The Scottish folklorist Andrew Lang once said that some people use statistics like a drunken man uses lampposts – to support themselves rather than for illuminating the path. Convalescing finance minister Arun Jaitley – a lawyer by profession – seems to be doing just that in his latest post on his Facebook page. He claims that the economy grew by 7.7% in the last quarter and this trend “is likely to continue for the next few years”. Various indicators like FDI, domestic investment, social sector spending etc. are increasing and “each one of these is a high job creating sector”. Revenue collection is increasing but the govt. has remained fiscally prudent and responsible. Jaitley needs to say this – after all his job is on the line. But, what’s the truth?
Jobs is the most crucial bit because high GDP growth or more FDI or better tax collections may please neo-liberal economists and Washington but for winning the 2019 elections jobs will be the most important issue. Jaitley says that construction sector is expanding at it will give jobs. Firstly, construction sector employs about 14% of the labour force as per the KLEMS data put out by RBI. So, its not as if this sector alone is going to absorb the 120 million new persons added to the labour force every year, not to forget the backlog of jobless from earlier years. Secondly, this is the only sector among major employers where productivity is declining. That’s because it is low paying, insecure, seasonal drudgery. Its worse than selling pakoras in terms of income or stability.
Jaitley also says that investment, both foreign and domestic is increasing, implying that this will boost employment. The most recent data on national income shows that gross fixed capital formation (a measure of investment) grew at 9.8% in 2017-18 compared to 11.2% in 2016-17. Its actually slowed down not increased as Jaitley would have us believe. Another measure – lending by banks – has also hit one of the lowest levels of growth in several decades. So, there is no reason to believe that jobs will be created through increase in production in the coming years as Jaitley asserts.
Jaitley is similarly incorrect in asserting that FDI flows into India are increasing because FDI share of GDP actually declined from 2% in 2016 to 1.6% in 2017. Also, the number of greenfield FDI projects fell by 21% according to a recent report. In any case, FDI is hardly creating any jobs in India. The govt.’s much hyped ‘Make in India’ programme appears to be a non-starter as an analysis by Biswajit Dhar and K.S.Chalapati Rao has shown.
Jaitley also asserts that manufacturing is growing, again implying that jobs will also grow. He bases himself on the growth in the fourth quarter on 2017-18 which was clocked at 9.1%, reaching a level (nearly) last achieved in the first quarter of 2016-17. But have a look at annual growth figures: manufacturing growth has slumped from 10.1% in 2016-17 to 8.6% in 2017-18. For the finance minister to go over the moon on the basis of one quarter’s results is unbecoming.
And then Jaitley repeats the favourite Modi argument (also the economic vision of RSS) that there is a “wave of self-employment” caused by social sector schemes, especially financial inclusion programmes. He is probably referring to opening of Jan Dhan accounts and the provision of Mudra loans. As has been shown earlier, average quantum of Mudra loans is about Rs.47,000 per person. This is hardly an amount that is going to kick start any new viable self-employment opportunity. It may be helpful for already running businesses as working capital.
Jaitley is on thin ice – and he knows it. That’s why he is repeatedly asserting these wild claims. Remember, in February this year, in his Budget speech he claimed that 70 lakh jobs are going to be added. But data is not going to douse the fires of unemployment that is raging in the country. Especially not dodgy data.