can be achieved is to boost the manufacturing sector, which has the potential to create a lot of blue collar jobs. This is something that Mr Modi has been working on through his Make in India initiative, which aims to transform India into a global manufacturing hub – although the pace of its progress has been slower than many had hoped.

“The data suggests stress right now, but the unemployment number will go down in two or three years,” says Shailendra Kumar, the chief investment officer at Narnolia, a brokerage house in Mumbai.

With polling in the general election continuing in six more phases until May 19, the results will finally be announced on May 23.

The election could turn out to be a test of whether Indians will give Mr Modi more time to deliver on his promises to generate much-needed jobs.

Updated: April 13, 2019 02:28 PM

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