Sunday, November 16, 2014

Has Poverty Decreased ?

Has poverty decreased ?

The debate on poverty has transformed into a new plane since the country embarked on globalization. Before 1991 the poverty was measured in the light of the government policies implemented in line with domestic priorities. With the implementation of globalization policies since 1991, the poverty estimates call into question the set of policies under implementation since then. The poverty estimates, both released in 2011 by the Suresh Tendulkar committee and now in 2014 by the Rangarajan committee, are relevant, writesVeeraiah Konduri
New poverty estimates for India are in public domain now. By submitting its report in 2014 July, C. Rangarajan, former Chairman of Prime Minister’s Economic Advisory Council, performed his last official assignment. In preface to his report Rangarajan said, “Growth is not the sole objective of economic policy. It is necessary to ensure that the benefits of growth accrue to all sections of society.” A usual refrain in government language.
The debate on poverty has transformed into a new plane since the country embarked on globalization. Before 1991 the poverty was measured in the light of the government policies implemented in line with domestic priorities. But with the implementation of globalization policies since 1991, the poverty estimates call into question the set of policies under implementation since then. That is why the poverty estimates, both released in 2011 by the Suresh Tendulkar committee and now in 2014 by the Rangarajan committee, are relevant.
A comparative reading of the Lakhdawala committee findings on poverty in India and those of the Tendulkar and Rangarajan ones are important as they reflect the changes in poverty during the last decades of economic reforms. Not only that. During the last two decades, India stood out as one of the fastest growing economy scoring its growth rates nearing double digits before the global capitalist stagnation unfolded.
C. RangarajanThat is why some of the commentators in 2012 went even up to scolding those who begged to differ the estimates of Tendulkar committee. The tongue-in-cheek English media went one step ahead when it claimed that those who differ on Tendulkar’s estimates wants to see India still poverty ridden country and wants to keep their politics alive by punching the bag of sustaining poverty. For a surprise, there is no such a debate on the Rangarajan committee findings. Perhaps all the commenators must be busy in trying to locate the impending economic growth under the new regime in the country. We were told that the growing economies and economic growth benefits all sections of people and helps them to move out from poverty stricken life to life with dignity.
The Planning Commission based on the methodologies and recommendations suggested by the successive working groups on poverty has been performing the job of determining the poverty levels in India. The groups constituted by the planning commission from time to time are also revisiting the methodology deployed for this purpose. Presently the methodology prescribed by Suresh Tendulkar in his report is being used. Experts group headed by Suresh Tendulkar was constituted by the Planning Commission way back in 2005 and the group submitted its report in 2009.
As the Rangarajan committee report mentions, the Suresh Tendulkar committee used the all India urban poverty line basked as the reference to derive state –level rural and urban poverty, which is a deviation from the established practice of measuring the urban and rural poverty line separately. With this attempt, the absolute poverty declined fast in the country during the last two decades. Tendulkar observed, “Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs”. By mentioning it as socially perceived deprivation, Tendulkar seems, refused to see the deprivation in real life of a poor. With the controversy arose about Rs. 32 a day per capita expenditure for a person to be labeled as poor, the then UPA government appointed high level committee to look into the issue under the chairmanship of Rangarajan.
