Hardwired corruption blocking jobs creation

The grim spectre of mass unemployment is beginning to haunt the Indian economy. Belatedly, mainstream media and the political establishment have woken up to the reality that the prime purpose of encouraging investment — foreign and domestic — in the Indian economy, is to create jobs for the huge army of youth entering the jobs market every year. With the country’s institutions of tertiary education churning out an estimated 5 million good, bad and indifferent quality graduates, including 1.5 million certified engineers, with illiterates and school dropouts contributing another 10 million, the Indian economy needs to create at least 20 million new jobs annually. And globally, even if not in India, it’s well known that well-paid, meaningful jobs can only be created in the manufacturing sector or industry. Currently the manufacturing sector/industry contributes only 15 percent of India’s GDP against 20 percent in the developed OECD countries and over 30 percent in China. And with the annual GDP growth rate plunging from 9 percent in 2007-08 to below 5 percent in 2012-13, the prospect of the economy having generated anywhere near 20 million new jobs in the recently concluded fiscal year is fanciful. According to the authoritative London-based weekly The Economist (May 11), between 2004-05 and 2009-10, no net new jobs were created in the Indian economy against 60 million in the previous five years. On the other hand, communist China generated 130 million new jobs in services and industry in the decade 2002-12. If the number of unemployed citizens including 40 million registered unemployed is set to cross 100 million, the fault for this sorry situation is primarily of the Congress party which has ruled at the Centre for over 52 of independent India’s 65 years. First under prime minister Jawaharlal Nehru, it imposed the capital — rather than labour-intensive — heavy industry development model upon Indian society. Secondly, during the Emergency of 1975-77 it comprehensively sabotaged the country’s birth control programme. Since then, the national population has grown by over 400 million. Furthermore by imposing a regime of licence-permit-quota raj and tolerating official corruption as an “international phenomenon”, it slowed down investment in labour-intensive medium and small-scale industry, which would have been able to generate mass employment. And even though the then Congress government liberalised and deregulated Indian industry in 1991, corruption has become so firmly implanted in Central, state and municipal government, that India is ranked #132 on the World Bank’s transnational Ease of Doing Business Index. With the country’s 15-64 age group population set to rise by 125 million within the next decade, and annual GDP and industry growth at decadal lows, the solution is to stimulate manufacturing and industrial growth sufficiently to create 30 million living wage — rather than subsistence level — jobs in manufacturing and agro-industry. But the prerequisite of economic development is to flush out the corruption which is hardwired into mainstream political parties — particularly Congress — and government at all levels, and is blocking industrial growth and employment. Time to…