No Industry, No Job

Modi’s ‘Make in India’ Didn’t Make Jobs

Anchal Vohra

Meerut’s national relevance has until now been based on its large military garrison, but the new road has become a symbol of its population’s hopes of future growth and development. Just as the Modi government brought them a new swanky highway, they now hope it will bring them industry, jobs, and improved quality of life.

Yet other than the highway, not much more has changed in the city in the 10 years since Modi took power, promising 100 million jobs through his flagship “Make in India” initiative. Just about 50 miles from Delhi, Meerut is still a long distance from the capital’s cosmopolitan lifestyle. In that way, it has become its own symbol of India’s uneven growth story under Modi.

Every year, 7-8 million young Indians enter the workforce. But many never find a job. The unemployment crisis in India is particularly acute among the young and the educated, including Manu Chaudhary. On a recent day in Meerut, in a shop only a few feet away from an open drain filled with waste, Chaudhary was sticking thin plastic covers on laptops at a cubicle-size computer repair shop. This is not what he dreamed of when he studied for a bachelor’s in computer administration at a local college. He had hoped to get a well-paid job with a multinational company but never managed to, not in Meerut or Delhi or Bengaluru, India’s IT hub.

According to a recent report from the International Labour Organisation (ILO), being educated is no guarantee for employment in the country. On the contrary, those without university degrees or even full schooling have a higher employment rate.

Nearly 83 percent of those unemployed in India are young, and among these unemployed young Indians, nearly 66 percent are educated. In 2022, the unemployment rate was nearly nine times greater among graduates, at 29.1 percent, than those who could neither read nor write, at 3.4 percent. The ILO report states that the “youth unemployment rate has increased with the level of education, with the highest rates among those with a graduate degree or higher” and that it is “higher among women than men.”

Further illustrating the mismatch, the report says that while the ratio of educated youth went up from 18 percent in 2000 to 35 percent in 2022, their participation in economic activities went down from 52 percent to 37 percent over that same period. While the overall youth unemployment rate in India reduced from 88.6 percent in 2000 and 82.9 percent in 2022, the ratio of educated young Indians facing unemployment grew from 54.2 percent to 65.7 percent.

 There are multiple reasons behind the country’s unemployment crisis, including poor quality of education, insufficient government investment in education and health, and a desperate need for the government and the private sector to invest in more labor-intensive industries.

In Meerut, banners advertise private schools and professional courses on nearly every street. They charge a fee that the middle classes in such cities can somehow scramble, but the quality of education they provide is rarely up to the mark. Those who study there either cannot afford more prestigious and expensive private institutes, which have a higher placement rate, or didn’t manage to clear any competitive exams for top public-funded educational institutes, which, among ace intellectuals and professionals at home, have also produced the likes of Google CEO Sundar Pichai and other Silicon Valley minds.

Raghuram Rajan, the former governor of the Reserve Bank of India and widely known in the West as the banker who predicted the 2008 meltdown, recently spoke about the poor quality of such education as a problem for long-term economic growth in India and called for higher government spending in education and health. India needs to, firstly, make the workforce more employable and, secondly, create jobs for the workforce it has, Rajan told Bloomberg in an interview last month.

The ILO analysed data for a period of more than 20 years, which included the reign of the Indian National Congress, now an opposition party. According to a March paper by four economists at the World Inequality Lab, however, inequality in India is worse under Modi than it was under the British. Between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration, the paper says, and India’s top 1 percent income share is “among the very highest in the world, higher than even South Africa, Brazil and [the United States].” Modi came to power in 2014.

In 2016, when Modi demonetised 500 and 1,000 rupee notes, 86 percent of Indian currency became illegal, Ghosh noted. The scarcity of cash led to a crunch in jobs in an economy that was still largely informal and operated primarily on printed money.

A new goods and services tax also “created disequilibrium,” said Aasheerwad Dwivedi, an assistant professor of economics at the Jawaharlal Nehru University. “Producers needed to adjust to the new system, which was difficult given the informality in India.” The two interventions were a major shock to the Indian system further exacerbated by the COVID-19 pandemic.

 Agriculture still “employs roughly 43.7 percent of the country’s workforce, reflecting that job creation in India is slow,” he said. “The share of workforce employed in agriculture is larger than it should be due to ineffective demand for skilled employees in the non-farm sectors.”

Modi’s Make in India was supposed to have created demand for jobs in manufacturing, but that, too, is progressing slowly. “When manufacturing or even services cannot generate the kind of employment they are looking for,” the young and the educated “prefer to remain unemployed rather than underemployed.”

[Courtesy: Foreign Policy]

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Vol 56, No. 46, May 12 - 18, 2024