The table below reflects the variation in the basic details of poverty estimates. Table 1 informs about the monthly per capita expenditure where as table 2 informs about the absolute number of poor in India including the absolute poverty decline during the period. As shown in table 1,
the per capita monthly consumer expenditure considered by Tendulkar committee for a person to be categorized as below poverty, is upwardly revised by Rangarajan panel from Rs 673 to 801 for rural areas and Rs. 860 to 1198 for urban areas for the year 2009-10. Similarly for the year 2011-12, the Tendulkar committee fixed minimum monthly per capita expenditure at Rs. 816 for rural and Rs. 1000 per urban where as Rangarajan panel pegged these figures at Rs. 972 and 1407 for the same period. The calculations arrived at by Suresh Tendulkar panel suggests.
Table 2 also reveals similar
variations in the number of absolute poor in the country. The Tendulkar committee concluded that only 29.8 % of India’s population was poor in 2009-10 and it further went down to 21.9 % by 2011-12 where as Rangarajan panel findings concludes that a 38.2 % of Indians were poor in 2009-10 and in 2011-12, the percentage of poor declined to 29.5 %. Thus on an average an additional ten percentage of country’s people got the BPL tag. Though the number of poor went up with the calculations of Rangarajan panel, the so called commentators which expressed its outrage over the Tendulkar committee findings kept silent for its own reasons
Now after perusing the key findings and variations in findings between the two panels, let us consider the problems with the findings of Rangarajan panel. There two set of objections to the latest findings. One is about the food basked and calorie norm computed by the Rangarajan panel and the other is much larger one, the one that contextualize the decrease of poverty in India in the given pace of economic growth over the last few years. As the above tables indicate, there is an average 8.7 % of population moved upward from the shackles of poverty between 2009-10 and 2011-12, just in the span of three years. This feat is primarily achieved by skewing the calorie norm. First let us consider the calorie norm computed by Rangarajan panel.
The Alagh committee in 1979 computed this calorie norm basing the differences of works to be performed by the different classes of people in rural and urban areas. Since then it became a standard for various government policy formulations and fixation of even minimum wages. Over the last 35 years what are the changes that occurred in the nature of works that are being performed by the workers in rural and urban areas that resulted in requirement of reduced energy? How the Ranragarajan panel came conclusion that mere 2155 calorie is sufficient for performing the hard works? What are the new technologies that came into rural area that requires the rural workers to spend less energy while performing the operations? No one knows.
This computation will have far reaching consequences in computing the minimum wages as the nutritional requirement stands a prime concern while fixing the minimum wages. By reducing the minimum required calorie food, the Rangarajan panel excluded considerably higher number of people from being poor who are originally unable to spend to meet the 2400 calorie food. This 10 % reduction in minimum required calorie intake, if one takes into consideration, would have added up number of people below the poverty line to a much higher figure.
Another major question comes up from the government own figures themselves. When we see the poverty estimates of Rangarajan panel in the light of the National Sample Survey Organisation’s 68th round survey, the incompatibility of both the findings comes out more expressively. According to the 68th round survey of NSSO the total number of work force increased to a 30.9 million by 2011-12. But only 1.5 million work force could only be absorbed by the economy given its slackening of GDP growth from 8.40 % in 2009-10 to 6.88 % in 2011-12.

