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Home > Business > Columnists > Guest Column > Arvind Singhal

Job led growth

March 20, 2004

One of the recurring themes in leading international financial media is that of 'jobless' growth in major global economies.

The United States economy, for instance, has been growing at a scorching pace of 6 per cent in recent quarters and yet, that country is beset with increasing job losses and a high unemployment rate.

India, unfortunately, does not have very reliable statistics on employment (or unemployment) situation and hence while this issue has become the single most important electoral factor even in India (if one were to look at some of the voter surveys that have come in the national media), the magnitude of this looming problem is not very clearly known to our political leadership.

Irrespective of whatever official statistics we have on the current levels of unemployment and the demographic trends over the coming years that can forecast the job-creation needs in the coming years, it is irrefutable that India has a major challenge on its hands when it comes to creating jobs for all its citizens in the employable age group.

If any single situation can take away the sheen from India's progress in the coming years, it would be our inability to create enough jobs for all.

Fortunately for India, the challenge seems to be far more manageable than it may be for USA or Germany. All it needs (in big doses, though) is ideological pragmatism as well as a strong resolve to make the requisite changes in mindset and policy.

In most major economies, 'services' form the largest sector for creating employment. US alone has over 12 per cent of its employable workforce engaged in the retail sector.

And yet, the Indian government fails to even acknowledge the existence of the retail sector as an 'industry' and take any positive steps to encourage its modernisation and expansion.

In fact, a plethora of local, regional and national laws such as operating hours, trading conditions, movement of goods from one municipal limit to another (or one state to another), licences and permissions etc. make the start-up of a retail business a real exercise in determination and perseverance.

Probably unknown to our Planning Commission, the fledgling modern retail (and food services) sector has probably created as many new jobs as the emerging BPO / ITES sector.

If only the government of India can recognise the employment potential of a modern retail / retail services sector, over 2 million new (direct) jobs can be created within the next six years alone (assuming only 8-10 per cent share of organised retailing).

A strong retail front end can provide the necessary fillip to agriculture (through value added food processing), handicraft, and small and medium manufacturing enterprises, creating millions of new jobs indirectly.

The tourism and business related travel and hospitality sector creates a very large quantum of jobs in countries such as the US, Spain, France, Italy, and Singapore.

Yet, we all know that India receives a minuscule two million foreign visitors, and a majority of them so far are the low-spending 'Paharganj, Delhi' variety.

If only we can give the travel and hospitality sector a more holistic policy framework, starting from releasing large (prime) tracts of government / defence/ railway land to be used for developing a large inventory of high quality, moderately priced hotel rooms across major tourism / business centres of the country, millions of high income jobs can be created almost overnight -- with the magnificent tourism options offered by our 'Incredible India'.

Healthcare is becoming the biggest 'industry' in most developed countries, especially in view of the aging population in most of the developed world.

India can boldly attract hundreds of thousands of 'medical' tourists each year if only the government can provide a visionary policy framework to enable rapid increase in quality medical education (to create a large pool of highly qualified medical professionals) and to enable establishment of high quality medical facilities at major international gateways to India. Hundreds of thousands of new jobs can be created in this promising sector.

The list of such promising sectors is much longer than what I can cover within the constraints of this column. This is why I strongly believe that India's challenge in creating tens of millions of new jobs is one that is highly manageable.

Making some fundamental policy changes, providing some basic ingredients such as releasing government controlled land on more favourable terms, and a determination to facilitate rapid growth of such sectors by allocation of the best political and bureaucratic leadership to the same is all it takes to make a very strong start!

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