Hindu Nationalist RSS Leadership Criticizes Jobless Growth in India

[Riaz Haq]

Akhil Bharatiya Pratinidhi Sabha (ABPS), the top decision-making body of India's RSS (Rashtriya Swayamsevak Sangh), says that “the young generation is suffering from unemployment and the pandemic has made things even grim... We cannot turn a blind eye to unemployment. It is a crisis and it needs to be addressed.” The RSS was apparently reacting to the falling labor participation rate in India relative to Pakistan and the global averages. The RSS leadership wants the government of Prime Minister Narendra Modi to focus on helping small and medium sized enterprises (SMEs) to create jobs.  RSS likes Modi government's ‘Make in India’ initiative “but it needs to be sharpened even more and get more investment.” The resolution is titled, ‘The need to promote work opportunities to make Bharat self-reliant’. The solution offered by ABPS resolution: Take agro-based local initiatives to promote rural areas and create jobs, according to Ram Madhav, a member of the RSS executive committee. 

Falling Employment in India. Source: CMIE

India's labor participation rate (LPR) fell to 39.5% in March 2022, as reported by the Center for Monitoring Indian Economy (CMIE). It dropped below the 39.9% participation rate recorded in February. It is also lower than during the second wave of Covid-19 in April-June 2021. The lowest the labor participation rate had fallen to in the second wave was in June 2021 when it fell to 39.6%. The average LPR during April-June 2021 was 40%. March 2022, with no Covid-19 wave and with much lesser restrictions on mobility, has reported a worse LPR of 39.5%.

Labor Participation Rates in India and Pakistan. Source: ILO/World ...

Youth  unemployment for ages15-24 in India is 24.9%, the highest in South Asia region. It is 14.8% in Bangladesh 14.8% and 9.2% in Pakistan, according to the International Labor Organization and the World Bank.  

Youth Unemployment in Bangladesh, India and Pakistan. Source: ILO, WB

In spite of the headline GDP growth figures highlighted by the Indian and world media, the fact is that it has been jobless growth. The labor participation rate (LPR) in India has been falling for more than a decade. The LPR in India has been below Pakistan's for several years, according to the International Labor Organization (ILO). 

Indian Employment Trends By Sector. Source: CMIE Via Business Standard

Construction and manufacturing sectors in India have been shedding jobs while the number of people working in agriculture has been rising, according to CMIE. 

Pakistan Employment By Sectors. Source: PBS via Bilal Gilani

It is important to note that Pakistan’s economy has created 5.5 million jobs during the past three years – 1.84 million jobs a year, significantly higher than yearly average of new jobs created during the 2008-18 decade, according to the findings of Labor Force Survey (LFS) as reported by the Express Tribune paper. The biggest jump in share of employment (1.5%) was in the construction sector, spurred by Naya Pakistan construction incentives offered by the PTI government. 

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[Riaz Haq]

India’s economic activity looks set to slow as resilience wanes

https://www.livemint.com/news/india/indias-economic-activity-looks-...

India’s economy appeared to slow rather than accelerate last month, as high-frequency indicators tracked by Bloomberg signaled worsening business and consumption activity.


Although a dial measuring so-called animal spirits showed activity was steady for a fifth straight month in November, the needle was just one bad data point away from swinging to the left. Exports, a key growth lever in the past year, was among three of eight metrics that performed poorly. The rest were unchanged.

Bloomberg’s dashboard reflects a broadly grim outlook for 2023 as tighter global interest rates take a toll on demand. The gauge uses a three-month weighted average to smooth out volatility in single-month readings.

Below are more details:

Business Activity

Purchasing managers’ surveys for November showed that activity across the services and manufacturing sectors improved, though the three-month weighted average was still weak. New orders expanded at faster rates in both sectors, while output prices rose at the quickest pace in three months.

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said the latest results are good news, even if the trend for inflation is somewhat concerning. “Evidence of stubborn inflation may prompt further hikes to the policy rate at a time when global economic challenges could negatively impact" India’s growth, she said.

Exports barely improved last month, increasing 0.6% from a year ago after declining 16.7% in October, data released by the trade ministry showed. Only half of the 30 sectors posted growth. The government attributed the tepid performance to weak demand for engineering and iron ore products.

Imports climbed 5.4 percent, keeping India’s trade gap above $20 billion for the eighth consecutive month. That adds pressure to the country’s current account deficit, a key vulnerability for the economy and the rupee, the worst-hit major Asian currency this year after the Japanese yen.