Reservations in Private Sector : Arguments and Counter Arguments

Friday, December 6, 2013

Welfare goals overlooked

Welfare goals overlooked the moves from those at the helm of national affairs, , the government is gradually slipping away from the goals for which its flagship welfare programmes have been conceived, contends K Veeraiah
The Achilles’ heel of fiscal discipline is now going to hit the so-called game changing flagship programmes of UPA hard. On the one hand, different agencies under UPA II are preparing to bank on their “ game changer” flagship programmes. On the other, the finance ministry is circulating guidance notes to curb the funds for the same flagship programmes. Immediate motivation might have come from the quarterly review of economy that was released by the finance ministry for the quarter ended by September 2013. It states the Centre is moving fast beyond the fiscal deficit target for this financial year.
Just before the finance ministry’s fiscal discipline drive, the government has announced new schemes, programmes and intentions hoping that they will help the government to sail through the forthcoming elections. The 11th Five Year Plan document visualized this linkage and said, “ though the 10th Five Year Plan achieved 7.7 % growth, it is perceived that the growth is not sufficiently inclusive for many groups, especially SC, ST, minorities. Gender inequalities remain a passive problem”.
To bridge this gap in developmental indices the UPA came up with idea of flagship schemes and floated 13 such programmes. Though the schemes which were proposed under this banner are not at all completely new, recognizing the role of their economic linkages ushering in comprehensive development is a new phenomenon. Some of them are completely new whereas some are restructured programmes of old ones. Over the time three more were added to the kitty and thus, as of now, 16 such programmes are under implementation.
The ultimate objective behind the flagship programmes is to achieve broad-based improvement in the living The ultimate objective behind the flagship welfare programmes is to achieve broad-based improvement in the living standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve the general elections, the central government  some more schemes such as delivering to rural working women, primarily agricultural labour, educational reforms worth Rs 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on apart from the game changer National Food Security Act.standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve of the general elections, the central government cleared some more schemes such as delivering mobile hand sets to the rural working women, primarily agricultural labour, educational reforms worth 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on, apart from the game changer National Food Security Act.
Since beginning of these flagship programmes the neo-liberal intellectuals cried foul and worried about the return of so-called welfare state. But the Comptroller and Auditor General of India in its latest report ( Report 1 of 2013- Financial Audit), laid bare the claims of the government when it reviewed the expenditure on flagship schemes in different years. Over the last four years cumulative spending in the name of seven flagship schemes stood at 4,07,058.5 crore against the budgetary allocations of Rs 4,13,307.69 crore.
In another sense contrary to the general perception that the UPA government is spending more on the social welfare schemes, the table explains the gradual reduction in expenditure under these schemes. Certain schemes such as RGGVY experienced drastic reduction upto 62% whereas the election winning MGNREGA programme seems to have lost the favor of the government. This is evident that in any single year the government failed to utilize the budgetary allocations for the same.
Way back in 2009 itself finding problems in implementation, the Prime Minister’s Office set up a Delivery and Monitoring Unit to coordinate and sort out the delivery mechanisms. Despite that arrangement, there is no major improvements in on the ground. Recognising this, the National Advisory Council, which advises the government on policy matters constituted a three member sub committee to review the implementation problems and suggest way out under the chairmanship of Mihir Shah, who also happened to be a Planning Commission member. The Mihir Shah committee came out with recommendations on three basic aspects of the implementation of flagship schemes. They are, a) streamlining the funds flow, b) improvements in transparency aspects, c) preparing the knowledge banks at district level implementation. Mihir Shah committee also finds it difficult when it comes to the financing the schemes. That is why its first recommendation centres around streamlining of fund flows. This is what the CAG report also indicates when it looks at the budgetary allocations and expenditure levels under different programmes.
Notwithstanding the moves from those who are supposedly directing the affairs of the government, the establishment is gradually slipping away from the goals for which these flagship programmes are conceived and started applying the fiscal discipline yardsticks. Let us consider the allocations and actual expenditure for financial year 2011-12 as test case.
