Manufacturing of growthless jobs

It is that time when all ministries in New Delhi are taking out advertisements proclaiming the achievements of the government in power. There is nothing unusual in what is happening, but the scale on which the publicity blitzkrieg is talking place is staggering. That it has no parallel is clear from the full-page advertisements taken out by the Planning Commission which is normally expected to remain sedate and sober.
The Commission boasts that India is now firmly on a 8 per cent growth path, no matter that this achievement is only for the period July-September 2003.There is every possibility that growth in services may have been over-estimated since much of the growth spike has come from only a few sectors like telecom. But we should not quibble. The year 2003-04 will undoubtedly see GDP growth of 7-7.5 per cent and whatever the caveats — low base in the previous year, effect of a good monsoon this year and so on — this should be acknowledged as a major step forward. Whether it can be sustained is an entirely separate issue.
More controversially, the Commission boasts that there has been a huge upswing in employment generation in the last two years. According to it, almost 8.5 million new employment opportunities (in English, jobs) have been created in 2001-02 and a similar number in 2000-01. This, according to it, is almost thrice the accomplishment in the Narasimha Rao-Manmohan Singh years.
This claim goes completely against conventional wisdom that employment growth has decelerated in the last five-six years. According to labour ministry’s data, for the very first time, employment in the organised sector actually fell in 2001-02; during 1990-96, employment in the public sector increased by 0.58 per cent per year but during 1996-2002, it has fallen steeply to a negative 0.58 per cent; and during 1990-96, employment in organised private sector increased by 1.58 per cent per year but during 1996-2002, this growth rate declined dramatically to just 0.11 per cent per year.
So, what does the Planning Commission know that ordinary mortals are not aware of? What is the basis of its claim of the terrific growth in employment in the past two years, even after accounting for the new jobs that have been created by the successful flagship programmes of the Vajpayee administration — highways and telecom.
In the past, the Planning Commission has used sectoral GDP growth rates and output-employment elasticities (a technical term to denote the econometric relationship between growth in two variables) to estimate trends in overall employment. This is based on the assumption that jobs are created by the growth process in agriculture, industry and services. There may be special rozgar yojanas, but for the most part, it is economic growth that leads to sustained expansion in productive jobs. In the last five years, even after taking account the feel good and India Shining of 2003-04, real GDP growth would have averaged around 5.7 per cent per year, as compared to 6.7 per cent per year during 1992-96. On this basis and taking into account a stagnant investment rate, it would be reasonable to expect that employment growth too would have been lower in the recent five years.
A Planning Commission that a couple of years back refused to believe that poverty was falling owes it to the country to explain how astronomical increases are now taking place in employment. That electoral politics is at work is obvious from the selective manner in which surveys conducted by the National Sample Survey Organisation have been used to create an impression that employment is booming. If these surveys show more people working, it does not mean that more jobs have been created; instead, they could reflect growing distress.