The Gaping Maw Of Unemployment In India

The unemployment rate in 2012 will increase up to 202 million and it is on an upward trend for 2013, the International Labour Organization (ILO) reported on Monday.  Experts predict an unemployment rate reaching 6.2 per cent by 2013.

Source: www.financialexpress.com, May 01, 2012

Against the global unemployment rate, consider this- the unemployment rate in India has been consistently increasing, and stands at 9.8% in 2010-2011!

Over the past decade, India has been regarded as the success story of globalization. India’s success is attributed to off-shoring of IT-enabled services, backed by reforms leading to global economic integration and domestic deregulation. Yet, even before the global economic crisis, in spite of high income growth in the organised sector, India faced the challenges of increasing inequalities and falling standards of living among marginalized groups.  

In order to understand the Indian unemployment crisis, it is important to understand these basic terms.

• Labour Force: The labour force is defined as the number of people employed plus the number unemployed but seeking work. 
• Unemployment Rate: The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labour force.
• Gross Domestic Product (GDP): The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
• Primary Sector: Where the economic activity involves exploitation of natural resources. Typically, agriculture and agriculture related activities are the primary sectors of economy.
• Secondary Sector: When the main activity involves manufacturing then it is the secondary sector. All industrial production where physical goods are produced come under the secondary sector.
• Tertiary Sector: When the activity involves providing intangible goods like services. Financial services, Information Technology etc. are in the tertiary sector.

In the last four decades, the share of the primary sector in GDP decreased, the share of the secondary sector remained static and the share of the tertiary sector grew. However, the share in providing employment was not in tune with the share in GDP.

• In 1973, the agriculture (primary) sector had a 45% share in the GDP and a 75% share in the labour force. Today, it constitutes only about 25% of the GDP, but still has a 60% share in the labour force.
• In 1973, the manufacturing (secondary sector) had a 20% share in the GDP and a 10% share in the labour force. Today, it still constitutes 20% of the GDP, and has an 18% share in the labour force.
• In 1973, the services (tertiary) sector had a 35% share in the GDP and a 15% share in the labour force. Today, it constitutes 55% of the GDP, but only has a 22% share in the labour force.

It is quite clear that majority of the people are still employed in agricultural activities. As agriculture provides seasonal employment during cropping season, chances of hidden unemployment are big. The fallacy has been in assuming that IT-enabled services would become the engine of growth for the entire economy. Although educated and skilled workers do get employed in secondary and tertiary sector, for unskilled and semi-skilled workers there is still shortage of employment avenues. The inability to undertake land reforms or other strategies that would have involved substantial redistribution of assets means that wealth and income inequalities continue to be very high. Hence the most important current problem is the resolution of the agrarian crisis and the need to ensure sustainable productive employment for the majority of the labour force.

For urban India, deregulation took away the advantage of increase in export employment. The employment loss because of import competition, especially in small enterprises, was not compensated.  Also, there was a decline in organized sector employment due to the decline in public sector employment.  Further, several “economic reform” measures such as trade liberalization, the reduction of credit allocation to the priority sector and the removal of various forms of support worked against the interests of most small producers, who accounted for labour-intensive forms of urban manufacturing employment.

Economic inequalities have increased in India in the post-reform period.  The benefits of growth have been concentrated and have not trickled down sufficiently. The economic growth process in India has been unable reduce poverty, as it failed to deliver proportional structural change in the output to employment ratio. It was unsuccessful, despite high rates of output growth, to generate sufficient opportunities for work to meet the needs of the growing labour force.

To add to all this is the global economic crisis, which puts forward further challenges of sustainability of economic growth.  All this means that government mediation in the process of global economic integration is the need of the hour. However, India’s turbulent political environment of coalition governance is marked by ineptitude and indecision. The problem is further aggravated by large scale corruption that does not allow whatever minimal affirmative action that is taken to reach its intended beneficiaries. 

It is no wonder, therefore, that in India, the problem of unemployment takes on epic proportions! 

© Sujata Khanna. All rights reserved.

Emotional Intelligence

Organisational teams are put together keeping a particular organisational goal in mind. The teams comprise people with diverse skills, mentalities and backgrounds. In such a situation, the formal leader would definitely attract a following if he has leadership qualities, as in, a 3D personality (refer to my post, The anatomy of a leader, Mar 19, 2012), but a fourth personality dimension is necessary to sustain that following. That fourth dimension is Emotional Intelligence.

