Future of Jobs: Is India really going through zero growth?

Given the growing uncertainty with respect to jobs across the globe, CNBC-TV18 put together an eminent panel to discuss and deliberate on the way forward for the job creation opportunities in India.

The panellists for this discussion included Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, S Ramadorai, Chairman, National Skill Development Agency and Dr. Romesh Wadhwani, Founder Chairman, Wadhwani Foundation.

A lot has been said about the rate of growth in this country and the unprecedented high economic growth that we saw in the 10th and the 11th Plan. Unfortunately, that did not result in significant job creation. It actually was a period of jobless growth.

In terms of the employment elasticity -- the rate of change of employment marked to the GDP -- it has been securely declining from 2000s. About 0.44 percent between 1999-2000 and in the period of 2004-2005 and again 2009-2010 which were high growth periods it has come down to about 0.01 percent which is virtually zero. It means India has been seeing a period of jobless growth.

Below is a verbatim transcript of the discussion on CNBC-TV18

Q: What can we really expect now? Growth rates have come down significantly. We are not talking about 8 percent. We will be lucky if we do 5.5 percent. 6 percent seems like a bit of a stretch at this point in time. If we come down to this level of growth what happens then to the vision of job creation, what happens to the employment opportunity that we so desperately need for a country that talks about its demographic dividend and its demographic advantage?

Ahluwalia: There is absolutely no question that in order to achieve what we want to achieve and what we need you have got to have a much more robust growth performance. Neither last year, nor this year can be called good years, not just for Indian but for all global economy. If you are taking medium-term view my view is that the sort of perspective that we had in mind that India can get to a stable, sustainable 8 percent growth rate remains valid. The challenge is that in the first two years of the 12th Plan we have been knocked off that trajectory, almost every other country has also being knocked off their trajectory and so we must just get back to it. There is whole agenda.

We can discuss what that is. When the National Service Scheme (NSS) shows poverty has declined, everybody says that is rubbish. When the NSS seems to show that unemployment growth has decelerated, everybody treats this as a gospel truth. The same NSS data by the way, if you compare the three data points only, 1994, 2004 and 2011, it is factually true that more jobs were created between 1994 and 2004 than between 2004 and 2011.

However, increase in the labour force in the first period was also much more and as a result in the first period the rate of unemployment actually increased. In the second period, the labour force did not increase that much, we think because a lot of people were in school and the rate of unemployment actually declined.

So the first point I want your viewers to note is: it is totally false and possibly deliberately misleading to present the high growth period as a jobless growth period.

Q: You are hoping that we are going to be able to skill enough people and those skilled people will eventually find employment. So it is a bit of a chicken and egg kind of a situation. Are you feeling confident and optimistic that India is going to be able to deliver on the kind of job creation that we need to?

Wadhwani: Major challenges ahead. First of all my definition of skilling is not just about giving people the talent that they need to become employable, it is about actually making sure that they get employed. In other words there has to be connectivity between the employer community and the skilling community, because otherwise it is like clapping with one hand. You may skill someone , but they are still unemployed, what was the point of skilling them. The second observation is that at least in this particular domain, India is the land of bogus statistics. The way the statistics are done would have been appropriate 50 years ago, it is not appropriate for the world of today. They are very aggregate. They are very old. They are very inaccurate. They are done on very small point samples.

There are multiple problems with the actual methodology that is being used and then if you look at these so called employment forecasts for 10 years out, first of all I have no idea how people come up with a forecast 10 years out, but let us assume that there was some magic there, the forecast is that the total workforce will go up from 475 million, organised and unorganised to 585 million, that is 110 million net new jobs. Last 7 years 15 million, next 10 years 110 million.

What magic change is going to happen? Where all those jobs are going to come from? To really keep track of where those jobs are going to be and to make sure that there is good harmony and balance between job creation and skilling, we need a much better, much more real-time ability to collect labour data and jobs data. We do not have today. The second big challenge is we need to take skill development initiatives and translate them into an agenda of actionability, because aspirational goals are all dandy, if you cannot execute them they fail.

Q: The mandate of the NSDC is really to look at skilling India in an organised fashion. It has been a successful beginning as far as the NSDC is concerned. What are the big challenges that you are up against at this point in time?

Ramadorai: The NSDC last year skilled about 400,000 people. This year we are skilling up to 10 lakh, which is 2.5 times what we were used to doing. The number of partners whom we have funded, whether it is grant, whether it is debt funding or a portion of the equity has increased substantially based on the sector gap, skill gap analysis we have done. We do not want everybody to be starting only on IT or IT enabled services program. Second one we are focused on is to the reach which is beyond the traditional forces and states.

The most popular states must be brought into the whole skill building agenda. So if we do not do it in UP, Bihar, Jharkhand, Bengal or whatever it is you are not going to get the kind of numbers and the mobility of the people which is a big problem will create a lot of problem for us. So the sector skill gap studies plus the funding for the right partners and measuring then through the technology based systems is going to be very, very critical.