The cumulative allocations for seven flagship schemes for the 2011-12 financial year stand at Rs 126312 crore and actual expenditure at Rs 109379 crore. Except in the case of PMGSY in the year 2010-11 which experienced almost double amount spent than the budget allocation, for all the flagship schemes, the situation stands same. Year by year the expenditure on these schemes is decreasing.
Look at the nature of the schemes. The MGNREGA is the only scheme that is intended to enhance the livelihood sources and wages for the majority of the rural poor. Hence out of the near about Rs 4 lakh crore of allocations, MGNREGA component itself is about Rs 1,79,079.2 crore. But actual expenditure is only 125842 crore short of nearly Rs 53, 237.2 crore which One must remember the fact that whatever the budget announcements, the government is governed by the budget responsibility and fiscal irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called as FRBM act) imposes the ceiling on the over all expenditure of the government and also fixes the bench mark in terms of is a whopping 29.72 %. That means, over the last four years itself, out of the allocations under MGNREGA, the government could not spend nearly 30% of allocations ! Having stated the facts from government report itself, the finance ministry’s proposal for universal reduction of 15 % for flagship programmes means a further deep cut of their spending as well as reducing the coverage which in all likelihood may go against the spirit of the flagship programmes.
This implicit drive could not help the government to meet its fiscal deficit targets mandated by Fiscal Responsibilities and Budget Management Act 2003 forcing Finance Minister Chidambarm to go overboard in asking concerned ministries to reduce their spending. Majority of the spending under these flagship programmes flows into rural economy unless stifled under the corrupting influence of administration.
The indicators already show that the economy is at snail’s pace and urban consumption has failed to pick up despite all the tax concessions imparted by the government. Surveys from McKinsey to Fitch show that the growth of economy is dependent on the possibility of increase in rural spending. Without money flowing into rural economy under these flagship programmes, no one can expect the rural sectors of economy to contribute to the overall economy of the nation.
P. ChidambaramThe government, it seems, is all out gearing itself to please the international rating agencies whose wrath Chidambaram faced during his latest visit to Washington. Though the Indian media played its due role in airing the news as if the Chidambaram took on the rating agencies as well as the IMF and World Bank for their growth projections, what went behind the screen is altogether different story.
With the latest announcement from the finance ministry it can be construed that the finance minister himself gave a commitment to the international community of finance capital that he would do his best to meet the fiscal deficit within the permissible limits.
One must remember that whatever the budget announcements, the government is governed by the budget responsibility and fiscal management, irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called FRBM act) imposes the ceiling on the overall expenditure of the government and also fixes the bench mark in terms of fiscal deficit. As we know, for more than a year the neo liberal policy analysts, both foreign and indigenous experts, are warning the government about the widening current account deficit. The finance minister’s statement suggesting the universal cut of 15 % on all government expenditure is an indication to this effect. Under this mandate only the finance minister is emboldened to ask the concerned ministries to reduce their budgets. By doing this, it is obvious that the finance ministry is pressing the wrong button.
According to the calculations of CBGA, cumulative tax concessions given out to super rich corporates between 2005-06 and 2012-13 financial years amounts a staggering Rs 31,88,760 crore ! Of this, mere corporate income concessions amount to Rs 474346 crore which is equal to the FRBM deficit target for the current financial year, which is higher than the cumulative allocations for flagship programmes over the last four years. Additionally, another Rs 271512 crore worth personal income tax concessions was doled out during this period which means a grand 20 % of the total tax concessions were accrued to the kitty of few super rich sections.
At the same time, this is also a period during which the government failed to meet the FRBM targets and dwindling tax : GDP ratio. Simply warding off to these telling facts, the finance minister prefers to cut back on the public investment which is life line for rural India. In a simple analysis, to ensure the smiles on the face of a handful bunch of super rich in the country and those in the world of international finance capital, the finance ministry has decided to trample upon the livelihoods of more than 3/4ths of Indians.
Major flagship programmes : actual expenditures and budget estimates (BE in crores)
Sr. No


