Ahead of Union Budget, PM Modi meeting industry leaders across various sectors to seek feedback on various sectors and suggestions on various policies to boost growth
Bharat should use global slowdown as a springboard to take the
next big leap
Dr Sudip Kar Purkayastha
After seven decades since Independence, when Modi 2.0 has begun to address some important socio-political reforms, global recession has unfortunately begun to cast its shadow on otherwise blossoming Indian economy. Several parties in the opposition space instead of co-operating with the government are using the temporary slowdown as weapons to torment it unfairly.
The pressure on Modi 2.0 is bound to grow more with time as it has made a few more important promises like doubling of farmers’ income by 2022, house for every poor family by 2022, safe drinking water for everyone by 2024, and $5 trillion Indian economy by 2024, for example. Ideally it needs to complete them before its present term completes. Under the circumstances what are the ways forward?
Out of the Box ‘Solution’
The government has been trying sincerely to tackle the challenges, but desired results are yet to manifest. Examined closely, its actions so far focused more on the ‘supply side’. These include successive cuts in bank rates, recapitalisation of public sector banks, sector specific package e.g., funds for real estate, cut in corporate tax rates, granting Rs 6 lakh crore by way of Mudra loan to 12 crore beneficiaries, to name a few. But the corporate sector continues to be diffident about demand and reluctant to expand and recruit.
Why this? Though the prospect of export looks grim due to global recession, India has a huge internal market. That should have largely insulated the economy. If the business confidence is still low, the government need to look at the management of the ‘aggregate demand’ and its components.
A section of economists argue that large numbers of Indians do not have adequate purchasing power and the government must place some money in their hands to stimulate consumption. They advocate inter alia a scheme of Universal Basic Income (UBI) which will raise demand & consumption, and therefore lead to utilisation of idle production capacity and rise in employment.
Blue Sky Thinking
The silver lining in the ongoing crisis is the government’s ‘openness’ to ideas. This attitude was the hall mark of Economic Survey (ES) 2019 document. Its preface stated the policy makers’ commitment to ‘unfettered approach’ and ‘blue sky thinking’ to meet the challenges of development.
That the government was aware of the importance of ‘demand side’ had showed up in a prominent way in September 2019. It decided to make a major intervention in the area of ‘aggregate demand’ by stepping up public investments to augment stock of physical infrastructure quantitatively and qualitatively. The finance ministry set up a task force under the secretary of economic affairs to identify Rs 100 lakh crore of infra projects covering both green field and brown field types, each over Rs 100 crore for investment over a period from 2019-20 to 2024-25.
This has been a momentous step long awaited. However, two observations will be in order. First, right identification of the infra projects is a must. Second, the investment should also address some urgent reforms to improve the quality of human infrastructure including inter alia education, health and judiciary. The government in fact studied these three areas in ES 2019, knows the ills, but do not seem to realize how comprehensively yet imperceptibly they have been throttling the economy. This article seeks to identify the right candidates for physical infra investment, argues that a fifth of the corpus of Rs 100 lakh be set apart for holistic reform in the areas relating to human infra and concludes that these combined measures can rapidly cast away the gloom and put the economy on a high growth path.
The Core Proposition
Interestingly it is possible to weld the massive infra investments with creation of huge numbers of jobs which in turn will generate income in household sector and boost consumption. This will have the same impact as the UBI with the added benefit that the money will be transferred to millions of youth not by way of charity but as a dignified compensation for the labour they put forth. This article proposes that fixed income salaried government jobs can be created for large numbers of unemployed youth belonging to weaker sections. These jobs will be for nation building encompassing both physical infrastructure and human resources. They will be for a shorter duration of up to 10 years somewhat like the ‘short service commission’ (SSC) in the defence forces. If the scope and scale of the works are considered as we propose to do in the succeeding part of the article, we would agree that they can potentially absorb nearly 10 million youth.
We take the proposal forward by investigating into opportunities for investments in both kinds of infrastructures. To begin with the physical infra projects, obvious examples are roads, affordable houses, ports, and facilities for generation of renewable energy.
