Friday, October 19, 2012

The Befitting March!

The Befitting March!

Many years ago, I started my first earning debut. Being a refugee from the earlier East Pakistan (now Bangladesh) and being quite young in age and born in an educated middle-class family, access to an honest way of earning was a primary focus. The kind of job was of lesser importance though parents preferred dignified jobs. When I was about fourteen, I stated to earn. I was considered more fortunate among the luckier ones as I started earning a bit early without compromising my basic education!

But because I started a bit early, I was exposed to the methods of earnings. My exposure provided me with profound experience with a bit of skills in several areas, which spanned from handling electrical gadgets to house-line repairing, assembling of small step-down transformers, fixing of faults in water connection lines, sourcing of cheaper house-hold materials, preparation of various simple house-hold chemicals like washing powder, cheap soaps and detergents, repairing of house-hold materials and the like. Private tuition and coaching was another passion of mine; as a consequence, as I grew up and moved up to my mid-twenties there were no dearth of jobs for me with some pocket money too! I studied and learnt the market considerably within my means and molded myself accordingly. In our days, Government jobs were lucrative and passing UPSC examinations were adequate for getting decently fixed somewhere. This is what I did later!

There is much less government jobs at the present time. Our time has undergone a sea-change. From the scenario of Public Sector piloting the economy the earlier days up to late eighties, the Private Sector has established its hold gradually and firmly, now has almost majorly taken over. Consequently, the jobs in the private market are much more these days. Government jobs have drastically shrunk.

Statistics from learned sources vouch for the arrival of fresh job-seekers in numbers of more than one million annually! They are all young in the productive age of twenties to thirties. Our country does not have annually, new jobs for so many at a time! For some years therefore, bulk of young people are waiting for their turns; some are picking up smaller jobs with lower pay packets and some others are getting under-paid!

Young individuals are holding low-paid jobs to help cover some of their incidental expenses. They are in the waiting for a better opportunity. Unfortunately, low-wage jobs are becoming a career for many young Indians as the right kinds of opportunities are not arriving. In the process the lower –wage occupations are growing much faster than the mid-wage or the high-wage occupations. Is this a good trend?

Skill development is of prime importance for making one competent for hiring. These days the spectra of skill development is diverse. But the scope of acquiring skills does not seem to be adequate. Young job-seekers are often not adequately trained in skills that facilitate their hiring for an earning.

In any country, the Gross Domestic Product (GDP) growth rate provides a collective and combined measure of variation in value of the goods and services produced by its economy. GDP measures the value of total outputs in real terms or in inflation-adjusted terms in a year, which output must be the total value of people’s total expenditure to be incurred for buying the outputs. The GDP is calculated by three main techniques, which are based on measuring the output, or assessing the income or by calculating the total expenditure; by all these techniques the same figures are derived.

Indian economy is yet agriculture -based. Agriculture contributed to about 22.6% of the GDP in 2009-’10. The sector provides employment to nearly 56 % of the work force; employment in agriculture is however poorly paid. The service sector contributed to a hooping 63.4 %( including construction) of the GDP during 2009-’10 .This sector provides employment to nearly 25% of the work force. The industrial sector contributed to around 14% of the GDP; the sector provides employment to nearly 19%. The total work force is estimated to be over 500 million. Most remunerative salaries are in the Service and Industrial sector. Therefore, it needs to be explored if it would be possible to create conditions so that employees in Agriculture sector are also better paid.

Indian economy has manifested an average growth rate of more than 7% in the decade starting from 1997; unfortunately, the growth was predicted at 4.9% in 2012 by the International Monetary Fund (IMF) citing reasons of drought on one hand and the political gridlock on the other. IMF felt that unless better and more efficient ways and means are kept in place for boosting infrastructural investment especially in the energy sector and policy reforms in several sectors like taxes, subsidies and the like that contribute to boosting of investment and reduction in the supply bottlenecks , the annual GDP growth would not get picked up. This observation is certainly causing concern among the forward looking individuals and organizations.

The GDP growth over the years has been contributing to reduction in the poverty level of Indians to a considerable extent. Indian GDP at current prices was reported at 57412.38 billion Indian rupees in 2009, according to the International Monetary Fund (IMF); this figure is anticipated to reach 120973.81 billion rupees in 2015. Yet in spite of considerable reduction in the quantum of poor people, there exists some 217 million Indians, who are malnourished and living in families with income below the poverty line. Indian population is estimated at 1240 million in mid 2012. The malnourished Indians constituting about 17.5% urges the need for taking greater and stronger corrective actions from multiple directions to minimize the quantum. Most malnourished poor people reside in villages. Employment in agriculture is their almost only option for a living.

