For some time now, the principal opposition party viz. Congress has run an overzealous propaganda campaign to create an impression that four years of Modi – rule has failed to generate jobs. In doing so, it has blatantly ignored all round development work being carried out by the present dispensation in all spheres of economic activity – at a much greater space than under the previous regime – which inevitably leads to massive job creation.
At present, India does not have an institutionalized system of collecting comprehensive and real time data on jobs. The only systemic data compilation is by National Sample Survey Organization [NSSO]/Labor Bureau which does its survey only once in 5 years and covering only 8 core sectors. It is therefore only natural that the jobs generated by speedy all round development does not get captured in official figures. The grand old party has leveraged this data void to give currency to its fabricated propaganda.
The job creation at the national level is an aggregate of the accretions in the states. That there has been substantial job creation at the state level [for instance, a good 5.3 million in Karnataka and 6.8 million in West Bengal] is duly recognized by non-BJP governments in their respective jurisdictions. Why not? But, what will flummox any well meaning person is their refusal to acknowledge that under Modi – dispensation, jobs have been created in India.
Undeterred by existence of facts to the contrary and in the belief that the narrative will catch the imagination of public in the assembly elections in Madhya Pradesh, Chhattisgarh and Rajasthan later this year [followed by general elections in 2019], the Congress is positioning itself as a savior of the unemployed youth. It has mooted an ‘unemployment allowance’ for persons in a specified age group 18-30 years.
The modus operandi will be to issue a certificate/slip to each of the unemployed youth to serve as an entitlement to an ‘unemployment allowance’ if the party comes to power in the state/centre. The allowance will provide a sort of income security to the certificate holder till such time he/she gets a job. The party is examining the MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] – launched by UPA – I under its leadership in 2005 – to work out the nitty gritty of the proposed scheme.
Under MGNREGA ‘guaranteed’ employment is provided to a member of a poor family in rural areas for a minimum of 100 days in a year and wage paid @ Rs 100 per day. For this purpose, one job card is given to each such family. A card holder is expected to work on projects such as irrigation, road construction, building houses, digging tube wells, constructing toilets etc. Even when the authorities are not able to provide work, he/she is entitled to the promised wage.
Considering vote catching capability of the proposed idea [as also the fact that MGNREGA is a pan-India scheme which is to be used as a guiding force], the party will in all probability project it to cover the entire country.
A provision for an ‘unemployment allowance’ will have mind-boggling financial implications. Taking the allowance as Rs 10,000 per month [the current statutory minimum wage] and existing unemployed youth about 30 million, this would entail a monthly outgo of Rs 30,000 crore or Rs 360,000 crore annually.
This could double to Rs 720,000 crore if the minimum wage is doubled to Rs 20,000 per month – as per current thinking among policy makers – and the allowance is aligned to the revised wage figure.
The liabilities thrown up by this give-away will completely destabilize the union budget as there is absolutely no way that government of the day would be able to mobilize the required resources. Yet, if it is given this would either mean corresponding increase in fiscal deficit [it will more than double if allowance is fixed at Rs 20,000/-] and in turn, that much additional borrowings. The consequences by way of hike in debt, higher interest rate, lowering of ratings, higher inflation, increase in current account deficit will be catastrophic.
Alternatively, if the fiscal deficit is to be reined in, this would require a humongous cut in development expenditure and spend on welfare schemes besides a significant curtailment in bare minimum revenue expenditure such as salaries & wages and essential overheads. One shudders to fathom the adverse fall-out on growth apart from big blow to governance, maintenance of law and order and India’s defense preparedness.
A drastic cut in capital expenditure means stoppage of project activities which leads to huge loss of jobs. It is ironic that on one hand, the party wants to help the unemployed [vide an allowance] on the other, the very idea mooted by it will have the inevitable effect of destroying jobs. With grim future, the ‘unemployment allowance’ will have to be given perpetually. India will be trapped in the vicious circle of ever increasing largesse, debt and joblessness.
A collateral damage will be by way of rendering our workforce unproductive and ineffective. When, the easy option of income without work [read: unemployment allowance] is available, why would anyone choose the hard course of getting a job? So, even those who may be willing to work and can get a job, may not go for it in the hope of getting income sitting pretty at home. It can also give rise to malpractices whereby persons may not reveal that they have a job [applies more to ‘informal’ sector] if only to grab the allowance.
Under MGNREGA, at least, there exists scope for making the person work via implementing suitable projects, though ‘guaranteed wage’ [even when there is no work] is not a good thing. The ‘unemployment allowance’ is a perverse policy as it guarantees an income to a person without work. This is the surest recipe for converting a ‘demographic dividend’ into a ‘demographic disaster’.
Without doubt, NDA – government is well poised to take India to a high growth trajectory though, the pace of job creation may not be in sync with aspiration level of the people. The allegations of Congress regarding jobless growth is sheer propaganda with the sole aim of dislodging Modi and grab power. Its idea of ‘unemployment allowance’ is aimed at luring the youth and gets their votes.
The public must ensure that Congress does not succeed in its sinister design and the socio-economic disaster – inevitable in a scenario of Modi being dislodged from power in 2019 – is averted.