Statistics for the years 2009-10 to 2011-12 are from CAG Report 1 of 2013. Data for the year 2008-09 collected from different government sources.
Abbreviations :
SSA = Sarva Shiksha Abhiyan,
MDM = Mid Day Meal Scheme ,
MGNREGA = Mahatma Gandhi National Rural Employment Guarantee Act,
RGGVY = Rajiv Gandhi Gramin Vidyudeekaran Yojana,
IAY = Indira Avas Yojana,
PMGSY = Pradhan Mantri Gram Swarojgar Yojana,
NRHM = National Rural Health Mission
( From, December 2013 issue)

Sunday, October 20, 2013

Poverty as an electoral weapon

Poverty as an electoral weapon

Poverty in India reflects a sad state of affairs. Instead of removing this economic and social aberration, the political class has been using poverty as an electoral weapon. The recent poverty data touted by the government to virtually claim that the scourge has been all but conquered reveals only the UPA-II’s stunted state of mind, argues Veeraiah Konduri 

The Planning Commission’s updated poverty estimates for the year 2011-12 basing on the National Sample Survey’s 68th round survey on monthly per capita expenditure (MPCE) throws new light on the trend of poverty reduction in India. The timing and comparative presentation of estimates turned out to be an occasion to unsettle the debate on poverty and its dynamics in India one again. Several economists and activists, including some politicians commented already. A crowning comment came from the future Prime Ministerial candidate, Rahul Gandhi, when he said, “ poverty is just a state of mind. It does not mean scarcity of food, money or material things.” According to the revised estimates, the percentage of persons below the Poverty Line in 2011-12 has been estimated as 25.7 % in rural areas and 13.7 % in urban areas and 21.9 % for the country as a whole. The respective ratios for the rural and urban areas were 41.8% and 37.2% for the county as a whole in 2004-05. It was 50.1 % in rural areas and 31.8% in urban areas and 45.3% for the country as a whole in 1993- 94. In 2001-12, India had 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, that is reduction of 1327 million persons over the seven year period. The press note issued by the Planning commission surmised its conclusions by saying, “ The decline in poverty flows from the increase in real per capita consumption. The clear inference is that ( a) the real monthly per capita expenditure increased by much more in the second period ( 2004-09 to 2011-12) as compared to the first (1993-94 and 2004-05), (b) that the increase was fairly well distributed across all deciles of the populations, and (c) the distribution was particularly equitable in rural areas. The first national poverty line was computed by YK Alagh committee in 1978 followed by Lakdawala committee in 1993 and the last in that series is the Suresh Tendulkar committee which deviated from calorie norm while computing the poverty figures to compute the poverty line basket which includes expenditure on food, cloths and health and came out that a person who spends Rs 32/- in urban areas and R 25/- in rural areas can not be treated as poor. The Planning Commission which spent Rs 35 crores only to renovate two bathrooms in its building decided that a person can live with Rs 32/- in urban India ! Suresh TendulkarThe poverty estimates, beginning from 1970s are being revised and updated once in every five years basing on the NSSO’s household consumption and expenditure survey. Against this the UPA –II government ordered an interim survey stating that it can not base on 2009-10 survey results as it was sever drought year. Perhaps this is the first time for the Planning Commission, the premier policy guidance body of Indian establishment out rightly siding working to boost the government-of – the day’s prospects. On the first reading of the estimates, one will get an impression that this magnitude of poverty reduction is only possible because of the economic reforms. And particularly the findings are designed to suit the UPA-II’s political objects as it is about to go on an electioneering in which these findings may be flanked as its achievements. Because of the seriousness of the criticism none other than the government’s chief statistician TCA Anant came out with a rejoinder denying this. The findings also wants us to believe that the economic reform induced growth finally trickled down and translated into increasing the per capita consumption of individuals. Also the pink press wrote editorials celebrating this decline and some even gone to the extent that the political establishment is worried because of poverty reductions. On the other hand, the estimations met with such a stiff objections that the Planning Commission member has to come out in open to say that these poverty estimates are nothing to do with the allotment of entitlements which are under pipeline and even claimed that for the first time in India the poverty estimates and fixation of entitlements are delinked to serve the poor better. The estimates are questionable on multiple grounds. The government is yet to come out with satisfactory explanation on the doubts raised over the Suresh Tendulkar formula of computing the