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August 27, 2006
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August 27, 2006




Page: 14/34

Home > 2006 Issues > August 27, 2006

Economy Matter
Jobless growth strategy still haunts

By Dr. Parakala Prabhakar

There are people and families behind the cold numbers of workforce data. They have not known anything but farming. The solution is not to drive them out of the farm and into the wretched urban slums. The way to increase productivity in the agriculture sector is not by slashing the number of hands that work the land. It should be done by changing the farm ownership patterns and improving farm practices.

Very often it is in some abstruse seminar papers that the actual thinking of the establishment is revealed. Notwithstanding eloquent speeches to the contrary in the legislatures, or loud protests against them on the streets, it is these strands of ideas that relentlessly shape the government?s policy thrusts.

One important clue to the Planning Commission?s thinking on agriculture, employment generation, and small industry is offered by the most important economic apparatchik of the present regime. Montek Singh Ahluwalia, the Commission?s Deputy Chairman, described agriculture ?as a residual sector marked by widespread disguised unemployment.? At a seminar in Delhi recently, he advocated for ?a shift of work-force from agriculture to non-agriculture to raise the per capita income of workers.? He said that ?mere expansion of employment would not make a dent on poverty.? He went on to argue that the ?two were not necessarily correlated.? He proposed that it was more important to concentrate on sectors ?which had higher labour productivity and high employment potential.? In the same breath he wondered whether reservation to the small-scale sector would generate jobs.

He talked about the three most important sectors of the Indian economy. What does this thinking portend?

Let?s first look at the farm sector. Indian agriculture has witnessed severe crisis during the last five to six years. From Kerala to Punjab, thousands of farmers have committed suicides. Well into the third year of the UPA rule, there is no marked improvement in the farm sector conditions. While it is true that the sector is host to a large army of disguised unemployed, the solution is not to shift work-force from this sector to the non-agriculture sectors.

The challenge that Indian agriculture poses to any sensitive economist is to suggest strategies to make it provide gainful employment to the available work-force. There are people and families behind the cold numbers of work-force data. They have not known anything but farming. The solution is not to drive them out of the farm and into the wretched urban slums. The way to increase productivity in the agriculture sector is not by slashing the number of hands that work the land. It should be done by changing the farm ownership patterns and improving farm practices. Shifting work-force out of agriculture can kill both the farmer and the farm. This is an uncomfortable portend.

The importance of small scale industry in the Indian economy and its potential for employment generation cannot be overemphasized. Once upon a time it was the socialists who laboured under the fetish of largeness. It seems that now it is the turn of the born-again free-marketers to suffer from the same disorder. Their preference is for one big enterprise producing one hundred goods, rather than ten small ones producing ten goods each to make up for one hundred goods in the economy. The first one is easy to administer. The second, they feel, is clumsy. But the first option assures only production. The merit of the second one is, it guarantees consumption too. The misplaced predilection for high growth rates ignores the need for sustainable consumption levels. Ultimately, all economic planning should be about assuring minimum and humane levels of consumption. The present thinking in Yojana Bhavan, however, portends disregard to this fundamental principle. It spells danger to the enterprise, the entrepreneur, and the worker.

Employment generation has taken a beating in the recent past. Yet our growth rates have not suffered. High value-adding and skilled employment, of course, can generate prosperity. One could, indeed, leap-frog to 10 per cent growth rate without significantly increasing employment opportunities. If you look only at heartless bar-charts and faceless statistics, you will not find a correlation between unemployment and poverty or employment and prosperity. But look at people in flesh and blood. Understand the misery of a jobless farmer. Realise the travails of a wage-less weaver. The correlation between poverty and unemployment is inescapable. It hits you hard in the face.

It is, of course, possible for joblessness and prosperity to co-habit for a while. That kind of prosperity, however, comes with a price. The society is filled with echoes of heart-rending wails of the dependents of farmers and weavers who commit suicide. The rulers are forced to announce relief packages. But those packages seldom work. And in democracies, the price of such insensitivity is not just troubled consciences. It will ultimately cost the rulers their jobs. It happened earlier. And it will happen once again if the jobless growth strategy is not exorcised.

Incidentally, the Delhi seminar was co-sponsored by the World Bank.

(The writer is Director, Centre for Public Policy Studies (CPPS). He can be reached at: cppshyd@hotmail.com)




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