Public Investments—Roads & Houses
During 2014-2018 nearly 30,000 kms of national highways were built. By 2022, additional 92,000 kms+ require to be built. Also, there are state highways and others like the PM Gramin Sadak Yojana. As regards ‘houses’ till June 2019 nearly 90 lakhs houses were built under PM Awas Yojana (Rural) over a period of two and a half years. Another 60 lakh houses are to be built by June 2020 alone. Then there are plans under PMAY-Urban scheme to provide affordable houses to a rapidly rising urban population. On the whole, the target of ‘house for everyone’ by 2022 poses a mighty challenge. To comply with the deadlines they indicate scope for employment of a huge army of skilled construction workers.
These two are examples where the government has identified the gap and fixed target. However, the challenge lies in identifying critical areas where the scope for investment is very high, benefits are manifold and yet they remain un-identified or rank low in order of priority of policy makers. The most eligible candidate for investment satisfying these criteria is a nationwide project for ‘restoring mother rivers’ of the country to health.
Public Investments—Restoring 10 Major River Systems to Health
India is blessed with over 10,000 rivers including 10 major river systems traversing through villages and towns. Besides the Ganges river system (RS) with a length of 2525 kms in India, others are: Indus river system (RS) (700kms) Brahmaputra RS (2900 kms), Yamuna RS (1376 kms), Narmada RS (1163 kms), Tapi RS (724 kms), Godavari RS (1465 kms), Krishna RS (1400 kms), Cauvery RS (805 kms), Mahanadi RS (900 kms). In most parts they are silted and polluted. The construction and related activities centring them may include: (a) extensive dredging to improve navigability and revival of waterways; (b) setting up several thousands of STPs in towns and cities along their banks to ensure that the sewage water and industrial effluxes are adequately treated before they join the stream; (c) both building and repairing of embankments of areas that tend to get breached during monsoon; (d) constructing several thousand river ports along the banks of the rivers.
Mother Rivers Upon India
Benefits will include inter alia drastic reduction in the cost of transportation of goods & passenger fare; improvement in aquatic lives giving a push to river-based fisheries; reduction in losses of property and lives due to monsoon floods every year; a new spurt in ship building and manufacturing of environment-friendly water-borne vessels; protection of environment. The revival of waterways as popular means of transportation can gradually take considerable parts away from road transport which today carries 64.5% of goods and nearly 90% of passenger traffic in India. In addition, tens of billions of trees can be planted across both banks of these rivers. Known as agro-forestry, such plantation will, after a gestation period of 3-4 years, become a permanent source of handsome income supplement for the farmers. The other obvious benefits are revitalization of rivers will lead to prevention of evaporation of running water, recharging of ground water, and improvement in soil quality. And these are no fanciful thoughts. An interesting project viz., Cauvery Calling by Isha Foundation (HQ in Tamil Nadu) has already begun which aims to plant 2.42 billion trees across banks of the river spread over one-third of its basin. It has reportedly persuaded nearly 70,000 farmers to shift to agro-forestry. This is the scale of activities and benefit from only one river system, and that too, one-third of it!
In terms of job creation, large scale new jobs will be available not only for construction of but also for operating the river ports and in the river policing services. As regards agriculture and allied activities, both agro forestry and fisheries are likely to create demand for new workers and reduce the disguised unemployment in villages. Notably setting up of tens of thousands of nurseries which will be needed to produce saplings will open up business opportunities to tens of thousands of farmers. Planting of variety of trees can ensure their use as fuel wood, fodder, fertiliser, medicine, etc.
As said already the task of building and empowering human resources is equally, if not more important. The government must shed complacency and act ‘here and now’, which will inter alia generate substantial numbers of jobs, direct and indirect, in a short time.
Education — Enough of Outsourcing
To start with, there is acute shortage of schools in the country. While estimating numbers of schools per million 5-14 years of teen age population at 6,000 in 2016, the National Education Policy (NEP) 2019 envisages it would grow to 6,300 in 2021 and 7,300 in 2031. This is typical bureaucratic approach. There is no sign of meeting the challenge head on. The acute scarcity of standard education in villages and small towns is a stark fact. Its impact has been particularly severe on socially backward classes. As a matter of fact, considerable vacancies in the government for reserved categories today remain vacant for want of educationally competent candidates.
