DNA Money Edit: Importance of job creation with GDP growth

Economic growth without proportionate employment generation is nothing new to India. But the latest data on the rate of employment, according to the KLEMS research project supported by the Reserve Bank of India (RBI), points to the fact that it is getting worse in recent years.

During 10 years preceding 2015-16, when India clocked a higher average growth, the compounded annual growth rate of employment was a mere 0.53%. The study said the growth in employment has slipped by 0.1% during 2015-16 and by 0.2% in 2014-15, despite India reporting a higher economic growth.

Employment generation in sectors such as agriculture, forestry and fishing, manufacturing, textiles, mining and trade has suffered badly. Some of these sectors had faced a further slowdown in job creation in 2016-17 and 2017-18 when the economic growth slipped following the note ban and the rollout of the goods and services tax (GST).

In February, Labour Bureau's Quarterly Employment Survey said the manufacturing sector reported a loss of 87,000 jobs between April and June 2017. What is worse is that most people moved out of agriculture owing to poor productivity between 2014 and 2016 are not able to find alternate employment in other sectors. The government needs to step up its efforts to boost employment generation while pushing the economic growth.