India reaped a bumper harvest of jobs in 2017-18

A new study by leading Indian economists fact-checks some figures on India's youth entering the job market every year.

The rumbling will grow in intensity as the Lok Sabha elections draw nearer. The now-united-now-fragmented Indian Opposition is looking around desperately for issues to corner Prime Minister Narendra Modi and his government with.

Demonetisation, which the Opposition thought was its trump card, actually delivered a landslide for the BJP in Uttar Pradesh. The Goods and Services Tax (GST), which Congress leader Rahul Gandhi likened to an iconic Bollywood villain, has begun to stabilise and likely to deliver an additional revenue bonanza of $15 billion current the full financial year. So, the Congress and other parties opposed to Modi and his government have latched on to reports of alleged massive job losses in the Indian economy.

Jobs survey

As proof, they cite a CMIE-BSE survey that showed employment in January-April 2017 at 405 million; the figure for January-April 2018 was 401.7 million, a fall of 3.3 million, the single-largest jobs loss recorded in any one-year period since the survey was launched two years ago. Their charge: Modi has not only failed to keep his promise of providing 10 million jobs a year, he has actually presided over a period when jobs actually shrank in the country.

This argument, they're certain, will resonate with the Indian youth, who constitute about two-thirds of the electorate and propel them to power in New Delhi. A study by noted economist Dr Surjit Bhalla and T. Das titled 'All you wanted to know about jobs in India - but were afraid to ask' very credibly debunks this myth about alleged job losses and shows, with sound methodological rigour that, instead, a record 12.8 million jobs were created in 2017-18.

The promise

But first, let us look at the alleged promise by Modi to create 10 million jobs a year. A Google search with “Modi” and “10 million jobs” threw up a number of articles on the subject, but not one of them actually quoted the Prime Minister making that promise.

The closest was a report on an election rally in Agra in the run-up to the 2014 Lok Sabha elections in which Modi promised to create 10 million jobs for the country's youth. There was no “... a year” after that number.

So, it appears from a plain reading of the publicly available material on the subject that Gandhi and the Opposition are twisting facts to create a misleading narrative about the Prime Minister and his electoral promises. But elections are often won and lost based on perceptions and it must be admitted that the Opposition has succeeded in creating a perception that Modi did make such a promise. The only counter narrative that will hold up against this perception is actual job creation. There is a large body of evidence to prove that this has actually happened.

Facts & figures

Dr Bhalla and his co-author take the Quarterly Employment Survey (QES), which is conducted only among labour-intensive units, as their base material. The survey conducted in October 2017 showed 0.507 million additional jobs in this industry sub-group of 20 million. That's an increase of 2.53 per cent.

The QES covers less than 5 per cent of India's total work force (units with at least 10 workers). If the increase in jobs is extrapolated to the entire work force of more than 350 million, the number of new jobs created comes to about nine million.

This figure does not include the employment generated in the construction sector, which grew at 5.8 per cent, the largest annual expansion in 20 years. The sector employs a very large number of workers and its high growth rate is estimated to have added between 1.7 million and 3 million jobs during the year under review.

These trends are corroborated by payroll data released by retirement body Employees Provident Fund Organisation (EPFO), which is mandated to manage the social security funds of organised/semi-organised sector workers that shows more than 4.4 million jobs were created between September 2017 and May 2018. Though the data for this nine-month period is strictly not comparable with the results arrived at by Bhalla and Das as they related to two different, albeit partially overlapping, periods, the direction of the conclusions are exactly the same.

Data released recently by the EPFO reveals that new member enrolment in May, at 743,608, touched the highest levels over the last eight months. Within this number, more than 250,000 new members were in the 18-21 age group and more than 190,000 members in the 22-25 bracket.

Road to reforms

A caveat will be in order here: the data released by the EPFO is provisional and will be updated in the course of the year as updating records of existing and former members is a continuous process. EPFO also clarified that its data may include those with temporary employment.

The EPFO data, which effectively punctured the carefully constructed story of gloom being spread by the Opposition in India was met with virulent condemnation and vilification by a section of the media.

Additional numbers recorded by the EPFO merely shows the formalisation of the Indian economy, they claimed. In other words, their version of the story goes, it merely marks fresh registrations of hitherto informal sector workers and so, does not constitute job growth.

This argument, ironically, proves the government's case that difficult and painful structural reforms such as demonetisation and the launch of GST have actually brought the shadow economy into the open, but that's another story for another day.

But this line of reasoning, though seemingly logical, does not stand up to detailed scrutiny. The first-ever payroll-based estimate of employment change in India, carried out by Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, India's largest commercial bank, and Professor Pulak Ghosh of the Indian Institute of Management, Bangalore, shows that at least 10 million jobs were created in 2017-18. This study, by two highly respected and well-reputed professionals, has taken elaborate care to weed out the accretion to the EPFO numbers from the process of formalisation of the Indian economy that is currently underway.

The Bhalla and Das study another interesting finding. It says that it is erroneous to say, as the media, including 'India Global Business', has been, that 10-14 million youngsters are entering the Indian job market every year. The figure that, they say, reflects reality better is 7-8 million. The study also found that the 15-24 age bracket is expected to expand by only 2.5 million from 236.2 million in 2017 to 238.7 million in 2022.

Livelihood generation

There is other anecdotal evidence that nudges one to reach the same conclusion. The MUDRA scheme, which provides small loans to micro entrepreneurs in both rural and urban India, has disbursed more than 10 million such loans. It will be fair to assume that each such loan facilitated at least one additional livelihood. That alone should add up to a massive number, albeit mostly in the unorganised informal sector of the economy.

Then, labour intensive sectors such as logistics, real estate and road building are growing at a rapid pace. These are large magnets for employment and absorb millions of semi-skilled and unskilled workers as well.

By juxtaposing the study by Bhalla & Das and the EPFO data and the study on payrolls by Ghosh & Ghosh and given the solid growth figures being posted by a number of sectors, it will be safe to conclude that, notwithstanding what the purveyors of doom are saying, India reaped a bumper harvest in terms of job growth 2017-18.