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  • Budget 2014 and employment - What you should know

    Finance minister Mr Arun Jaitley will present his budget on 10 July 2014. He will have to present a budget that encourages businesses to set up new factories and expand their manufacturing capability. In this context, the stance of the budget will have a significant impact on the future of employment generation in India. The new government has been voted to power with a hope that they would create more jobs for the country's people. Hence, job creation will have to be the top priority for the budget.
    In India, there is no specific statistics released. A recent working paper published by Reserve Bank of India gives some insight that could be useful for the policy makers.

Here are facts on India's employment: Here's a look at why it affects India:

  • Budget and employment:

    In the interim budget, the previous government has admitted that due to the deceleration in investment, the manufacturing sector has witnessed a sluggish growth. The National Manufacturing Policy has set the goal of increasing the share of manufacturing in GDP to 25% and to create 100 million jobs over a decade. The new government will have to push this agenda aggressively to achieve target.

  • The latest data:

    As of March 2012, the latest data that is available, 47.2 crore people were in the work force in India. Around half of them or 23.4 crore are rural male while 10.9 crore are urban males. Around 10.2 crore women work in rural India while 2.7 crore women work in Urban India.

  • Employment data in India:

    The challenge of the numbers above indicates that India needs to generate regular data on employment. The data is currently compiled by the National Sample Survey Office (NSSO) for India. The budget needs to provide for a comprehensive survey to be released every week, like in the US, to help assess the impact of policies on employment. The dated information serves little purpose.

  • GDP and employment connection:

    For every 10% change in India's GDP growth rates, there is 1.8 to 2% change in employment. For example, India's GDP rises from 4.6% to 5.2% (which is a 10% change), it would create new employment for close to 80 lakh people in rural and urban India. This relationship between GDP growth and employment data is called employment elasticity.

  • What next:

    The working paper argues that India will have to create 1 crore jobs every year for the next 15 years. Finding productive jobs for such huge numbers is a big challenge, the RBI working paper argues. It also says that additional jobs will have to be created keeping in mind the overall structural changes that Indian labour market has been going through. This is to include movement of people away from agriculture and reduction in women labour force as they move towards education.

    • If you are interested in knowing more about employment elasticity, a recent working paper published by RBI is a good read.Read more

    • The latest US jobs data is captured by the local press each week. Read more

  • 0.20

    The Planning Commission of India estimated India's average employment elasticity to be 0.20 in the decade to 2010. Employment elasticity is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth. The employment elasticity indicates the ability of an economy to generate employment opportunities for its population as per cent of its growth (development) process.