Yojana: Improving Productivity and Employment Growth
Here, we will discuss and analyse a list of sectors of the Indian economy, which can perform and contribute significantly to its GDP growth and also will give a boost to the employment generation motives of the Government.
Probable Questions for IAS Mains Exam
Q1: What are the measures taken by the Government to enhance the productivity of Industrial sector? Elaborate
Q2. Analyse the impact of demonetisation on rural farm and non-farm sector of the economy.
Q3. “Instead of merely importing technology, how innovation can be pursued which will contribute to productivity and employment, both have to be the important menu in the future discourses”. Discuss
For the developing economies of the world, it is much needed to revive its industrial sector because the service sector alone could not perform in every requisite of the economy.
Impact of Demonetisation on Rural and Urban Unemployment Growth
- The historic demonetisation drive of currencies of higher denomination last year has impacted the growth of agricultural investment and non-agricultural investment respectively in rural and urban areas likely to suffer raising the urban unemployment rate and underemployment.
- The medium and small enterprises which are largely dependent on cash transactions both in manufacturing and services are likely to suffer in terms of investment, growth and employment while larger units are also not completely out of risk.
- The first instance of the impact of the demonetisation is cut in investment which is mostly done in terms of a reduction in labour cost because it is the only input as compared to other inputs where an entrepreneur can take decisions easily.
- The demonetisation drive also impacted the rural sector unemployment and the fact is that presently, the agriculture sector has no potential to absorb labour significantly while many of them take recourse to shift in the rural non-agricultural sector which is too dependent on day to day cash transactions.
- How the Industrial Sector will help to generate employment
- In India, the industrial sector has great potential to rise and its total factor productivity growth can be raised significantly through technological advancement and innovation, contributing to non-input driven growth.
- As per the recent research which implies that in cases of capital intensive or high-cost technological innovation there are various channels through which the employment gains are possible.
- Other measures like product diversification, manufacturing of new products and by-products without a proportionate rise in capital and material and more importantly, the large-scale adoption of the new technology can result in employment gains.
- Necessarily, there are no trade-offs required to achieve the productivity gains and employment gains simultaneously.
The Union Budget 2017-18 on Growth and Employment Generation
- This year, the Government has made a highest allocation to MNREGA, one of the flagship schemes, so that large numbers of employment prospect are created.
- In order to avoid the usual criticisms of the employment guarantee programmes that it did not create enough assets which could contribute to future growth, the government has already started the geo-tagging of all the assets generated under the scheme.
- Geo-tagging is the space technology process of online recording of geographical information to various media in the form of metadata.
- Kangra of Himachal Pradesh has become the first district in the country to geo-tag 100 per cent of the assets generated under the MNREGA.
- During the financial year 2017-18, under the MNREGA scheme, it has been proposed to construct another 5 lakh ponds for drought-proofing in the specified regions in the country.
- If the MNREGA scheme is linked up with existing irrigation scheme then it will be simultaneously effective and productive for both in terms of agricultural growth and employment generation initiative.
- In the recent Union Budget 2017-18, the allocation for the rural, agricultural and allied sectors for 2017-18 is 24 per cent higher than the last year's allocations shows the aggressive approach of the Government to deal with the rural unemployment, underemployment and poverty issues.
- The Prime Minister‘s Employment Generation Programme, which is a composite of Rural Employment Generation Programme (REGP) and Pradhan Mantri Rozgar Yojana (PMRY) received an allocation of 3 times more than that of the allocation of the previous year.
Source: PIB and Yojana
- The Ministry of Micro, Small and Medium Enterprises (MoMSME) administers the programme and it is implemented by the Khadi and Village Industries Commission (KVIC) which has the dual objective is to bring back the tradition of village artisanship and to help (urban) youth not able to find jobs otherwise.
- In the recent Budget, the Government has emphasised on digital transactions through the nationwide digital India programme which will enable small and micro enterprises to access formal credit and hence rise in the productivity of these units and meaningful contributions to be made by these units to the national GDP.
- In order to provide help to small units, the programme of Digital India best suit in consolidation, facilitating the collection of taxes for those units surviving on the margin can actually improve their financial viability and performance.
- For the units who do not have debit cards or mobile phones, a merchant enabled Aadhaar payment system is proposed to be launched.
- Smaller firms with a turnover of around 50 crore or less will have to pay a lower tax (25 per cent) and they will have greater autonomy to invest more and hence in the process the industrial growth and employment are expected to rise.
- When it comes to the foreign investment, the Budget has also emphasised on the FDI norms that 90 per cent of the FDIs are proposed by automatic mode and that the Foreign Investment Promotion Board has been abolished, economic activities are expected to pick up considerably without the compulsion of going through bureaucratic delays.
- A 36 per cent increase in foreign direct investment (FDI) is likely to boost investment and generate employment considerably in the country.
- The Union Budget methodically addresses the constraints lie in the manufacturing sector and the Government in the ensuing 2017-18 financial year will launch a scheme Sankalp (Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme) at a cost of Rs 4,000 crore.
- Under the Sankalp programme, around 3.5 crore youth will be trained it will also provide market-orient training to the youth.
- In order to improve employability, the PM Kaushal Kendras will be extended to 600 districts, each being set up as community skill centres focused on the rural population with facilities for language lab, digital library, assessment and career guidance and skill room.
- Apart from the PM Kaushal Kendra, 100 India International Skill Centres (IISC) are to be opened serving the same purpose will offer advanced training and courses in foreign languages which is to help those who seek job opportunities outside the country.
After independence, India has witnessed dozens of employment generation and poverty alleviation programmes but still, the issues like poverty and unemployment have remained the core issues before the policy makers. One of the most important aspects of such policies over the years is its ineffectiveness to deal with the desired motives of the policy. The Government must focus on the core areas where the most workforces are involved like in farm sector where the half of the total population of the country involved and seeking work opportunity. So, at this point in time, effective implementation of policies is the most viable. The Government’s initiative of Geo-tagging of assets created under MNAREGA is a good step towards transparency and credibility which will help to reduce the existing discrepancy in the system and hence more such measures are required to make the policies as the successful one.
Apart from the farm sector, the manufacturing sector which has a large number of sick units is another area the Government should focus on. However, the manufacturing sector has great potential and it seeks technological innovation and basic credit support from the state can excel its productivity and considerable contribution to the national GDP.