Consumer Activity

Demand for bank credit remained healthy at 17.2 percent, even amidst tighter liquidity conditions and higher borrowing costs, Reserve Bank of India data showed. Goods and services tax collection, which helps measure consumption in the economy, rose 11 percent, a modest performance compared to October’s 24 percent jump.

Market Sentiment

Electricity consumption, a widely used proxy to gauge demand in the industrial and manufacturing sectors, was weak, with the peak requirement last month rising to 162 gigawatts from 155 gigawatts in October. India’s unemployment rate climbed to 8 percent, according to data from the Centre for Monitoring Indian Economy Pvt.

[Riaz Haq]

India's Unemployment Rate For December Is 8.3%, A 16-Month High: Report

https://www.ndtv.com/india-news/indias-unemployment-rate-for-decemb...

Mahesh Vyas, managing director of CMIE, said this is "not as bad as it may seem" as it came on top of a healthy increase in the labour participation rate

India's unemployment rate rose to 8.3 per cent in December, the highest in 16 months, from 8 per cent in the previous month, data from the Centre for Monitoring Indian Economy (CMIE) showed today.
The urban unemployment rate rose to 10.09 per cent in December from 8.96 per cent in the previous month, while rural unemployment rate slipped to 7.44 per cent from 7.55 per cent, the data showed.

Mahesh Vyas, managing director of the CMIE, said the rise in the unemployment rate was "not as bad as it may seem" as it came on top of a healthy increase in the labour participation rate, which shot up to 40.48 per cent in December, the highest in 12 months.

"Most importantly, the employment rate has increased in December to 37.1 per cent, which again is the highest since January 2022," he told Reuters.

Containing high inflation and creating jobs for millions of young people entering the job market remain the biggest challenge for Prime Minister Narendra Modi's administration ahead of national elections in 2024.

The main opposition Congress launched a march in September from the Kanyakumari to Srinagar to mobilise public opinion on issues such as high prices, unemployment and what it says are the "divisive politics" of the BJP.

"India needs to move from a single focus on GDP growth to growth with employment, skilling of youth and creating production capacities with export prospects," Congress leader Rahul Gandhi, who is leading the 3,500-km march on foot, told reporters yesterday.

The unemployment rate had declined to 7.2 per cent in the July-September quarter compared to 7.6 per cent in the previous quarter, according to separate quarterly data compiled by National Statistical Office (NSO) and released in November.

In December, the unemployment rate rose to 37.4 per cent in Haryana, followed by 28.5 per cent in Rajasthan and 20.8 per cent in Delhi, CMIE data showed.

[Riaz Haq]

#India's numerous #jobs #scams show the depth of its #unemployment crisis. Just one such ring has reportedly conned at least 50,000 people since 2020, making it one of India’s biggest job frauds in recent times. #Modi #BJP #economy https://finance.yahoo.com/news/indias-numerous-jobs-scams-show-1055... via @YahooFinance

 

India’s latest organised job scam episode has affected people in the Indian states of Gujarat, Karnataka, Andhra Pradesh, West Bengal, and Odisha. They were duped of crores of rupees after being promised jobs, reports said.

“The scam was being run by a group of tech-savvy engineers from Uttar Pradesh with the help of some expert website developers. This core group was assisted by around 50 call center employees. These employees were paid 15,000 rupees ($181) per month and were from Jamalpur and Aligarh localities of Uttar Pradesh,” according to Jai Narayan Pankaj, a senior Odisha police officer.

Candidates paid up to Rs70,000 for training and other orientation programmes, including Rs3,000 in registration fees. However, the training never happened, Pankaj said.

In another incident unearthed in December, around 30 people were tricked into counting the arrival and departure of trains at the New Delhi Railway Station for a month, BBC reported. They were told this was part of their training for the positions of travel ticket examiner, traffic assistant, and clerk. Each of the duped candidates had paid up between Rs2 lakh and Rs24 lakh for the coveted Indian Railways job.

Scammers are not limited to operating within India’s borders either. Some work through agents even in Dubai and Bangkok. Aspirants are sometimes persuaded to move to countries like Thailand. Many are taken illegally to Myanmar, Laos, and Cambodia where they are held captive and forced into cybercrime.