The NEP 2019 observes the poverty of quality schools right from the early childhood care and education (ECEE) stage onwards. But it leaves large numbers of young population at the hands of ‘faith-based’ schools. A serious introspection would reveal that such dependence has been at the root of many social evils, social inequalities, alienation from India’s civilizational ethos and radicalization of mindsets that afflict the country today. NEP estimated the numbers of school dropouts of the age between 6 to 18 years at 6.2 crore in 2015. Large part of the blame for these lapses go to the absence of quality schools in sufficient numbers. Unavailability of competent teachers is another part of the problem. According to a clarification by Minister of State HRD in Parliament in July 2018 there are more than 10 lakh vacancies for the posts of teachers in the elementary and secondary schools in the country. Majority of these vacancies are in rural areas and in certain places the PTR (Pupil Teacher Ratio) is worse than 60:1. The government must understand the implication of leaving this most critical area of nation building either unaddressed or left with incompetent agencies. It should act energetically and come forward with quality schools and teachers. Mere filling up the vacancies already assessed will provide million plus jobs in teaching and non-teaching roles
Health — Insight into Job Opportunities
Right since 1947 India had neglected health of its people, particularly the poor. According to a ICMR study India carried 20% of global diseases burden with a meagre 8% of global doctors & nurses and 6% of global hospital beds. The first major awareness of the government reflected in the National Health Policy 2017. It envisaged setting up of 1.5 lakh Health and Wellness Clinic across the country to act as the foundation of India’s health system. It also provided for creating a large army of health service providers including nurse practitioners, public health nurses, mid- level health service providers through short courses & training, a cadre of public health managers and mainstreaming of alternative medicines. However, no definite timelines were set for meeting many of these targets. Not only a much faster turnout of doctors and nurses, there exists need for a very large numbers of para medical professionals to work as lab technicians, physio therapists, medical attendants and others. There is also a void of mental health professionals. Across the health sector huge vacancies go abegging for suitable candidates. Educational and training infrastructure need to be organized to build the army of health service providers. To rise to the occasion, the government must act in mission mode and secure full-scale cooperation of the major companies in the private sector providing health services.
Restoring Judicial System
Inadequate infrastructure in the judiciary probably affects the country’s economy in a vicious manner the impact of which has not been adequately recognized. Three layers viz., D&S Courts, High Courts and Supreme Court put together had outstanding lawsuits of over 3.46 crore at the end of 2018 and the number is rising every year. The pending cases in the D&S courts claims the lion’s share with 3.03 crore cases, followed by High Courts (42.39 lakh cases) and Supreme Court (over 56 thousand cases). More than 64% lawsuits in the D&S courts are pending for over a year, about 38% over 3 years and about 22% over 10 years. During 2018 the D&S courts achieved Case Clearance Rate of 94.76% and 87.4% with regard to civil and criminal cases respectively. Though this seemed to be impressive, the major challenges in India are the ‘back log’ and volume of ‘new filings’. The aim must be to achieve full clearance of the backlog on war-footing and then achieve CCR of 100%. Clearly this cannot be done without an all-out drive. In this regard the government approach as revealed in the ES 2019 betrays a routine, incrementalistic approach. It foresees things improving over a time frame of 5 years with the filling up of the vacancies. The question is can India afford such complacency?
The legacy of huge numbers of long pending cases has been throttling the economic development of the country by keeping millions of potentially productive economic agents perpetually paralyzed in legal wrangles. According to a World Bank Report on Ease of Doing Business 2020, it still takes on an average nearly 4 years to enforce a contract. The impact on the GDP becomes unavoidable.
The government can, much to the profit of the country and economy, work with the judiciary for next few years to ensure that the courts work in two shifts, retirement ages of judges at all levels are raised by 5 years, recently retired judges are invited to join back on contractual basis, and the much talked about Indian Judicial Service to appoint career judges is introduced without delay. It is high time the executive and the judiciary join hands to do whatever it takes to overhaul the system and ensure that the average life span of a lawsuit is brought down below 1 year. The government spend on judiciary in India as a percentage of GDP is less than 1%, way below that of developed countries. The benefit of spending more to spruce up the judicial system on the economy is phenomenal. Probably the highest marginal benefit to the economy results with the lowest percentage increase in the marginal expenditure in judiciary compared to any other sectors of public service.
