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India’s leading data expert expresses concern about GDP calculations and government jobs data

Vyas added that cautious policies adopted by the Union government could spell disaster for the Indian economy.

Representational Image (Source ANI)

The government’s recent data suggests that the unemployment rate is now back at pre-COVID levels and the third quarter data of the GDP showed that growth by 0.4 per cent. This came after the nation had witnessed a back-to-back contraction in the previous two quarters.

However, not everyone is happy with the situation. Centre for Monitoring Indian Economy (CMIE) MD Mahesh Vyas in an interview with India Ahead said that we should not be optimistic about the data and added that the lockdown proved much worse than demonetisation in terms of job losses. Vyas added that cautious policies by the Union government could spell disaster for the Indian economy.

Q- CMIE data showed Nine months after the COVID-19 lockdown, India still has 15 million missing jobs when compared to the pre-COVID 19 period. with more young people and women losing their jobs than older people and men, respectively. Furthermore, Women are 11 per cent of the employed workforce but they made up 52 per cent of the jobs lost. 15 million jobs lost in a 1.3 billion-plus population size country- should we see the glass half full or empty?

A- The situation is quite concerning and we should be worried about the numbers and it should be topmost on the minds of people who worry about India’s well being. More people should enter the labour force than we are seeing right now and nobody should feel rejected. We not only need to decrease the unemployment number but also improve the quality of employment and income that it generates.

There is a lot of the narrative in the debate that compares the current unemployment scenario in the country to pre-Covid times and tries to paint a picture that all is well now which is quite misleading.

Q- In January this year in an interview you said- ’employment is back but the nature of that employment recovery is such that it raises questions and that is the point I want to make regarding the recovery process and the sustainability of the recovery process.” Explain to us your concerns and How does January recovery numbers compare to the corresponding period in 2020?

A- Quality of employment that has come back isn’t as good as it was in the past and it wasn’t anything to celebrate in the past as well so we should not be happy to go back where we were 12 months ago. How many people are working in agriculture, how many people are employed in non-farm jobs which are disguised as employment? When there is an increase in jobs on farmland, it leads to deterioration in our employment. We need more jobs in the manufacturing industries and the formal sector.

Q- Was Covid lockdown demonetisation disaster 2.0?

A- The COVID Lockdown was much worse than demonetisation in the context of job losses. During demonetisation, the job losses were at about 10-12 million which recovered within 3-4 months.

However, during the lockdown, we are talking of 15 million job losses. This is humongous. Even after lockdown has been lifted up, a substantial number of people are still left without any employment which mostly includes youth and women.

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Q- Employment rate was 43 per cent in 2016, now we are at 38 per cent – From 407 million we are looking at 400 million now- Is a year on year decline in numbers acceptable?

A- The headlines should be about India’s labour participation rate and employment rate, not about the unemployment rate. The labour participation rate has been falling down steadily from 45 per cent. In addition, we have an abysmally low labour participation rate with 40 per cent of the working-age population currently unemployed.

Q-The unemployment rate has ranged from 9 per cent in the post-lockdown period since July 2020 to 6.5 per cent in February this year. Is it a sign of recovery yet or too early to feel happy?

A- It is misleading to cheer unemployment numbers since the lower rate actually reflects the dejection of people. They are so dejected with the circumstances and the labour market conditions that they are not even willing to come and look for jobs because they think that it is pointless to go look for jobs because there are none available.

Q- Is India a ticking time bomb because of its demography and jobs crisis?

A- I hope it doesn’t become a demographic disaster. But if we don’t heed to the growing problem that the youth of the country are not able to find jobs and that lesser and lesser women are going to seek jobs then it could be a cause for worry. There is already discrimination in society against hiring women which we need to accept.

Moreover, less and less young people are coming to look for jobs and the condition could be troublesome in 5-10 years. In short, if we don’t create jobs across the board apart from agriculture we should definitely worry about a demographic disaster.

Q- Is there a recognition you see of this problem in the government? Was it reflected in the budget speech?

A- I’m sure that the government does recognise it internally but has a different narrative that wants to pep up people. It is a gung ho narrative that wants people to believe we can make it we can do it because a politician usually does peppy work and will never admit that he messed up. So I think the government does recognise it but its narrative doesn’t reflect the unemployment crisis.

Q-Are we looking at a messed up economy?

