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Employment & Entrepreneurship


by IRC-ADMIN - Jan 24 2019 11:35AM

Narendra Modi in his election campaigns in 2014, had repeatedly promised that if he was to be elected then he would create one crore jobs per year. Rest is history. Ever since the third year anniversary of the Modi Government, the opposition has been busy finding faults with the government. One of their spear attacks has been that the Modi government has failed to create jobs in the country as promised by him. The economy under Modi has been booming. India became the fastest growing economy in 2018 and it is also now the 6th largest economy in the world. But for the opposition, the economy is plagued by a phenomenon they call ‘jobless growth’ i.e they say that despite being a country having very high growth India cannot produce jobs. The opposition back this claim by quoting a stat from Centre for Monitoring Indian Economy Pvt., a Mumbai based company whose data shows a considerable dip in employment rates during the Modi government. In this article, we will be exposing the claim of the opposition by the most credible data sources and research.

The ongoing debate around jobs in the economy has been extremely skewed with unsubstantiated statements being heralded in the media diminishing the true state of employment growth in the economy. In a recent development, a think tank that purports to work on data has laid claim to the fact that the total working population in India has, in fact, declined by 10 million in the last year. These numbers seem opportunistically quoted by CMIE two months ahead of schedule on preliminary estimates from a minuscule sample of 140,000 respondents from an already skimpy full sample size of 550,000 individuals that were to be initially released in February 2019. Obviously, the link with the forthcoming elections seems to be a major reason for a premature release!


To gain a clear perspective on the employment delta, we need to look at data to understand the sources from where jobs are being created and assess the changes in employment’s biggest contributors. The transportation sector is one of the largest job drivers in India. Mohandas Pai & Yash Baid had conducted research on this aspect. They have considered data on the domestic sales of commercial vehicles (medium and heavy and light commercial vehicles), passenger vehicles (passenger cars, utility vehicle, and vans), three-wheelers, and tractors to estimate jobs being created in the economy. The data collected is from Society of Indian Automobile Manufacturers (SIAM) and the Tractor and Mechanization Association (TMA), the apex bodies for the automobile and farm mechanisation (for tractor sales) industries. These bodies consistently collect and disseminate data regularly on production, sales, and export trends collected from all the various automobile manufacturers in India. The conclusion they reached would astonish us exposing the lies propagated by the opposition. Every vehicle that is purchased in India creates jobs. For example, the manufacturing of a commercial vehicle typically creates two jobs, an auto rickshaw creates, on an average, 1.5 jobs as it is typically used in multiple shifts by different drivers. A taxi creates one job and further since many people have drivers to run their car, we can assume an additional job being created for every four passenger vehicles sold.

In their study, they have taken the total annual sale of vehicles from April 1, 2014, to December 31, 2018. We can clearly see that just the transport sector alone has contributed almost 3.4 million jobs in FY17-18, with a further 2.8 million jobs created in the 9 months ended December 31, 2018, as well. During the NDA term, over 14 million jobs have been created in this sector. A sizable chunk of this workforce earns a healthy income of about Rs 20,000-25,000 a month. There is a clear and growing demand for these jobs. About 70% of all goods movement happens by vehicles in India with the railway share further decreasing. It is evident that, in an economy of the size of $2.6 trillion, which is growing at 7%+, a huge number of jobs are being created. All we need to do is look at the job drivers and estimate the number of jobs. It is to be noted that in calculating the jobs from this sector, they have not considered any ancillary jobs that are created, namely from repairs, servicing, the sale of spare parts, the direct or second-hand distribution and sales of the vehicles themselves, the scrapping of these vehicles, and the sale of insurance, financing, etc. These ancillary jobs would be quite significant in size by themselves. However, for this study, we only look at the direct job creation and, yet, the following numbers are clearly substantial.


 Another large sector which creates jobs is the professional sector, much of which is non-corporate and outside the social security network. Professionals who start their own practices also create a significant number of jobs every year and these need to be an integral part of our calculations. Job creation is high among professionals like chartered accountants, company secretaries, management accountants, lawyers, fashion designers, doctors, architects, project managers, financial advisors, insurance agents, real estate brokers, stock market brokers and intermediaries, and myriad other professional service providers. insurance agents, real estate brokers, stock market brokers and intermediaries, and myriad other professional service providers. The total jobs created by this segment of the economy is also a function of the rich human capital graduating from our universities and professional entities. 

There is consistent data available in the income tax (I-T) department’s annual Income Tax Return Statistics Reports that provide a total of non-corporate professionals who are taxpayers. Non-corporate taxpayers declaring their income under the head, income from professions, implies that they are not paid the salary for themselves but pay salary to people employed by them. Most non-corporate professionals will have lower than 20 employees outside the purview of social security payments and can be counted separately. Based on the latest report for FY17, there is a total stock of 2 million such taxpayers as of March 31, 2017. Taking the average growth of around 150,000 new taxpayers per year, we can estimate the stock of non-corporate professional taxpayers at 2.4 million by March 2019. Of course, there will be more professionals working who may not be taxpayers but they will reflect as taxpayers in future years.

Taking an extremely conservative estimate of each taxpayer employing 5 individuals on an average, it can be estimated that there is a total current stock of a minimum of 12 million people employed in this sector alone. It is further estimated that three professions—chartered accountants, lawyers, medical professionals—together could be employing around 10 million people because a majority of these professionals, who have been practising for 5+ years, would employ over 5 individuals. The increase in total non-corporate professional taxpayers on a y-o-y basis helps us estimate the number of new practices being added every year. Using the same estimate of 5 jobs per practice, we can estimate from the attached graphic that 8 lakh jobs are added from the professional sector every year.

The attached graphic shows the incremental increase in taxpayers every year. It is possible that they were working earlier and they then came into the tax bracket this year. However, this is an annual feature with a continuing pipeline and, hence, it normalises over time. We estimate that the professional sector alone has created around 4 million jobs from 2014-15 to 2018-19 (last year numbers are estimated). Taking the jobs that we estimate from the transport sector—14 million over a similar time period—we can easily estimate a total of 18 million jobs were created in this period. We also cross-verified the annual flow of professional talent from our universities and professional entities to make sure that there was adequate talent joining the job market every year. Of course, very many will join corporate employers and come into the social security net, but large numbers will join professions too.

Now, there could be critics and they are welcome to criticise and make their own estimations about the replacement rate and come out with their own numbers, but whatever be the final number, anybody who looks at this data can undeniably affirm that large-scale jobs have been created in transportation and in the economy. Further, formal jobs counted through the EPFO, ESI, NPS, and in the professional sector are also large. The theory of jobless growth propounded by analysts, who have not seen this data, is indeed bogus. the inescapable conclusion is that India is producing a large number of jobs and yes, Modi government is delivering unlike the claims of the people who left the legacy of the growing unemployed population. Modi is in the path of 'Sahi Vikas'!

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