More on Budget
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services that is owned by international ratings agency Standard & Poor's. CRISIL has pointed out that between 2005 and 2010, the number of jobs created was 2.7 crore but the number of self-employed fell by 2.5 crore. The net addition to employment was a meager 0.2 crore. The number of youth that entered the work force in this period was about 5.5 crore. Only four percent of these got jobs despite the average rate of growth in this period being 8.7 percent. The CRISIL report points out that employment declined by seven percent in the manufacturing sector between 2005 and 2010 despite high rates of growth. Big industries—both domestic as well as multinational—increased production by using automatic machines. They made more profits. The Sensex roared. But large numbers of workers actually lost their jobs. Perhaps it was dissatisfaction with jobless high growth that led to the exit of the UPA Government. Challenge before Finance Minister Arun Jaitley was to provide jobs and usher in better days with a much lower rate of growth in the range of 6-8 percent.
The Budget makes yet another push towards aggressive implementation of the same discredited policy under the garb of ‘Make in India’. Finance Minister Jaitley must realize there is an irreconcilable contradiction between 'Make in India' and employment generation. Making in India means that frontier manufacturing technologies using robots would be used to make Indian products globally competitive. But that will lead to the displacement of workers. The challenge of 2015 was to find a way of creating not five crore jobs for those entering the job market; but to create 10 crore jobs to also clear the backlog accumulated during the UPA Government. Alas! Jaitley prescription will not create these jobs at all. In fact, his policies will eat the jobs that are existing.
Jaitley has provided encouragement to big investors by deferring the much-feared tax proposal known as General Anti-Avoidance Rules or GAAR. He has allowed investment funds to "pass through" the income tax to the actual investor. The tax payable by an investment fund will be paid by the person who has made investment in the fund and not the fund itself. He has declared that the corporate income tax rate will be reduced from present 30 percent to 25 percent. These measures are clearly designed to attract investments in big factories. These same factories are eating up jobs of the people. A textile mill creates 1000 jobs but eats away the livelihood of one lac weavers.
Jaitley has created a Mudra Bank to provide loans to small and medium enterprises. He seeks to create an impression that the Government is soft towards small businesses. The main problem of these industries, however, is disappearance of the market due to competition from big companies. Only about ten percent of the weavers are surviving the onslaught of cheap sarees from big textile mills of Surat. Providing more loans to the weavers will only push them into greater debt when the market is slipping out of their hands.
Jaitley has taken the first steps towards putting in place an universal social security system like one existing in most developed countries. But that still does not mean jobs. The poor people will be thrown out of their jobs and will live of the doles handed out by Jaitley's Government. A fine way indeed of bringing better days (achhe din) for the poor! The demographic dividend has been converted into a demographic liability by the Honourable Finance Minister. [contributed]
Vol. 47, No. 36, Mar 15 - 21, 2015