India is just not creating enough jobs

In September and October, India added over 8.5 million jobs in the formal sector. However, that was not enough, considering the number of applicants, along with fresh graduates, exceeded the number of available jobs.

In December, India’s unemployment rate rose to 8.3%, the highest in 16 months, data from the Mumbai-based Centre for Monitoring Indian Economy (CMIE) showed.

datawrapper-chart-z6nHe

Worsening this is the global inflationary pressure and fears of an impending recession, sparking layoffs in recent months. This is besides the enduring effects of the pandemic years.

“One of the alarming possibilities for India...is the fact that our additions to the labour workforce are likely to slow down as it happened in China or in Europe and other developed economies,” TeamLease Services co-founder Rituparna Chakraborty told The Indian Express newspaper.

A study by CMIE and the Centre of Economic Data and Analysis of Ashoka University showed that over 12.5 million people aged 15-29 years not only lost jobs in 2020 but also stopped looking for new ones.

The number of farm jobs, meanwhile, increased during this time but that only underscored the economy’s weakness, the study found.

[Riaz Haq]

India’s economy is growing at the fastest pace of any major country, fueled by corporate earnings and middle-class consumption of the sorts of goods these companies (delivery companies) are rushing to deliver.

https://www.nytimes.com/2023/01/04/business/india-delivery-apps.html

But there has been no commensurate growth in steady jobs in India’s deeply unequal society. That has left the legions of working poor who toil as delivery drivers to serve a middle class that they have fewer and fewer hopes of ever entering.

Millions have been pushed into gig work as Prime Minister Narendra Modi has moved to privatize public entities and cut red tape, enacting a series of changes to labor regulations that have diluted protections for workers.

The number of gig workers is projected to reach 23.5 million in 2030, nearly triple the number in 2020, according to a June report by Niti Aayog, a government research agency.

With India’s public sector shrinking, the informal sector now accounts for more than nine out of 10 jobs, International Labor Organization data show. Such jobs, without guaranteed health insurance, social security or pensions, range from the treacherous — construction work without hard hats or other protective gear, or assembly-line labor in illegal firetrap factories — to the merely miserable.

Work as a delivery driver can seem a better alternative. Delivery app companies dangle offers of 45,000 rupees per month, or more than $540, in targeted ads on social media, about double the country’s median income.

But drivers say they rarely earn anything close. What they do get is constant hounding by customers and automated calls from the companies to go faster. The algorithms that assign orders, they say, reward drivers with high ratings, which are based on the speed and number of past deliveries. Drivers say delays — regardless of the reason — can mean a reduction in assignments or even a suspension, pressure that sometimes pushes drivers to put themselves in danger.

Mr. Niralwar joins other delivery app drivers every evening as they mill about in a dusty, unpaved parking area in Hyderabad. They chat between orders, lifting pant legs to compare motorcycle injuries.

Ankit Bhatt, 33, moved to Hyderabad four years ago so that his wife could take a job at a call center. Without a college degree, he had more limited employment options: low-paying retail or informal manual labor.

Ready to begin his evening shift for Swiggy Instamart, Mr. Bhatt tried to log in but found that his ID had been temporarily blocked — punishment, he said, for failing to deliver an order after his motorcycle clutch had given out.

“You could be sick, you could have an accident, your bike could have mechanical issues. You will be penalized for that,” Mr. Bhatt said.

[Riaz Haq]

India’s economic activity cooled off at the start of the year as higher borrowing costs tempered demand at home and abroad, signaling more pain ahead as the global economy slows down.

https://www.bloomberg.com/news/articles/2023-02-19/india-s-economic...

The needle on a dial measuring so-called animal spirits moved left and was back where it was for six straight months before showing momentum in December. Falling exports and a slack in manufacturing and services drove the weakness in business activity, offsetting improvement in consumption drivers reflected by tax collections and job growth, according to eight high-frequency indicators tracked by Bloomberg.

Domestic recovery, that has been driving momentum so far, is getting wobbly. The Reserve Bank of India, which has raised borrowing costs six times since May to 6.50 per cent, is seen increasing interest rates again in its April review amid inflation topping estimates and further tightening by global central banks.

Bloomberg’s animal spirits barometer uses a three-month weighted average to smooth out volatility in single-month readings:

Business Activity
Purchasing managers’ surveys indicated activity in both manufacturing and services slacked in January. Output and new orders grew at softer paces, and dragged the composite index lower from an 11-year high in December.