poverty line, which basically deals with the methodological issues. AnantThe reading of the figures doled out from the NSSO computations followed by the Planning Commissions conclusions confirms that the unprecedented, uninterrupted intensive growth that India undergone from 2004-05 to 2010-11 helped to uplift 137 million people above the poverty line. Even after such a tremendous achievements, India homes for 269.3 million which is nearly half of the total poor in the world. Several commentators including those from the Planning Commission attributed this achievements to the economic reforms, thus wish to justify the clamor for accelerated reforms or in Prime Minister’s own wards, “ further unleashing the animal spirits in the economy”. According to the data, the rate of poverty reduction stood at 7.4 % per year during 2004-05 and 2009-10, when the average growth rate of economy stood at 8.5 % per year. The rate of poverty reduction increased to 7.9 % during 2009- 10 and 2011-12, when the average rate of growth of economy was reduced to less than 6 % ! That means the lower growth also leads to poverty reduction, according to the neo liberal argument ! The essence of the reformists’ argument is that the people are able spend more than the poverty line basket standards which implies that their incomes are looking up the sky. Some even went to comment on the changed food pattern with an inference to the increased cost of expenditure on account of fruits and milk. There is a fundamental problem with this assumption. In any economy, the if the incomes of it’s people looking up the sky, they must be employed in income generating activities or the government is increasing its social welfare spending, which both are not facts in today’s Indian context. The poverty line basically considers the spending on food articles, so let us consider the social welfare spending, the Congress’ MPs themselves calculated that the during 2003-04 and 2013-13, the share of food subsidy decreased from 57 % of GDP to 39 %, a clear 22 % down from its 2003-04 levels. Hence the increase in the expenditure on food articles can not be attributed to welfare spending by the government. According to the data, the rate of poverty reduction stood at 7.4 % per year during 2004-05 and 2009- 10, when the average growth rate of economy stood at 8.5 % per year. The rate of poverty reduction increased to 7.9 % during 2009-10 and 2011-12, when the average rate of growth of economy was reduced to less than 6 % That means the lower growth also leads to poverty reduction, according to the neo liberal argument ! Let us assume that the capacity to spend by aam aadmi went up as they are got gainful employment during this period. But the assumption is negated by none other than the NSSO surveys themselves. According to the latest NSSO survey on employment and unemployment, the man days generated reduced from 2.83 billion in 2009-10 to 2.16 billion in 2011-12 which means economy lost about 67 billion man days, there by the potential income generated by these man days. Not only that, according to Manas Chakravarty, the employment elasticity of Indian economy gone down from 0.44 in 1999-2000 and 2004-05 and to 0.01 during the period 2004-05 and 2009-10, ruling out the possibility of providing the gainful employment. The employment elasticity of manufacturing sector gone down from 0.76 between 2000-2004 to negative growth of – 0.31 between 2004-09, which are the years of high average growth. During this decade, the 14 million farmers lost their source of income, land and turned joined the ranks of agricultural workers. For the better part of UPA regime, the employment potential of economic activity in rural India gone down enormously which forced the government to come up the MGNREGA to resume the basic economic activity. No same mind can think of these developments contributing to the income and expenditure by people. Finally, a source of logic can be find in average rate of inflation. According to one analyst, average annual growth in inflation is at 12 % during this period which contributed to the rise in cost of living. A person who bought one liter toned milk for Rs.26/- in 2009 is now buying the same for Rs.32/- in 2013. Similar trend can be found in case of any other food articles. Still the people are buying as they have sustain their energies to live one more day. This does not mean that their incomes are rising that is why they are able to meet the ever galloping inflation burden. This can even be met through rising hand loans through non-formal channels, which means the rising expenditure on food articles and basic needs such as health and shelter are financed by debts rather than by increase in income. We are only discussing the unidimensional aspect of poverty. Had we gone into multi-dimensional poverty, our standing will be on the lowest bottom as it reflected in the annual human development index. With out taking this into consideration, the policy makers are enthusiasm about showcasing the glory of globalization and economic reforms using the deflated poverty estimates reveals nothing more than the UPA-II’s stunted state of mind.

