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LATEST NEWS UPDATES | India’s High Growth Rate Isn’t Translating to Job Creation -Saumitra Chaudhuri

India’s High Growth Rate Isn’t Translating to Job Creation -Saumitra Chaudhuri

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published Published on Apr 18, 2016   modified Modified on Apr 18, 2016
-TheWire.in

The number of jobs created in eight select industries in 2015 was 135,000. This was much worse than the 421,000 jobs created in 2014 and the 419,000 in 2013.

Here, when I use the shorthand “jobs” it means both jobs and livelihoods for self-employed people. In the farm sector, most “jobs” are livelihoods. In the non-farm sector too, outside of the organized sector, much of working opportunities come as self-employed livelihoods and not jobs as normally conceived. In the pre-industrial world, higher output and incomes were achieved by the natural growth of the work force, and was therefore limited. That was also the reason why populous regions had higher aggregate output – India, China, Egypt – and were the perennial target of raiders from poorer regions. The Industrial Revolution created a transformation in the productivity of labour aided by machines and education and the reallocation of labour from the farm to the non-farm sector. After the Second World War, former agrarian and colonial economies embarked on the path of industrialization with varying degrees of success.

Regions endowed by nature with abundance of minerals and rich agriculture prospered before the Industrial Revolution and afterwards; it helped propel economies like the US. However, material endowments did not always engender economic prosperity; and a lack of it did not foreclose the possibilities of economic growth. The tortured course of many African and Latin American countries rich in resources and poor in social organization was one side of the story. The rise of Japan and later South Korea as manufacturing giants with virtually no mineral wealth at home was the other end of it. Both India and China were slow to industrialize and to urbanize in the first few decades of the post-1950 era. In part the redistribution of farming land away from feudal landlords to the “tiller” or peasantry gave a window to rural populations to stay longer on the farm.

However, as education progressed and work opportunities in the better paying industrial and modern service sector emerged, the dynamics of labour reallocation away from the farm reasserted itself. In China the administration used the hukou or registration system to slow the pace of rural migration by denying migrants access to social benefits. Nevertheless urbanization climbed from less than 20% in 1978, the start of China’s economic reforms, to over 55% today.

The pace of urbanization in India was slower: From 23% in 1981 to 32% presently. In part it was due to the improvement in agrarian conditions in India in the decades after 1980, with high yielding varieties, improved access to water, crop diversification, rapid expansion of animal husbandry and better prices. However, it was also because educational attainments in India lagged China. Most importantly, jobs in the non-farm sector grew more slowly.

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TheWire.in, 18 April, 2016, http://thewire.in/2016/04/18/indias-high-growth-rate-isnt-translating-to-job-creation-30081/


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