India's employment crisis

An infographic in Indian media
India's unemployment rate has reached a historical high and the government is panicking. It has rejected and suppressed the report and committed itself to inventing a new set of numbers. Members of the national statistical body have resigned, and the bad job numbers have become one of the worst kept secrets in its modern history. 

As the government went down the road of obfuscation, it had also fooled itself believing that everything was fine. Once the statistical reports were questioned, the best explanation that the Head of the apex economic policy-making body could come up with was that Uber and other taxi-hailing companies have created millions of jobs in India. But then, the crisis is anything but hidden - walk on any street in any neighbourhood in any Indian city, and it is likely that you will see a few working-age people loitering, waiting or playing cards or carom in the middle of the day. IMF has recently warned that youth inactivity in India is highest among all developing economies (see here) and this has the making of a huge crisis.

Indeed, as Rutger Bregman would argue, going by its root word, crisis should signify a point of departure. But this is not the case in India, as no one is really looking to change anything - and hence, the right word may indeed be 'coma', a deep dreamless sleep. The youth inactivity is somewhat encouraged by various political parties across India and the some state governments have even made it a point to make annual grants to local youth associations, encouraging mid-day television watching or card plays against political volunteering at the time of elections. While this has resulted in, as expected, different kinds of social problems - drug abuse, mistreatment of women, petty crimes and cow vigilantism - the political advantage of unemployment has been cynically exploited by all political parties in India. 

And, not just that: The Indian middle classes, the key beneficiaries of globalisation, worked as 'Dream Hoarders', cornering government benefits and social infrastructure for their own benefit and to exclude everyone else. Unlike an 'emerging' economy - the world of 'white tigers' - social mobility in India has become more difficult. The deterioration of public education, proliferation of bad colleges, predatory health care system and poor quality jobs have all contributed to closing of the gates of opportunity, rather than opening it.  

The current situation is indeed a far cry from the enthusiastic portrayal of development made in 2014, when Prime Minister Modi came to power. So much has changed since those heady days, when India was to become the magnet of foreign investment and the manufacturing capital of the world, dethroning China. Part of it is inept handling of the economy: An ailing Finance Minister who meddled freely with the Central Bank ran the economy to the ground. Part of it is self-inflicted: Narendra Modi's politically motivated demonetisation was the price the Indian economy had to pay for his ambition to dominate the Indian politics. But much of it is a failure of strategy - the Indian government was sleepwalking into disaster and have no idea how to get the youth back to work.

With another election around the corner, the Government is in no mood to do critical analysis of what has gone wrong. Instead of substantive conversations, its strategy is bluster - the beating up of Pakistan hoping that it would translate into votes. Every month the government - in fact, governments, as the governments of various Indian states are equally responsible - sleeps on the job though, India is adding more than a million people to the army of job-seekers. Its demographic dividend is quickly turning into a demographic disaster.

In more ways than one, this Indian problem is also a global problem. Young Indians are a significant part of the 'out of poverty' claim that globalisation's advocates make. Indians are also one of the staunchest supporters of the Globalisation 90s style, not surprising as they indeed have been its major beneficiary. However, one could argue that India's current troubles are direct outcomes of its premature liberalisation, its very success in global service industry before the social and infrastructural issues were sorted out. India's education is a mess, and while the country's rulers may have expected that economic prosperity would lift its standards, poor educational attainment of Indian workers have become a significant barrier to productivity growth and moving up the global value chain. Its efforts to simplify red tape - with its focus on Ease of Doing Business rankings - only meant big companies could crush small companies and lax environmental control gives its cities one of worst air qualities in the world. And, finally, its IT services industry, successful as it is, crowded out other industries and enterprises which would have had longer term impact. In summary, unless the unemployment problems are quickly solved, India promises to be the ultimate basket case of neo-liberal economics.

The government has tried to deal with this complete failure of neo-liberal economics with a greater dose of neo-liberal economics. Therefore, it has started distributing free money to create 'incubators', with a teary-eyed dream of creating 'Start-up India'. This has had predictable outcomes: This has become another conduit to make the rich richer, and poor poorer. There are more incubators than start-ups in India, as they represent an additional source of rent for the college owners with empty classrooms. Similarly, its abysmally inefficient, poorly planned efforts of skills training has gone nowhere, becoming another source of corruption and cronyism and not the path of redemption it was once touted to be. These failures, however, are also evidence of limitations of neo-liberal thinking: That start-ups don't appear out of thin air because the government has said so, people don't become skilled because centres have opened.

Finally, then, it's quite dire without any clear answers. So, it's best to conclude with a question. When Soviet Union succumbed under the dead-weight of its demography, we celebrated the death of communism. As India heads to general chaos and unrest, and perhaps even a war, as its muddle-headed leaders bring the genie out of the bottle all too often, it's worth asking this question: What's at stake here? If India fails to emerge, and if globalisation has made even one of its direct beneficiaries so miserable, what's got to give?    


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