The central government has asserted yet again. And this time it’s in the comity of nations. The Prime Minister opted out of the RCEP trade bloc citing reasons which point towards unfair bargaining position accorded to India but the real causes may be different. If India would have signed the RCEP in line with the other 15 signatory nations, there was an imminent danger of over a million jobs withering away. In an economy which is in a somber state it would have been hara-kiri in the short term to accept RCEP conditions when China was playing hard ball.
Though the concluding statement left an option open for India to join the agreement in near-term, given the time-frame of RCEP being signed by early 2020, that seems to be an unlikely possibility, veering India towards aiming to renegotiate individual trade agreements with important nations globally including the EU. Given the tough times we are in, at least there will be a moratorium on job losses at a period when employment creation seems to be a far-fetched dream.
Economic Slowdown and Challenges
Industrial output has fallen to its worst level in the last eight years. Eight core sectors have reached their lowest level. The trend cements concerns around economic slowdown. Moody’s recent announcement downgrading India’s credit rating to negative should worry North Block. It’s bound to wean away the FIIs if they were even contemplating investing in India. Chances of job creation, as a result, have become remote in the short-term. What’s more worrying is that Moody’s has anticipated the slowdown to continue unabated riding on the shadow banking crunch and rising public debt.
If one has to counter their argument, mere booster doses announced over the last two months by Finance Minister Nirmala Sitharaman won’t suffice unless they start showing signs of delivering results. Even if that happens, it might not be before a few quarters of stability that entrepreneurs will see value in investing, leading to job creation. Newspapers carry reports of corporates laying off employees but nowhere it is reported when attrition is not backfilled by organizations.
The malaise is deeper than expected and employers are taking note, with optimistic caution. Political instability – in Maharashtra will depress FIIs as well as the domestic business community. Worsening pollution in NCR and apathetic response to mitigate it is not helping matters. The chain of sentiments impacting investors and thus adversely influencing economic activity and employment generation is anybody’s guess. Tough executive action is the need of the hour to stem the rising tide of economic slowdown and unemployment.
Addressing Skills and Employability
Skill building for the future should be one of the topmost priorities of the government and the corporates alike. A serious warning has been issued by UNICEF stating that about half of South Asian youth by 2030 will be jobless due to a lack of skills. This is true for India as well wherein we are still grappling with a high level of employability issues facing graduate engineers – over 50% of whom do not get employment in line with their qualifications. Communication and soft skills are the other traits which continue to elude our youth.
Hope from the Start-Up Ecosystem
Finally, some news, even though a projection, is worth cheering. In its latest report, NASSCOM has projected that India’s start-up ecosystem has the potential to create up to 12.5 lakh direct jobs in the next five years, from 3.9-4.3 lakh direct jobs in 2019. The number of indirect jobs created by the start-up ecosystem in India can jump to 39-44 lakh by 2025 from 14-16 lakh jobs this year, according to the report titled “India’s Tech Start-up Ecosystem”.
One hopes that economic and tax sops coupled with a robust mechanism around ease of doing business will propel the start-up ecosystem to flourish, generate jobs, add dollars and give stability to the Indian economy.
