Tuesday 6 January 2015

The Shape of Things to Come

CRISIL is a global analytical company providing ratings, research and policy advisory service. Its major shareholder is Standard and Poors, a division of McGraw Hill Financial Company.

 In a research study Crisil has found that between 2005-2010, 2.7 crore jobs were created in India, but in the same period 2.5 self employments ceased. So in effect only 20 lac new jobs were added in this period.

 However, during this period 10 crore youth entered the job market. So only 5% youth got jobs. What happened to the rest ? They probably ended up as street vendors, hawkers, stringers , bouncers, beggars, prostitutes, or criminals. I have already mentioned this in my articles 'Vikaas' and 'Unemployment in India' on fb and on my blog justicekatju.blogspot.in.

 An equally important fact revealed in the study by Crisil mentions that  in 2005, to do production of Rs.1 crore, 171 workers were required, whereas in 2010 to do the same production only 105 workers were required. So there was almost a 48% job reduction so far as the per unit production was concerned. This was obviously because due to the introduction of new technology, industry was becoming more capital intensive rather than labour intensive ( see my article 'World Economic Crisis' on my fb page and my blog ).

 So though the GDP grew, industries earned profits, and sensex rose,  jobs were reduced.

 I submit that ' Make in India ' will worsen the job situation in India. According to a study by the Central University of Gujarat, Gandhinagar, for every 10% increase in foreign investment, there is a 1% job reduction.. This is because on the one hand these foreign industries, or industries financed by foreign investments, are highly capital intensive and so provide few jobs, on the other hand, they ruin many small industries which were employing lacs of workers, or self employed people, who cannot face the competition of multi- national giants.

  The present Union Government came to power on the slogan of ' vikas ', which meant creation of millions of jobs. The youth in India,particularly, voted en masse for BJP under this impression. But the economic theory on which the Government of India is running is the 'Trickle Down Theory' ( see my article by the same name on fb and my blog in which I have pointed out the fallacy in the theory ). It will destroy many more jobs than it will create. Consequently large scale disillusionment is bound to set in soon, when the youth, small and middle businessmen, workers, farmers, shopkeepers, traders, and even some big businessmen etc realize that they have been befooled and taken for a ride. In fact it has already set in, as I am informed.

At the same time prices of foodstuffs are rising, making livelihood more difficult. In the last two weeks they have risen on an average 10-20%.Onion is Rs.40 a kilo, tomato Rs.50, saag Rs.40, peas ( matar ) Rs.50, beans Rs.60, cauliflower Rs.. 40,cabbage Rs. 30 , potato Rs.20,etc. Mutton is Rs450 per kg

I submit that despite the recent electoral victories in the state elections ( which they won because Congress gave them a walk over by persisting in retaining the discredited Sonia and Rahul Gandhi as their leaders ), the Modi government will become extremely unpopular in less than 6 months from now, and then large scale agitations against it will begin, which will result in another Emergency


  1. Dear Sir, with all due respect. I think by suggesting that using better technology will take away jobs you are being luddite. It is true that, technology takes away jobs, but then it creates newer jobs as well. This is how innovation works.

    You are painting a very gloomy picture for India's future which may be only because you are filled with cynical pessimism.

    Manufacturing, Agriculture and Service are the sectors where there is a scope for massive job creation. The present govt is trying to transform India into a manufacturing hub. As wages in China rise, the next destination for global manufacturing in an ideal world had to be India. But due to a total breakdown of governance in the last 5 years and a leftist Nehruvian economic mindset of the then govt, manufacturers moved to East Asia, even Indian bizmen invested more outside than in India.

    With all due respect. I hope and sincerely wish that your predictions don't come true.

    I urge you to read "Beyond 2020-A vision for tomorrow's India" by president APJ Abdul Kalam and YS Rajan. I believe this book will clear many of the fears you have for the ambitious Make in India program of the Modi govt.


  2. I cannot disregard your premonition.
    It will not be mere economic upheaval it will also be accompanied by social and sectarian ( communal) conflagration and polarisation.
    Ache din indeed!!!!