Saturday, August 3, 2013

Can Job-Loss Growth be Really Inclusive?

Can Job-Loss Growth be Really Inclusive? Veeraiah Konduri THE results of the 68th round survey of the National Sample Survey Organisation (NSSO) on employment and unemployment reflect the deep-rooted convulsions that are taking place in the labour market in general and in rural India’s labour market in particular. The survey findings are based on a large sample of 1,01,724 households covering 7,469 villages and 5,268 urban blocks. The findings of the survey counter the government’s claim of inclusive growth and of benefits reaching out to a higher percentage of the working age population, vis-à-vis the overall population --- a claim which is typically coined in the policymaking circles as reaping of the demographic dividend. The survey, in fact, confirms the persistence of job-loss growth in India. The latest survey’s findings bring out three basic features. The first is about the transformational changes in Indian agriculture, the second relates to informalisation of the job markets and the third is about the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). FINDINGS IN A NUTSHELL It would be appropriate to consider a comparison of the results of 61st, 66th and 68th round surveys in order to assess the developments in job market during the UPA’s tenure, as this is the first government which has continued for more than one term in succession since India embarked on the globalisation policies. To present the findings in a nutshell, the rate of employment creation slipped from 39.2 per cent in 2009-10 to 38.6 per cent in 2011-12 while it was at 42 per cent in 2004-05. That means the nine years tenure over nearly two terms of the United Progressive Alliance saw our employment generation capacity going down by 3.4 per cent. This happened when the GDP growth graph rose more than nine per cent along with all three sectors witnessing upward change. (See Table 1 alongside.) The 68th survey findings are being interpreted in such a way, however, as if the fall in the growth rate of economy is the reason behind the slide-down in employment generation. The pace of economic growth is no doubt on a downturn for the last two years, but the downturn in employment generation goes far back, and the record over the last nine years which clearly indicates the job-loss growth. TABLE I Indicator (per cent) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 GDP 7.60 9.49 9.60 9.30 6.70 8.40 8.39 6.88 Agriculture 1.6 5.1 4.2 5.8 0.1 1.0 7.0 2.5 Industry 9.4 9.7 12.2 9.7 4.4 8.4 7.2 3.9 Services 9.4 10.9 10.1 10.3 10.0 10.5 9.3 9.4 Several studies about the development of capitalism in our society talk of the need of an economic system in which the overall dependence on agriculture for employment is replaced by dependence on wage labour. To put it simply, in a capitalist economy, gainful employment through industrialisation has to be higher than that in agriculture. Since independence, several analyses have criticised the government for not taking steps to reduce the pressure on agriculture. But for the first time now in India’s economic history, the overall dependence of the labouring population on agricultural work has come down to less than 50 per cent. Table 2, given alongside, reflects the sectoral composition in terms of employment, as the changes in abstract numbers. On an average, the table says, 840 people out of 10,000 opted out from agriculture between 2004-05 to 2011-12, which reflects the reduced potential of employment generation in agriculture. The table presents the distribution of workers (per 10,000) according to the Usual Principal Status by Industry in different rounds of NSSO surveys. TABLE 2 Indicator 68th Round 66th Round 64th Round Primary sector 4890 5320 5730 Secondary sector 2426 2250 1870 Tertiary sector 2686 2540 2410 The working age population -- labour force -- which stood at 400.8 million in 2004-05 (61st round survey of NSSO), increased to 423.9 million by 2009-10 (66th round survey) and further to 431.7 million by 2011-12 (68th round survey). That means the growth in workforce increased by 30.9 million between 2004-05 to 20011-12 whereas it could add only absorb 15 million during the last nine years in the actual working population. Though it looks like a great achievement, when compared to the levels of job creation during the period 2004-05 to 2009-10, it could only add up one million new jobs while the remaining 14 million jobs were added during the second term of the UPA, which is a major addition but comes in the form of jobs generated by the MGNREGA. It is thus clear that the working population actually declined during the most sizzling phase of economic growth. But while less labour force is coming into the job market, the economy is using them as an instrument to displace the formal or regularised workforce. However, their inclusion in the informal sector is nothing but a loss for both types of labour. The creation of decent employment outside agriculture is one of the biggest challenges that confront India which is trying to achieve faster, sustainable and more inclusive growth, at least in the words of policymakers. INFORMALISATION OF WORKFORCE Now we come to the second feature, i.e., informalisation of workforce. During the 11th Five Year Plan period