Risks of pakoda economics: Modi govt buries its head in sand, but unemployment may decide Lok Sabha poll result

Survey after survey is revealing that lack of employment will be one of the most pressing challenges facing the Modi government in its quest for a second term. According to the latest Pew Research Centre survey, published on 25 March, as high as 76 percent of Indian adults consider lack of employment opportunities to be the biggest challenge facing the country.

The survey comes after the Periodic Labour Force Survey of the National Sample Survey Office, leaked by Business Standard, showed that India’s labour force participation rate, which is the proportion of the population working or seeking jobs, fell to 49.8 percent in 2017-18 from 55.9 percent in 2011-12.

This is one issue where the Modi government is apparently fighting a losing battle in its bid to change the public perception. And this one is not like other issues which the Modi government and the BJP leadership are keen to dismiss as choreographed campaigns by liberal intelligentsia, and may have succeeded in doing so to some extent. The impact of unemployment is real and its manifestations in rural life are too obvious to ignore. The saffron outfits are well aware of the repercussions as the affected people can be expected to react when they go to the polling booths.

Results of a data-driven analysis of how the discontent over unemployment could play out in the 2019 elections are not at all reassuring for the Modi government.

Modi government desperate to show a lower unemployment rate

According to various estimates, the size of India’s jobless army is in the vicinity of 3 crore, which the Modi government is desperate to peg at a lower level, the success of which will be open to scrutiny in the election campaign for 2019. On a back-of-the envelope calculation, this would mean that each constituency will have over 50,000 unemployed among the voters. And the number is sizeable enough to decide the outcome of any constituency, particularly when there is a tough fight. And considering that there is a concentration of jobless in the crucial states in the Hindi heartland, which are set to witness keen contests in view of the three-cornered fight, this is going to be a crucial factor.

 Risks of pakoda economics: Modi govt buries its head in sand, but unemployment may decide Lok Sabha poll result

File image of Prime Minister Narendra Modi. Reuters

An analysis of the 2014 Lok Sabha election results reveals that in about 140 constituencies, the margin of victory was less than 50,000. The BJP may seek to draw comfort from the fact that most of the low victory margin seats were in states like Kerala, Andhra Pradesh and others where the party was not a major contender.

Still, there were about 40 seats, which were won by BJP and its NDA partners, with the margin of victory falling below the benchmark level. Many of these seats were in states like Karnataka and Bihar, where the party had done remarkably well, but faces tough fights this time. And most importantly, given the serious challenge the Modi government is expected to face in its bid for a second term, 40 seats can make the difference between hope and despair for it.

No wonder then that the Modi government has been doing everything possible — fudging, cover-up, window-dressing and what not — to come clean on the job front. We have had the curious case of two members of the well-respected National Statistics Commission quitting in protest over the delay by the government in releasing a new set of job statistics in the National Sample Survey Organisation (NSSO) report, which showed unemployment hitting a 45-year high under the Modi government. NITI Aayog, which primarily does PMO’s bidding, came out with the explanation that the report was not final as the data was still under process.

The controversial delay led to complaints by some 100 economists, some operating at the international level, about suppression of ‘uncomfortable data’ by the Modi government, which according to them questioned the credibility of once well-respected statistics originating in India.

It has now been reported that the controversial NSSO job data is likely to be released before the end of this month after a panel of experts vetted the report and arrived at the conclusion that the methodology used to interpret the numbers needed to be refined further.

Strategy behind Modi’s pakoda economics

The new data releases are expected to support the government contention that there is a serious flaw in the collection and reporting of job data as it leaves out jobs created in the informal sector, including self-employment. It is the same argument associated with what has come to be known as Modi’s pakoda’ economics.

Although the term has attracted much derision, pakoda economics is not just a random thought. There is a certain strategy in propounding the theory. Before coming to power, Modi had promised to create one crore new jobs every year if his party was voted to power. But the target turned out to be a line drawn in water.

According to published data, in 2016-17, only 4.1 lakh jobs were created, which is not even 5 percent of what was promised.

In four years of Modi government’s rule, the unemployment rate has registered an increase as the economy got caught in the tailspin of demonetisation and GST hiccups.

There has been a clear shift in the pattern of employment from permanent jobs to casual and contract jobs. The temporary nature of work obviously had an adverse effect on the level of wages, stability of employment, and social security.

The government claims that it has provided assistance to 7.2 crore youths under self-employment schemes. If what these people do with that money can be categorised as employment, suddenly, the job creation numbers would appear respectable and it would suggest that the government has even performed better than promised. That is the catch in the pakoda argument: a magic created through sleight of hand.

In his high-voltage reply to Congress president Rahul Gandhi’s famous 'hug and wink' performance in Parliament last year, Modi had presented a forceful argument about how the doctors, engineers, architects, lawyers, chartered accountants, cost accountants, company secretaries and other professional categories passing out of various institutes every year create jobs for others.

He even cited a study to show that out of about 17,000 new chartered accountants entering the profession in 2016-17, more than 5,000 started new companies. "If a chartered account company employs 20 people, then more than one lakh people have got employment in these institutions. Over 80,000 postgraduate doctors, dental surgeons and Ayush doctors come out of college every year. If 60 percent of them practice themselves, five others will get employment for each doctor and this works out to 2.4 lakh jobs."

"Nearly 80,000 undergraduate and postgraduate lawyers entered the profession in 2017. If 60 percent of them started their practice and gave employment to two to three people, about two lakh jobs were created through those lawyers. In these three professions, more than 6 lakh people would have received employment opportunities in 2017,” Modi had claimed.

He then cited the sale of passenger cars, trucks and auto rickshaws to argue the case further and establish that the public perception about job creation by the Modi government was not founded on facts.

All the arguments have been concluded and now it is time to wait for the verdict.

Updated Date: Mar 30, 2019 17:15:01 IST