New Delhi: Raising concerns over jobless economic growth, Bajaj Auto Chairman Rahul Bajaj has said that although India's GDP can hit a steady-state of around 8.5 per cent for several years, employment "will not rise at anywhere close to that rate of growth".
Stressing on "worrying macroeconomic theme", Bajaj said in his address to the company's shareholders in the Annual Report for 2015-2016 that each year India is producing an extra 12 million young people of an age that makes them ready for the nation's workforce.
"Unfortunately, while there is no doubt that we as a country can increase our GDP growth initially to 8 per cent per annum and then hit a steady-state of around 8.5 per cent for several years, everything seems to suggest that employment will not rise at anywhere close to that rate of growth," he said.
Indeed, all recent data across most manufacturing and service sector activities show that employment elasticities (namely, the percentage increase in employment for a percentage growth in value added) are not only less than unity, but often negative, he added.
"Matters worsen if you juxtapose significantly greater skill and multitasking needs of the future with the
inadequate educational and technical abilities of many who are entering the labour force thanks to years of neglect of our schools, colleges and technical and vocational training institutions," Bajaj said.
He further said: "How then can we expect to employ the majority of our youth even when we attain higher growth? And what will this do to inequality and social tensions? I don't have ready answers. But as a nationalist in his seventh decade, I am concerned."
On the company's performance during the last fiscal, Bajaj said that amidst various successes, there has been a disappointment over events surrounding its quadricycle Qute.
"In FY2016, we exported under 400 units (of Qute) to 13 markets across the world. It was ready for introduction in India last year. Unfortunately, everything has been held up by ongoing court cases, which now await a final verdict in the Supreme Court. The matter is subjudice. All I can hope for is a positive outcome," he said.
On exports, he said due to external factors, especially poor economic conditions and severe foreign currency constraints in some of the key importing countries, the company has not succeeded in equal measure both in motorcycles and three-wheelers.
"After a 15 per cent growth in motorcycle exports last year, the numbers fell by 4.1 per cent to 1.46 million units; and, similarly, on the back of a 9.2 per cent growth in FY2015, exports of three-wheelers dropped by 1.6 per cent to some 280,000 units," Bajaj informed shareholders.
This does not take away from the fact that the company remains India's largest exporter of both motorcycles and three-wheelers and it still enjoys significant market shares, he added.
"In fact it has improved its market share in important geographies: 24 per cent in markets where it operates in Latin America, driven by the Pulsar 200NS; and 33 per cent share in the relevant markets of Africa where the Boxer continues to lead our motorcycle sales. I hope that exports will pick up when some of these markets abroad get into better economic and financial shape," Bajaj said.