Sometime in 1998, I read Daniel Goleman’s book “Emotional Intelligence: Why it can matter more than IQ”, and later, his books “Working with Emotional Intelligence” and “Primal Leadership”. These books put into clearer perspective that which I had perceived, but never analysed, earlier- there are certain things about outstanding business leaders that separate them from others - a set of competencies that distinguishes how people manage feelings, interact, and communicate.

Everybody feels. In fact, it is impossible not to have feelings, and it is perfectly alright for you to be happy, sad, angry, resentful or even feel hopeless. What is important is to be aware of your feelings, the stimuli that evoke these feelings, and further, the behaviour that predictably follows the feelings. In the same manner, you must be able to understand the stimuli that evoke certain feelings in others and the behaviour that predictably follows.

Emotional Intelligence is the ability to perceive and understand emotions- one’s own as well as others’- and to use this awareness to pause, be flexible and purposefully direct one’s behaviour.

Leaders with a high emotional intelligence quotient are able to control mood swings and have high frustration tolerance, and thus, have the perseverance to achieving goals as well as have a positive attitude. They also have great empathy and can manage interactions and conflict better.

© Sujata Khanna. All rights reserved.

Hungry India

In the global ranking of some 193 countries in the descending order of their respective U5MR rates (under five mortality rate,expressed per 1000 live births), India ranks 46th. 

The country’s current status in this vital parameter of child welfare is woefully behind economically smaller neighbouring countries like Nepal (ranked 59th) and Bangladesh (ranked 61st). Only Pakistan has a higher U5MR rate, with 87 of that country’s children dying for every 1000 live births. 

Source: Deccan Herald, March 12, 2012 

Starvation is the result of a severe or total lack of nutrients needed for the maintenance of life. John. R Butterly, in his book ‘Hunger: The Biology and Politics of Starvation’, says “chronic malnutrition often leads to a compromised immune system and makes a person unable to fight off organisms that a normally fed human would barely notice.” 

Since the start of the new millennium, India has seen significant economic progress. Yet, death by starvation is a gruesome reality in India. Poor Indian households struggle to cope with high food prices and malnourishment among their children. TNN (Mar 9, 2012) reports people selling kidneys to beat starvation in a West Bengal village. 

These statistics should make our heads hang in shame- 

• India has an all-India average U5MR rate of 74. Bihar, Jharkhand, and Madhya Pradesh are the country’s “hungriest” states, with an average U5MR rate of 85. 
• 25% of the world’s hungry population resides in India. 
• The country has 360 million people living under the official poverty line.
• 43 per cent of children under the age of five years are malnourished.
• Half of all pregnant women aged between 15 and 49 years suffer from anaemia.

India grows enough food for its people. In order to ensure food security, three main public programmes are implemented by the government- the PDS, the ICDS and the NREGA. Yet, in spite of a clear public policy on food security, death by starvation still stalks both rural and urban populations.

• The Public Food Distribution System (PDS): The PDS fails due to inefficient planning. Grain rots in government warehouses while the poor go hungry. Ration cards are not issued to poor families because surveys are either delayed or just filed in, but not actually conducted. Further, corrupt ration shop dealers pilfer food and sell it on the black market rather than to intended beneficiaries. In fact, the Food Corporation of India (FCI) is one of the most corrupt divisions of the central government.
• The Integrated Child Development System (ICDS): The government is supposed to provide meals to all students at schools under the Mid-day Meal Scheme. Child care centres, known as Anganwadis, are supposed to provide immunization and supplementary food for the children under age of six and pregnant women at village level. But it is commonly seen that these are open only 6-7 days a month when they are actually expected to work 30 days a month.
• The National Rural Employment Guarantee Act (NREGA): This is the 100 day-employment guarantee system which is the biggest playground for corruption. Wages do not reach families, but are recorded. The money that the central/state government earmarks for poverty eradication is siphoned away by politicians, bureaucrats and village heads. 

What is the point gloating over India’s economic advancement when a poor person can’t access entitlements to government food and work programs? Public outcry questioning shoddy implementation of policies and corruption is the need of the hour. Bad governance is the key reason for all the country’s woes, the issue of food security being the foremost.

© Sujata Khanna. All rights reserved.