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A- We are looking at a messed up economy for sure because there are no jobs with only a few places showing some sort of job growth. We also need to focus on larger problems that garments, leather, textiles and other similar labour-intensive industries require a lot more attention than they are getting right now.

The garment sector has got some attention but still, it is not much and we need to motivate companies to invest in a macro way. We do not seem to have an economic strategy that is stated out. It is not there in the economic survey, it is not there in the budget and if the government of India does have a plan of coming out of this, it is a well-guarded secret.

Q- What kind of jobs are we now generating? If employment were to come back, it would really be newer sectors or different areas? What kind of shifts would be needed?

A- We need to match jobs to skill sets that are available in India. China solved the same problem by initially going through the path of the heavy labour-intensive industry which Indian can emulate by making the construction sector a labour-intensive industry.

Q- Is the government data not reliable or timely. Periodic labour force survey of 2018-2019 says that the employment scenario is better. So, is the government data misleading? Why the GDP numbers on employment data always controversial?

A- The Prime Minister says that the government has no business to be in business but the government needs to be in the field of data collection. That’s not something that should be left to the private sector. These statistics are supposed to be for the public good which helps the market understand where the economy is headed. The Indian statistical survey needs to be given a lot more professional independence to be able to fix this problem for the country. For the proper development of a country like India, it is important that Govt plays a role in generating statistics particularly one in the nature of public goods like inflation, unemployment rate, GDP.

Q- Is the government failing for lack of resources or the numbers are too inconvenient and so ostrich syndrome?

A- I think the motivation for the government is to withhold the release of the data  We need to ensure strong laws exists where statistics like the Industrial Production Unit are released without the need for clearance from a minister.

Q- Now that weeks have passed and the devil is in details, Which budget data is misleading? Health was projected as a 128 per cent jump. Will these pump up the rural economy and job numbers?

A- I think this government works differently. It does not seem to work in a manner that here we have a budget tabled in Parliament, which has allocations for individual ministries and schemes and then we will abide by this. They seem to say we will abide by but if anything goes wrong, or goes differently, then we will immediately take money from one place and put it into another. So we can always shuffle money midway through. So it is futile to try and read too much into what the budget numbers are telling us today.

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The money that they are going to spend in the year 2021 is inadequate. They will shuffle a lot mid-year as things pan out, or if oil prices just continue to go up. Looking at the budget, numbers alone are not going to take us very far. It’s not going to be a case where we don’t have money. Those numbers don’t have as much credibility as they should have .

Q- Can you compare the recovery process of the central government post-2008 financial crisis with the present times?

A- We are doing things differently for sure and I don’t think that what the government is doing from the fiscal side seems to be appropriate. Post-2008, the government decided to splurge money which they did through loan write-offs that helped in changing the mood of the people and that helped in us spring back.

Not spending is never a good strategy and although the government has done commendable work during the pandemic by sending grains and money to the poor the strategy’s implementation was flawed.

Q-Social media trends and protests like #modi_rojgar_do are seeking transparency and time-bound recruitment in government vacancies. Govt jobs are a small fraction – how important to this unemployment debate?

A-The hashtags that were trending are for a class of jobs where there is already excess employment in the government. The government should not be hiring PHDs for Peons and actually the government should be hiring such a large number of peons at all as these jobs are the cause of inefficiency in the public sector.

However, the government does need to hire many more doctors, nurses and other people who offer technical skills. These are the professional people that the government should be hiring and not Class-4 jobs.

Q-Should we be Concerned about GDP number calculations and are we looking at jobless growth?

A- GDP numbers do have a problem and we need it to be a lot more transparent. There are many things that are presented to us as improvements which Prima facie do look so but when the details are too inadequate for us to make sense of these numbers. Now there is a big debate raging over the difference between GDP and GVA (Gross value added) and the role that subsidies are playing in it.

The government should explain the details a lot and face users of this data and answer questions must more openly about this. It needs to invest a lot more in making our quarterly GDP numbers a lot more reliable than they are right now. The annual numbers are better calculated but if they don’t do the surveys, if they don’t do the consumptions and employment surveys, they are using really outdated mechanics to calculate the GDP. Do the surveys, invest a lot more to get the GDP numbers right. This is a phase of jobless growth. This is a phase of job contraction which is worse than jobless growth.

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