Economic Survey
By Dhurjati Mukherjee
Most Economic Surveys and the recent one too presented by Finance Minister Nirmala Sitharaman has lot of optimism, but questions remain on how much it reflects the present socio-economic situation. It is noteworthy that it has acknowledged the several problems and challenges that the government needs to navigate to ensure sustained growth in the coming years. The highlight is on a somewhat realistic GDP growth of 6.5-7 per cent in the current fiscal which is, however, lower than that projected by Reserve Bank of India and the International Monetary Fund.
To begin with, one can safely state that inflation, specially food inflation, is quite high and one can guess with what is destined to happen with erratic and uneven rainfall, as per available details. It is surprising why the Survey has stated that the RBI should stop looking at food inflation in deciding interest rates though the suggestion of giving coupons to the poor to deal with higher food prices is laudable. Not just inflation but various policies and programmes of the government are clearly indicative of the fact that the problems of the aam admi are rarely looked into.
Meanwhile, reports indicate that skewed distribution of rainfall in June-July saw nine states, including Jharkhand, Himachal Pradesh, Punjab, Haryana, Odisha and Bihar facing a significant rain deficit in the range of 20-49 per cent whereas six states, including four in the southern peninsula reported excess to large excess of cumulative rainfall during the period. While north Bengal received excess rainfall, there was huge deficiency in south Bengal, including Kolkata. Overall, the country reported deficit in cumulative rainfall with north-west (14 per cent deficit) and east and north-east (12 per cent deficit).
The Survey has delved into the problem of unemployment and the need to create 78.5 lakh jobs a year till 2030. But very cleverly the onus has been put on the private sector and action taken by the respective state governments. There is acknowledgement of the fact that India witnessed a decline in generating regular jobs in the last five years, quoting the Periodic Labour Force Survey (PLFS) which, no doubt, is a reality. Keeping in view the fact that nearly one-third of self-employed persons are unpaid workers, the scenario is quite intriguing. Experts have questioned whether dependence on the private sector would create sufficient number of jobs, keeping in view their track record of hiring lees and less people.
One may mention here that the recent report of RBI (KLEMS) does not reflect the true state of affairs. According to available data, 62 per cent regular employees had no written contract, over 50 per cent were not eligible for paid leave and around 60 per cent were not entitled to social security. Moreover, it has to be taken into account that most employed Indians are self-employed and the share of this type of employment has increased since the beginning of this decade. Thus, the rosy picture being painted by the government does not hold good.
If the problem of employment and growth is analysed from a different perspective, it will be seen that wage growth, which is an indicator of working class well-being, is very poor. The latest Wages Rates in Rural India, according to data from the Labour Bureau and National Sample Survey Office, show that the annual growth of real wages for male workers from 2014-15 to 2023-24 was just 0.6 per cent for general agricultural labourers, 1 per cent for non-agricultural labourers and -0.2 per cent for construction workers. If per capita income is growing at an average rate of 5 per cent, wages of informal workers (adjusted for inflation) are growing at less than 1 per cent and this clearly reveals that the lower segments of the population are suffering. The shrinking informal sector very well reflects the hardships faced by those who work there with poor wages and declining opportunities.
There were expectations that in outlining a strategy for agricultural growth and increasing farmers’ income, the Survey would not just deliberate on jargons like ‘comprehensive reforms’ but delve deep into the matter keeping in view concerns regarding soil fertility, water scarcity etc. Pointing to the need for crop diversification, a recent ICRIER paper, referring to the states of Punjab and Haryana, stated out that the current regime is unsustainable and results in massive groundwater extraction for paddy cultivation and the two northern states accounted for a substantial part of the fertiliser subsidy as they consumed more fertiliser than their counterparts during the kharif season.
The paper rightly proposed diversification of 12-14 lakh hectare from paddy cultivation in Punjab and Haryana with government offering upfront incentive of Rs 30,000-40,000 a hectare by repurposing power subsidy offered by the state and fertiliser subsidy given by the Centre. The government has to seriously think about the agriculture sector and formulate a plan of action in this regard.
Green initiatives of the government are quite laudable, but the Survey has rightly stated that expanding renewable energy and clean fuels will increase demand for land and water against the backdrop of “rapidly depleting land and water resources”. India’s land per capita is just 0.002 sq km which is much less than that of China and Brazil. In such a situation, India’s pledge to increase its non-fossil power capacity to 500 GW by 2030 may pose a problem. However, the electric vehicle market has taken off with India among the fastest growing markets.
In the education sector, the finance minister’s emphasis on vocational education and skill-employment mismatch are significant. But everywhere the government shows its dependence on the private sector without specifically talking outlining what the government intends to do to spread education in all subdivisions and blocks of the country. With higher school enrolment in girls’ education, more resources to states by setting up a Centrally-aided school and college in every block would help spread education. However, educationists fear increased involvement of private entities in the years to come, resulting in denial of access to education to the lower segments of society and the backward sections.
Finally, it is indeed distressing that, according to labour economist, Prof. Santosh Mehrotra, the number of youths ‘Not in Education, Employment or Training’ is among the highest in the world. He has estimated the figure to be over 100 million. Skilling of the workforce, keeping an eye on employability in labour-intensive sectors is imperative at this juncture as only 4.4 per cent of the young workforce is formally skilled, as per the Survey. The focus should not be only on growth per se but specifically concentrated on grass-root development whereby the poor segments of society benefit. —INFA