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ECONOMY: FORECAST
Jobs
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Sumer Datta
Hewitt Associates India
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The job market has
been adversely affected by the stock-market crash, the political uncertainty
and the overall dull business sentiments which have together put even
previously announced and confirmed growth plans on hold.Compared to the
previous year, revenues generated through placing people in various jobs
have fallen, but that's largely because of the slowdown in the IT sector.
Each IT professional would have contributed in dollars to this market.
By this yardstick the drop in revenues would easily be around 30 per cent.
If we were to look at jobs in the IT sector per se, the drop perhaps would
be higher.
The job market has also gotten tougher for freshers.
Not because the number of entry-level jobs have decreased in absolute
terms, but due to greater availability of people with one to three years'
experience. This is especially true for the IT industry. Already there
is talk of just-in-time hiring. This will again put pressure on jobs at
the lower end. For seniors, opportunities may actually grow marginally
given the drive for greater professionalism in industry. Middle management
will feel the pinch with corporations facing a slower growth and margins
being squeezed. The bank VRS is a pointer in this direction.The service
sector (and that includes the software services) will continue to generate
the maximum number of jobs.
Hopefully insurance, bio-informatics, IT-enabled
services (call centres), retail services and telecom should create good
opportunities in the private sector. If the infrastructure growth plans
of the Government go on schedule, there should be enough employment created
there also. Any pick-up in market sentiment would have a salubrious impact
on the job market. On a long-term basis, organised sector employment has
grown by almost 7 per cent in the past decade and could well continue
the same way or maybe even accelerate in the next decade. The reasons
being the faster growth of the services sector, improvement in infrastructure
and new business opportunities being created.
Industry
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Mahesh Vyas
Executive Director, CMIE |
Growth in industrial
production depends largely upon domestic demand which is expected to remain
muted for a variety of reasons. Agriculture incomes have suffered following
two consecutive years of decline in output. In the past six years, agricultural
output has declined in four. The sharp fall in farm incomes would be a
major impediment to demand for industrial goods this year year. The urban
sector has been reeling under wealth erosion. The large market cap-based
indices such as the Sensex and the Nifty shed around 28 per cent during
2000-01. But the index of the broader set of all actively traded scrips,
the CMIE Overall Share Price Index, fell by a whopping 44 per cent. This
does not capture the impact of the vanishing companies on the wealth of
investing community. The actively traded companies yielded returns of
only 4 per cent since 1996. The hopes of new wealth creators in the dotcoms
have vanished and the spate of VRS is creating urban unemployment.
Fresh investments have been weak for more than
three years now and with the continued sluggishness in consumption demand,
this is not expected to pick up. The 25th Survey of Investments conducted
by CMIE in April 2001 shows that outstanding investments in the industrial
sector declined by 3 per cent in 2000-01. Fears of cheaper imports and
sluggish demand are the cause. Investments are increasing in the services
like telecommunications and commercial complexes. But that is not enough
to spur growth. Similarly, the policy of lower interest rates and sufficient
liquidity helps, but is not sufficient to spur growth.
If agriculture continues to wilt and investments
continue to wait, industrial growth cannot but suffer. The growth rate
has been slipping during the second half of the 1990s. And it will again,
this year. We expect the growth to be around 4 per cent.
Agriculture
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Abhijit Sen
Chairman, High Level Panel on Food Management
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Foodgrain output in 2000-01 was 12 million tonnes
less than that in the previous year. Combined with stagnant or falling
prices of most agricultural produce, it has affected farmers' incentive
and ability to invest. That will have a negative effect on this year's
agricultural output. The impact of this years monsoon will start showing
only from October onwards when the kharif crop arrives in the market.
That means about half of the current financial year (April to September)
will reel under the effect of last year's subnormal monsoon when almost
one-third of districts suffered drought of varying intensity. Though the
procurement of foodgrain this year is about 5 million tonnes higher than
last year, private stocks of foodgrain are lower now than they were in
2000. Prices of foodgrains may shoot up after July unless the Government
releases huge stocks in the market. But will the administrative machinery
be able to release stocks in time and at places where shortages occur?
Besides, will the people affected by shortages have the money to buy at
the price the Government sells? On the flip side, even if the monsoon
turns out to be subnormal, there should be some positive growth in agriculture
production since two consecutive bad years have lowered the base of agriculture
production.
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