“Although manufacturers received new orders from international markets, the increase was slight at best and moderated considerably to a ten-month low,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

Exports
Exports fell 6.58 per cent in January from a year ago to US$32.9 billion (S$43.9 billion), data released by the Trade Ministry showed, indicating lower demand for goods abroad. Imports dropped 3.63 per cent from a year earlier and that pushed the trade gap to the lowest in a year, fueling hopes of a significantly narrower current account deficit.

The sharp fall in imports reflects the moderation in discretionary demand in the goods sector and the decline in commodity prices, said Garima Kapoor, economist at Elara Capital.

Consumer Activity
Liquidity in the banking system tightened, but credit growth picked up again, rising 16.33% in January, from 14.87 per cent in December, Reserve Bank of India data show.

Goods and services tax collections, which help measure consumption in the economy, rose 10.5 per cent from a year earlier to 1.56 trillion rupees – a feat achieved only once before in the history of the levy introduced in 2017. New vehicle registrations surged 14 per cent in the month, with passenger vehicle sales growing 22 per cent year-on-year, according to data from the Federation of Automobile Dealers Associations.

Market Sentiment
Electricity consumption, a widely used proxy to gauge demand in the industrial and manufacturing sectors, held steady, with the peak requirement last month rising to 173 gigawatt from 171 gigawatt in December due to increased heating requirements. India’s unemployment rate dropped to 7.14 per cent, from a 16-month high of 8.30 per cent a month ago, according to data from the Centre for Monitoring Indian Economy. BLOOMBERG

[Riaz Haq]

Only a cheaper rupee can spur Indian growth


https://www.ft.com/content/c3a28628-5b92-4db7-a8c2-0f41bea05969

Elite interest favours a strong currency, to the detriment of the nation
ASHOKA MODY


While other Asian policymakers, such as those in South Korea and China, have strategically used sizeable depreciations of their currencies to bolster export competitiveness, Indian elites bemoan every infinitesimal decline in the rupee’s value as a national humiliation. A unique economic and political confluence first entrenched this bogus pride in the country’s psyche in the mid-1960s. And since the 1990s, the country’s corporate leaders and new rich have wanted to maintain a strong rupee. As a result, the country’s export-based growth has suffered, as have jobs for low-skilled workers.


India is triply handicapped in exporting manufactured goods: it has a poorly educated workforce, few women in its factories and an overvalued currency. Education and female labour force participation are key to raising productivity, but take years to achieve. Today, only a much cheaper currency — about 100 rupees per dollar rather than the current 82 — can spur Indian exports. It is low-hanging fruit.

In a rare sane moment in 1949, a newly independent India devalued the rupee from Rs3.3 to Rs4.8 per dollar, bringing relief to its uncompetitive economy. Indian manufacturers could earn profits even when they lowered dollar sale prices, which helped increase exports. Costlier imports slowed import growth, helping reduce the current-account deficit. But the task was never completed. With low productivity and high inflation, India could not match countries such as Japan in labour-intensive manufactured exports. The World Bank and the IMF financed India’s large current account deficit, creating the illusion that it did not need currency devaluation.

When those two institutions finally threatened to stop financing that deficit, the country’s officials foolishly negotiated the rate to Rs7.5 per dollar in June 1966. This too-little-too-late devaluation did not compensate for the rise in domestic production costs. Taiwan and South Korea raced ahead, helped by currency devaluations; Indian exports languished.

The perceived failure of the 1966 devaluation to spur exports forever tarnished Indian belief in an activist exchange rate policy. Rather than encouraging more aggressive nominal devaluation to offset the rise in production costs and thus achieve real depreciation, devaluation “by stealth” was always too little, too late. In the 1980s, China used aggressive exchange rate depreciation as key to its monumental export push.



India’s 1991 financial crisis was another all too brief moment of sanity. Authorities devalued the rupee in July 1991 and let it float in March 1993. But new forces strengthened the currency. Software exports and remittances from workers in the Middle East had a bolstering effect. More importantly, once global money managers began funding large Indian companies, a strong rupee helped that small elite minimise the costs of repaying international creditors and investors. A strong rupee also helped aspirants to elite status shop for fast cars and handbags, often in Milan and Singapore.