the average GDP growth was eight per cent whereas the average annual growth in employment generation was down to a mere 0.6 per cent. This indicates the fact that a higher GDP growth did not translate into a higher rate of employment generation. Since the global depression, employment slid down further in tandem with the overall growth rate of Indian economy. In the interim period unemployment rate went up to 10.2 per cent. A more critical structural shift in Indian labour market comes from the agriculture sector. The proportion of workers engaged in farm related activities now accounts for only 49 per cent. Of the remaining, manufacturing absorbed 24 per cent and the service sector, 27 per cent. The pace of employment generation in these sectors, in numbers as well as in percentage, slowed down, leading to a dramatic decrease even in the number of the self-employed. But the Planning Commission refused to acknowledge the fact as well as the survey results till recently. Self-employment came down from 25.8 crore to 23.3 crore between 2009-10 and 2011-12 --- a clear 2.5 crore fall. However, it is not that this reduction in self-employment was counter-balanced by any growth in formal employment. These 2.5 crore self-employed individuals who lost their livelihood joined the casual labour force which went up from 13 crore to 15.3 crore --- a clear indication of the informalisation of labour force. This shift reflects the fact that the labour force is moving away from low value employment in agriculture to underpaid employment in the informal sector instead of moving up on the value scale by becoming parts of the formal labour market. TABLE 3 NSSO Survey LFPR WPR UR 61st Round 66th Round 68th Round 392 365 364 380 374 354 31 25 27 Table 3 helps us to understand the changing dynamics of labour market in India. All the figures are about the usual principal status. Decline in Labour Force Participation Ratio (LFPR), an indication of an economy’s inability to put to use the labour power for productive gain, is increasing, which is not a good indication. The LFPR was down from 40 per cent in 2009-10 to 39.5 per cent in 2011-12. The reason for the decline in labour force participation rate is the failure of manufacturing and service sectors to absorb the labour force that has moved out of agriculture; these people in turn had had to join the standing army of the unemployed or the casual labour force. This indicates that the economy has kept aside a considerable section of the working age population, preventing them from taking part in nation building by being gainfully employed. Also, this indicates a decline of the share of labour in the GDP and national wealth. When it comes to the women workforce, during the last nine years, it witnessed a steep reduction. As per the survey findings, it witnessed 90 lakh reduction in women workforce from causal labour. Out of every 1,000 women capable of working, only 327 could be employed in 2004-05, and the proportion went down to 261 by 2009-10 and further to 248 by 2011-12. On an average, the rate of reduction of women in the workforce was around 4.5 per cent between 2004-05 and 2009-10, which slightly improved by 2011-12, thanks to the MGNREGA. As the chances of being employed by the rural economy are drying up, male workers are migrating to urban locations, leaving the agricultural operations to women workers. Had the MGNREGA not been there, the fate of women workers would evidently have been much worse. As for the third feature, the findings of the 68th round NSSO survey brought out an important fact about the MGNREGA which is being ridiculed by various sorts of thinktanks and self-declared experts. There has been a widespread misinformation campaign that the pressure of wages is increasing due to the high benchmark set out by the MGNREGA. The average daily wage received by casual labours in rural areas engaged in public works other than the MGNREGA work was Rs 121 whereas those engaged in the MGNREGA earned only Rs 107 a day. At the same time, the average daily wage received by casual labours engaged in works other than public works was Rs 170 in urban areas. This confirms that the MGNREGA is not functioning as an impediment in the job market. After the implementation of the MGNREGA, the number of jobs generated by it went up substantially, as mentioned above, by around 14 million, out of which women accounted for an addition of 3.5 million. This is one third of those who lost their livelihood sources during the pre-MGNREGA period. It is evident that while the agrarian distress is pushing the workforce to move out of agriculture and other rural employments in order to try their luck in urban areas, the rural as well as overall employment scenario would have much worse than this if only, contrary to the criticism being mounted by a few, the MGNREGA had not been there. In sum, the 68th round of NSSO survey confirms that India is now undergoing a phase of what has been called job-loss growth. But job-loss growth excludes and restricts a considerably large number of working population from entering the job market, and this has its own spiralling effects on the economy in the long run. It is clear that any job-loss growth can never be inclusive in its nature, no matter what our policymakers shout from the rooftops.