If India becomes wealthier faster on a sustainable manner and if the income distribution is more even and rational, then much of the problems related to poverty and income-inequality would even up. The indicators for leveling up to attain at least up to some minimum standard would obviously include spread of education, availability of hygienic sanitation, intake of hygienic drinking water and balanced food by individuals, adequacy of health care needs for individuals , adequacy of clothing and availability of affordable hygienic shelter. It is obvious that it would take many years to achieve the goals; the aim should not in any way be misdirected nor should the efforts dither the planning process to achieve the set targets.

Decent jobs are created more in the industry and the service sectors. In organized sectors, benefits like provident fund, leave entitlement, medical facilities and insurance coverage are also provided to the work force. Indian Services sector include: financing, insurance, real estate, and business services (contributed to 16.7% of the GDP in 2009); trade, hotels and restaurants ( 16.3%) ; community, social, and personal services category( 14.4%) ; transport, storage, and communication ( 7.8 % ); and construction (8.2%).Major Indian industrial sector comprise of Textiles & Garments, Leather & Footwear, IT Hardware Software & Electronics, Capital Goods, Aerospace, Communication, Food Processing, Shipping, Drugs& Pharmaceuticals, Chemicals, Steel, Cement, Mining, Petroleum, Transportation and a few more. All these sectors have highly organized industries; a sizable chunk comprises medium, small and tiny enterprises too. The ancillary industries and services also contribute significantly. While highly paid lucrative jobs are mainly in the organized sector, comparatively good and well-paid jobs are also created in the other sectors. The total potential for employment generation in these two sectors is about 40 - 44%. The rest would have to look for jobs in the agriculture sector!

Agriculture can provide more employment if the productivity is raised through induction of modern technologies. The agricultural produce being perishable and the cold storage facilities being limited and expensive the chances of the produce getting spoilt and wasted are more. There is considerable inadequacy in the infrastructure facilities like roads, rails, water-ways and air transportation; further, inappropriate and inadequate transportation facilities, inadequacy in the availability of electricity and other energy sources etc. add to the worries of the communities practicing the trade. Most of the individuals in the trade are poor with average income less than those employed in industry or in the service sector.

On the other side of the scenario, the National Council of Applied Economic Research (NCAER) has recently estimated that the number of high-income households in India has exceeded the number of low-income and should have reached 46.7 million by March 2010, exceeding the 41 million households counted as low-incomes during the period. Individuals earning between Rs 45,000 and Rs 180,000 per annum, (at 2001-02 prices) rose sharply in the last decade to 135.9 million in 2007-08 and 140.7 million in 2009-10. The number of families having income between Rs 0.2 million and Rs 1 million per annum, which is close to the World Bank definition of middle class was 28.4 million by 2009-10. Such middle-class households were 4.5 million in 1995-96 and 10.7 million in 2001-02. Obviously, these are indicators about India becoming more prosperous. The Indian middle-class have more purchasing power than the poor Indians. Food produced by farmers can be purchased locally by these middle class people and consumption in these families would constitute a sizeable portion. This buying class can pay higher prices too.

The present Indian policy to allow 51% FDI in multi-brand retail shall boost procurement of agricultural produce from the farmers. This policy would allow flow of capital for investment and allow induction of better technologies. These two factors shall upgrade efficiency at multiple points, enabling the farmers to obtain better prices for their produce. It is also anticipated that several paying jobs shall be created and the actual producers will have more capital at their disposal thereby boosting their purchasing power. The rural sector will be substantially uplifted economically. The resistance to such a move by some sections of the citizens in certain pockets does not stand to score much as the arguments from such pockets that there would be loss of jobs does not stand the rigors of logic.

Good things can happen if the administrative set up and the societal structure accept changes that are natural outcome of liberalization. Without sizeable investment and induction of technology the efficiency of production cannot be raised beyond a limit. Technologies can enable quantum jump in the productivity. Technologies can be inducted only when there are adequate funds, no matter where the funds come from. If the governing and managing of funds and technologies are rationally made to attract induction of such inputs without belittling the sovereignty of the country through administrative procedures emerging from strong and stable governments, there is no reason to believe why such endeavor would not yield results of benefits. If however efforts of liberalization are prevented to bloom and if in the process the vital inputs of capital and technologies get blocked, the progress will certainly not be with the speed which is required for India to progress faster.

The government decision to induct FDI in multi-brand retail is anticipated to boost agricultural productivity. Further, it would empower the producers of agricultural commodities directly and thereby the farmers at all levels would be able to boost their average income. If this happens, more remunerative jobs would be created in Indian agriculture. This would eventually enable the agricultural output to contribute more to the economy in value terms besides enabling easing of income parity. Further, this would enable the generation of more skills among the agriculture workforce which would increase their prestige much higher. Reduction in income disparity and enhancement of individual skills are some of the vital manifestations of an intelligent and socially uplifted nation. FDI in multi-brand retail we thought, is a step in this direction.