Throughout 2001, if there was one word that no one in the Government dared to utter, it was "employment". Ministers have held forth on GDP growth, administered prices, disinvestment, the stock market and, lately, even on investment, but not on employment.

The Planning Commission appointed a Task Force on Employment Opportunities under the chairmanship of Montek Singh Ahluwalia. The group submitted its report in June 2001. Its conclusions are depressing. Total employment has grown from 374.75 million in 1993-94 to 397 million in 1999-2000. However, according to the report, "the rate of unemployment, as measured by the NSS surveys, appears to have increased in the 1990s". On the basis of current daily status (CDS), the rate has increased from 6.03 per cent in 1993-94 to 7.32 per cent in 1999-2000. The NSS data also show that the growth rate of employment has dropped sharply from about 2.0 per cent per year in the period 1983 to 1993-94 to less than 1 per cent in the period 1993-94 to 1999-2000.

One change that has occurred in the 1990s is that the public sector has lost its pre-eminence as a provider of jobs. In 1990-91, the number of jobs in the public sector was 19.1 million. The number crawled to 19.56 million in 1996-97 but declined marginally to 19.54 million in 1998-99. Since then, of course, there is no evidence of expansion of employment in the public sector.

The employment in the organised private sector also did not rise dramatically. In 1990-91, it was 7.58 million. In the eight years ending 1998-99, the number rose to 8.85 million. The capacity of private industry to generate jobs expanded only marginally. If private industry slows down, unemployment will rise dramatically. This is precisely what seems to have happened over the past four years. With industrial growth in the current year plunging to around 2 per cent and retrenchments on the rise, employment in private industry may have begun to actually fall.

The growth rate of employment in the organised sector reached a peak of 1.51 per cent in 1996, but plunged to 0.04 per cent in 1999. By now the growth would most likely be in the negative. Even at its peak, the growth rate of employment in the organised sector was below the growth rate of population. The number of persons on the Live Register increased from 34.6 million in 1990-91 to 40.4 million in 1998-99. Organised industry has, therefore, not only proved incapable of providing jobs to the urban population but also failed in its objective of drawing people out of low-income jobs in rural areas and providing them with higher-income jobs.

The rural story is not very different. During the 1990s, the agricultural growth rate has not only been lower than in the previous two decades, but has tended to be far more volatile. Besides, labour intensity in agriculture seems to have declined. These trends are reflected in the data on rural employment. The number of employed workers in the agriculture sector has declined by 0.34 per cent from 242.46 million in 1993-94 to 237.56 million in 1999-2000.

There is another aspect to employment: the quality of employment. While unemployment, according to the CDS measure, is only 7 per cent, the percentage of poor population is close to 26 per cent. According to the Task Force's report, "large numbers of those currently employed according to the NSS definition earned income levels which are insufficient to take them above the poverty line".

Mercifully, fertility rates have declined. Nevertheless, about 8.7 million persons enter the market every year in India. Assuming an employment elasticity of 0.22, a back-of-the-envelope calculation will tell us that low GDP growth will not bring about a significant improvement in the employment situation. What is needed is a GDP growth of 8-9 per cent over the next 10 years if we want to see a significant improvement in the employment situation. Such growth rates can come only through substantially higher public and private investment.

The traditional constraints in the growth of the Indian economy were paucity of food and foreign exchange. Both constraints have been banished. Inflation is at a historic low. Yet the Government is clueless about the ways and means of stimulating growth. Over the past three years, there has been a secular decline in GDP growth. The decline is expected to continue this year and the latest IMF forecast puts GDP growth at 4.5 per cent.

The BJP-led Government alone is not to be blamed for the unemployment situation. However, it is the BJP and its allies that have been in office for four years. In this period, they have only achieved a low rate of growth. It was jobless growth. And joyless growth.
(The author is a former Indian finance minister.)