Reflecting the national sense of pride and elite preference, political gamesmanship conditioned policymakers to focus on stemming the currency’s decline. In 2013, prime ministerial candidate Narendra Modi bemoaned the fall in the currency, saying: “Our rupee has been admitted into the ICU.” After Modi became prime minister, hot money flowed in and the rupee appreciated briefly. But when it fell again, leaders of the opposition trolled the government by repeating Modi’s phrase: the rupee was in the ICU.

[Riaz Haq]

Only a cheaper rupee can spur Indian growth


https://www.ft.com/content/c3a28628-5b92-4db7-a8c2-0f41bea05969


Elite interest favours a strong currency, to the detriment of the nation
ASHOKA MODY

Sadly, the nominal depreciation was not enough. According to the Bank for International Settlements, between 1994 and now, India’s domestic costs of export production have risen by about 60 per cent relative to competitors. As a result, the real exchange rate, which determines international competitiveness, has strengthened by 12 per cent. Vietnamese manufactured exports, following the East Asian playbook, are poised to exceed India’s manufactured exports.

India’s accumulated cost-of-production disadvantage requires the rupee to drop to about Rs90 per dollar; Rs100 per dollar would provide an ideal cushion. But Indian authorities continue to avoid an activist exchange rate policy, and rely on dodgy policy tools: tax cuts and subsidies for corporate India, tariff barriers to shield inefficient producers and weaker labour protections. Such measures simply make the rich richer, while doing little for low-skilled workers. An exchange value of Rs100 per dollar would temporarily give Indian exports a much-needed boost. The time to act is now.

[Riaz Haq]

Ritesh Kumar Singh
@RiteshEconomist
India's premature #deindustrialisation: 12 out of the 23 #manufacturing industries that make up the IIP (Index of Industrial Production) are at levels lower than 7 years ago
@moneycontrolcom

https://twitter.com/RiteshEconomist/status/1691499535170674698?s=20


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India's industrial growth falls to 3.7% in June


https://www.moneycontrol.com/europe/?url=https://www.moneycontrol.c....



India's industrial output grew by 3.7 percent in June, according to data released by the Ministry of Statistics and Programme Implementation on August 11.

At 3.7 percent, the latest industrial growth figure as per the Index of Industrial Production (IIP) is at a three-month low. It is also below the consensus estimate of 5 percent.

Industrial growth had come in at 5.2 percent in May - now revised to 5.3 percent - and was 12.6 percent in June 2022.

For the first quarter of 2023-24, IIP growth stood at 4.5 percent, down from 12.9 percent in April-June 2022 when the data was boosted by a favourable base effect.

Industrial growth in June was dragged down by a weaker increase in the manufacturing output, which rose by 3.1 percent year-on-year compared to 5.8 percent in May.

The performance of the manufacturing sector has an outsized impact on the headline industrial growth number as the sector accounts for more than three-fourths of the IIP.

While manufacturing output grew at a slower pace, that of mining and electricity rose at a faster clip. In June, mining output rose by 7.6 percent, up from 6.4 percent in May, and electricity production was up 4.2 percent. In May, electricity production was up a mere 0.9 percent.

The improved performance of mining and electricity sectors was down the low rainfall in June as drier conditions allow increased mining activity.

"IIP growth print in June has disappointed," said Suman Chowdhury, chief economist and head of research at Acuité Ratings & Research.

"Clearly, the manufacturing sector has not been able to sustain the growth trend that had been seen in the first two months of the last quarter. The manufacturing output grew only by 3.1 percent and actually saw a sequential contraction of almost 1 percent," Chowdhury added.

"Within manufacturing, output in metals exhibited a healthy performance while export-intensive categories such as textiles and wearing apparel continued to remain pressured," noted Rajani Sinha, chief economist at CareEdge.

In terms of the use-based classification of goods, there were some big shocks. While production of primary and intermediate good rose at a greater rate in June - 5.2 percent and 4.5 percent, respectively - there were weaknesses in other spheres, with output of consumer durables falling 6.9 percent in June after rising for the for the first time in six months in May.

Capital goods' output was up just 2.2 percent - down from 8.1 percent in May - while that of consumer non-durables rose a mere 1.2 percent. in May, it had posted a growth of 8.4 percent.

Output of infrastructure goods grew by 11.3 percent - the same as in May.

According to Aditi Nayar, ICRA's chief economist, the performance of most high-frequency indicators improved in July relative to June, although there were some laggards in the form of vehicle registrations and finished steel consumption.

"Based on these trends, ICRA expects the IIP growth to witness an uptick to 4-6 percent in July," Nayar said.