6% job growth double of previous year: analyses of RBI data
STORIES, ANALYSES, EXPERT VIEWS
India added nearly 4.7 crore jobs in the 2023-24 fiscal year, a Reserve Bank of India report showed Monday, higher than several other estimates.
Employment growth rate was estimated at 6% in 2023-24, higher than the 3.2% recorded in 2022-23, according to the report, which measures industry productivity and employment. This is the first time that RBI has tried to extrapolate a provisional estimate of productivity for fiscal year 2023-24, using available numbers.
RBI’s provisional numbers: The central bank has issued provisional numbers in its report, which aims to measure productivity across 27 industries that are aggregated to form six broad sectors, including agriculture, hunting, forestry and fishing, mining and quarrying, manufacturing, electricity, gas and water supply, construction and services. The KLEMS database was constructed using numbers compiled from NSO, NSSO, ASI and other sources.
Govt cites RBI report, says 8+ cr jobs created between 2017-18 and 2021-22
Low level of productivity: According to The Indian Express, the figures released by RBI “are provisional estimates and they do not provide the disaggregated sector-wise job numbers for the latest year. In recent years for which the disaggregated data is available (2017-18 to 2022-23), however, much of the increase in employment has occurred in agriculture, followed by construction and trade — sectors marked by low levels of productivity. As per the database, value added per worker, a measure of labour productivity, is the lowest in the case of agriculture, and in the case of construction and trade is substantially lower than in the most productive sectors of the economy. This low level of productivity has implications for workers’ wages…..”
Inadequate creation of productive forms of non-farm employment: Also “the issue of inadequate creation of more productive forms of non-farm employment has been at the heart of India’s development story. The State of Working India 2023 report had pointed towards the weak link between long run GDP and non-farm employment growth. While successive governments have taken steps to facilitate job creation, progress has been patchy. With growing capital intensity of production, even in the labour intensive sectors, this will become even more challenging. The India Employment Report 2024 had noted that ‘the production process has increasingly become capital-intensive and labour-saving’. It had also pointed out that the skill intensity of employment had increased, ‘which was contrary to the labour market needs of the country’. Ensuring that growth translates to more productive job opportunities is the foremost challenge before the government."
Negative Citigroup India report: The release of the RBI's KLEMS data follows a Citigroup India report on jobs released last week, which said India will struggle to create enough jobs for its growing workforce even with a 7% economic growth. The report had also said that India will need to create 1.2 crore jobs a year over the next decade, but the growth rate will only allow for the creation of 80-90 lakh jobs.
Government rebuttal: Last Monday, the labour ministry issued a detailed rebuttal to the Citigroup India report prepared by its economists. An official statement said that according to the Periodic Labour Force Survey (PLFS) and RBI's KLEMS data, India has generated more than eight crore jobs from 2017-18 to 2021-22.
"This translates to an average of over two crore employment per year, despite the fact that the world economy was hit by Covid-19 pandemic during 2020-21, which contradicts Citigroup's assertion of India's inability to generate sufficient employment. This significant employment creation demonstrates the effectiveness of various government initiatives aimed at boosting employment across sectors," said the statement.
The unemployment rate has declined from 6.0 % in 2017-18 to a low of 3.2% in 2022-23, the statement said citing the PLFS data. "The PLFS data shows that during the last five years, more employment opportunities have been generated compared to the number of people joining the labour force, resulting in a consistent reduction in the unemployment rate," said the release.
"This is a clear indicator of the positive impact of government policies on employment. Contrary to the report, which suggests a dire employment scenario, the official data reveals a more optimistic picture of the Indian job market," the statement added.