India is moving towards “Jobless” growth considering recent news of jobless harvest.
As reported, IT industry as a standalone growth engine is losing the tag and economists expect about 100,000 to 200,000 jobs to disappear every year for the next 3 years and after 3 years, they failed to assume anything positive. For the first time, IT / BPO / Telecom/ Retail / BFSI / Autos facing the heat bumps and companies are laying off people in large numbers.
Tata Motors has recently come up with a VRS for middle managers while IBM announced to lay off 5000 jobs as reported. Cognizant laid off 6000 jobs while HDFC Bank cuts 4,581 jobs in the third quarter because of improved efficiency. Telcom sector may lose 40,000 jobs while GM India exit plan will result in 7000 job loss. 11,000 job loss in Railways as revealed by CRB’s letter to 17 zonal offices.
What McKinsey and World Bank had to say about “Job loss”:
McKinsey, in its latest report, says nearly 600,000 engineers likely to be laid off in next 3 years i.e. half of IT workforce will be irrelevant over the next 3-4 years as reported. The World Bank had predicted that around 60% of the Jobs will disappear while China will see 70% of jobs get disappeared and 50% jobs will disappear in western countries as reported. One in four job cuts may be from India in IT, IT-enabled services, security services followed by banking sector by 2021 as reported by HR solutions firm PeopleStrong.
Declining exports is worrisome:
Exports are declining and have already lost 70,000 jobs in just one quarter. India’s dismal export performance is heading to massive job losses. And, after months of shrinking exports without any signs of improvement, India is set to lose more jobs lead to worsening the situation as reported.
Is demonetization slamming us as a draconian step by PM Modi?
A study conducted by AIMO, projected 35 per cent job losses, 50 per cent revenue dip, a drop in employment of 60 per cent and loss in revenue of 55 per cent before March 2017. While Labour Bureau says as many as 1.52 lakh casuals and 46,000 part-time jobs were lost during October 2016 to January 2017. According to CMIE, 1.5 Million jobs lost during first four months of 2017.
Read below how BJP created just 1 lakh jobs opportunities while 20 lakh lost their jobs, RSS affiliated BMS slams Modi govt earlier last year.
Is govt cooking up economic growth data?
Basic macroeconomics says GDP is directly proportionate to job market growth, IIP, gross fixed capital formation, exports and demand for consumer durables. Slower GDP means lesser jobs will be created. PM Modi is losing in every front whether it’s job creation, IIP, gross capital formation, exports or consumer demand except FDI as reported. Let’s take one by one.
GDP growth slowed down to 6.1% in January-March 2016-17 while gross value added growth at 5.6%. IIP numbers (a metric by which factory output is measured), which slowed down to 3.1% in April 2017 from 6.5% last year (All the constituents of IIP – manufacturing, mining and power and etc). While gross fixed capital formation data reveals there has been average take of capital goods and consumer durables due to FDI inflow (Read FDI impact below). Bank’s lending to corporations is at 7.9% growth while exports falling for 17 months in a row (every other Asian miracle economy had double-digit export growth) as reported.
Despite agriculture has been given less importance over other sectors and farmers suicide rate is still a big concern but agriculture have come to rescue the dropping figure otherwise GDP number could fall below 6%.
Even dismal numbers were reported for full year.
GDP Data presents a rosy picture but fails to convince top economists and data crunchers for Q3 GDP:
Economists and data journalists were left puzzled as the Q3 GDP figures have been rolled out by the Central Statistical Organisation (CSO) under the auspices of the PM Modi. Ever since PM Modi announced demonetisation, economists have projected a hit on GDP growth. However, none of those projected figures have come close to actual GDP data revealed by The CSO i.e. at 7.1%. GDP figures had not taken into account the impact of demonetisation.
Is Modi Govt fudging the GDP numbers? Is their data as fake as their nationalism? https://t.co/kT9JxCQX71
— Raghav Chadha (@raghav_chadha) February 28, 2017
With official GDP figures unchanged at 7 % even after notenandi, govt has truly inaugurated post truth economics! Dont know what to believe.
— M K Venu (@mkvenu1) March 1, 2017
Why did growing FDI inflow fail to job creation? where exactly is this FDI flowing towards when the economy as a whole is largely slowing down?:
Regarding the FDI inflow, India continues to be among the top ten countries globally, and fourth in developing Asia. It has been increased to $44 billion in 2015 as compared to $35 billion in 2014. If you closely watch the data, it reveals FDI inflows are growing for stakes in the Indian start-ups and brownfield ventures. Brownfield investment is different from greenfield investment as in greenfield projects, company constructs new production facilities and builds distribution hubs while in brownfield investment the foreign company or government entity purchases or leases existing production facilities to launch new production activity in the host country.
So FDI is increasing but does not lead to job creation. We need such FDI which goes into greenfield rather than just brownfield projects. Let’s examine recent FDI into brownfield ventures during the past couple of years i.e. Alibaba-Paytm (claiming a 40% stake in Paytm’s e-commerce business for $200 million in 2017), SoftBank-Paytm ($1.4 billion in 2017), SoftBank/Tiger Global/DST Global-OLA (1.3 billion in 2016), Tencent-Hike ($175 million in 2017), Ctrip-MakeMyTrip ($180 million in 2017), Beijing Miteno Communication Technology-Media.net ($900 million in 2016), Xander Group Inc./APG Asset Management NV purchase of IT SEZ in Chennai from Shriram Properties ($350 million in 2016), among others. With an exception under which FDI, including through e-commerce, is allowed up to 100% in B2B (business-to-business) segment, and also in B2C (business-to-consumer) segment, conditional upon whether the items are processed or manufactured in the country.
Where is the PM Modi’s commitment to create 1 crore jobs every year:
Modi on Unemployment before 2014 :