In a recent discussion on the economic situation in India, former Finance Minister P Chidambaram took a dig at the government’s claims of job creation.
Despite India’s impressive economic growth and large inflow of foreign direct investment (FDI), Chidambaram emphasized that this growth is not translating into sufficient employment opportunities.
He questioned the effectiveness and fairness of the government’s policies, raising concerns about the widening inequality and high levels of unemployment in the country.
Why This Spirited Growth Not Turning Into Jobs?
Chidambaram highlighted the alarming statistics that undermine the government’s claims of job creation. Despite India’s significant economic growth, the worker population rate remains low, with only 23% of the population engaged in productive work.
This stagnant employment scenario has persisted throughout the tenure of the current BJP government, raising questions about the impact of their policies on job creation.
Citing official survey data, Chidambaram pointed to the high unemployment rates among different age groups and educational qualifications.
Unemployment rates stand at 23.22% for the age group of 15-24, 42% among graduates under 25, and 23% among graduates between 25-29.
These figures indicate a mismatch between economic growth and the generation of suitable employment opportunities for a skilled workforce.
The Quality and Quantity of Employment
Chidambaram emphasized that the issue extends beyond just the quantity of jobs created. He highlighted the decline in regular-wage employment and the dominance of self-employment, which currently accounts for 57% of employment in the country.
This shift towards self-employment raises concerns regarding the stability and quality of these jobs. The precarious nature of self-employment often leads to lower income levels and limited access to social security benefits.
The Impact of High Unemployment and Inflation
Chidambaram discussed the implications of high unemployment rates combined with rising inflation. He noted that the current food inflation rate of 9.2%, along with an overall Consumer Price Index (CPI) inflation above the tolerance limit set by the Reserve Bank of India (RBI), will severely impact domestic consumption and household spending. This, in turn, could lead to a decline in overall economic growth and hinder the well-being of citizens.
Chidambaram expressed concerns about the decreasing net financial assets of households, which have reached a historic low of 5.1%.
This sharp decrease indicates reduced savings and a greater reliance on borrowing, further exacerbating the financial vulnerabilities of average households.
Such economic hardships directly affect child nutrition, education, and overall well-being, leading to long-term consequences for the nation’s development.
The Issue of Inequality
Highlighting the drastic wealth disparity in the country, Chidambaram questioned the fairness of the government’s policies
He highlighted the fact that the bottom 50% of the population owns only 3% of national wealth and receives just 13% of the national income.
On the other hand, the top 5% possesses 60% of the national wealth, with the top 1% controlling 22% of the national income.
This significant wealth concentration contributes to social inequality and undermines the objective of inclusive and balanced growth.
Chidambaram concluded by emphasizing the need for more balanced growth and equitable distribution of wealth.
He questioned the government’s priorities and urged them to focus on policies that benefit the poor and marginalized sections of society.
The prevailing economic disparities and persistently high unemployment rates require a comprehensive approach to address the root causes and create a more inclusive and sustainable economy.