Coming to new job creation, besides direct rise in the posts for judges and court staff, the maximum impact will be through rise in the number of legal professionals. According to BCI, the lawyers number around 1.3 million in India. Doubling of court shifts is expected to engage at least another 4-5 lakhs of legal professionals to handle the lawsuits. Besides the hope of time bound enforcement of legal contracts are bound to step up confidence in domestic and international investors giving a big push to the economy.
Another area of public service that is related to the criminal justice system concerns ‘policing’, which, according to recent reports has nearly 5.28 lakh vacancies across the country. India has actually 151 police personnel per one lakh population as against sanctioned strength of 191 per lakh people. The above vacancies are only in relation to the sanctioned strength. To come up to the standards of other BRICS countries, India needs to double or treble the strength of the police force. Together with carrying out the much awaited ‘police reforms’, filling up of at least the already identified vacancies will give urgent relief to people in general and confidence to business owners.
Digitalisation of Records
Two more areas where the government can create jobs and simultaneously make life easy for both people and businesses are (a) nationwide digitisation of government records of every description and (b) effective communication of all kinds of government schemes for public benefits to the rural population.
To elaborate, slow process of digitalisation has been hampering the quality of service delivery in various fields of governance. It is possible to undertake and complete this task across all areas of governance including revenue system, land records, police, court, education, etc for completion in a time frame of 5 years.
Ensure Last Mile Delivery
Talking of the government schemes, they are of diverse nature and often require some hand holding of rural population. For example, they could be as variegated as consultancy to farmers e.g., soil testing, kisan credit cards, agri loan waivers, crop insurance cover, personal accident insurance, Ayushman Bharat health insurance, Jan Dhan yojana, PM Awas yojana, Ujjwala yojana, pension schemes, and more. They keep coming out of the pipeline endlessly. To help the targeted beneficiaries avail the scheme benefits, a team of 15 advisors trained in farming, administration, banking and insurance may be appointed at block level to carry out awareness and education programmes round the year. Considering that there are over 6600 blocks in the country, nearly one lakh of new jobs can be created in a short time frame.
Keeping in view that the variegated nature of the work starting from construction to legal services that the new employees need to perform, the government will have to mobilize resource persons from both the public and the private sector. The first port of call will of course be the countrywide infrastructure already created under the Skill Development initiative of the government. Then, the major construction companies and health service providers from the private sector can be encouraged to make valuable contribution in imparting training as part of their CSR. The government can also draw from a huge body of retired personnel from armed forces, police, judiciary, banking & insurance, and education sectors amongst others. As regards the venue, the infrastructure under the Skill Development ministry, vacant slots in convention centres, meeting & exhibition halls, army and police establishments, training establishments of public sector and private sector companies and even classrooms of schools, colleges and universities can be utilized. The whole exercise may be carried out in a spirit of nation building.
Phasing the Recruitment Process
The scale of recruitment being huge it may take some time to identify areas for these jobs, but, still, the task must be approached with extreme urgency and carried out in stages. For example, the first batch of recruitment of 1 million may begin in six months’ time and then carried on at quarterly intervals for next nine quarters. All categories of new recruits may undergo six months training like army cadets. That will help fostering a national spirit in huge numbers of youth lifting them above divisive feelings of caste and creed. By phasing out, the government will get at least one-year time for allocating the first batch of employees to their respective jobs. However, the announcement of 1 crore government job can be done during budget presentation 2020 and that can have a magic effect on morale of the nation and instantly raise the confidence levels of the businesses.
Finally, this bold initiative is expected to blow apart the gloom of recession. Very recently the IMF in its annual report expressed grave concern about how declining consumption and investment and falling tax revenue combined with other factors have put brakes on one of the fastest growing economies in the world. For returning India to a high growth path it has advocated ‘urgent policy action.’ Exceptional situation warrants exceptional initiatives. Hopefully the initiative proposed here will qualify as one such.