Despite the huge push by the government to Make in India, a new study has confirmed that employment growth in the country has failed to keep pace with the economic growth in recent years. Particular concern is in sectors like mining, power and telecom, which, due to various issues, has seen reduction in employment.
A study of 715 companies over five years by credit ratings agency CARE Ratings found that the number of employees rose from 3.85 million in the year ended March 2013 to 3.92 million last year, a compounded annual growth of just about 0.5 per cent. This sluggish growth came even as India’s GDP (gross domestic product) grew at an increasing rate over 2012-13 to 2015-16, only slowing down in 2016-17.
“In the recent years, employment in the corporate sector has grown, though it has been lackluster given the ever growing population in India. In addition, the employment growth has not kept pace with the economic growth of the country that is growing at average growth rate of 7 per cent,” said Madan Sabnavis, chief economist at CARE Ratings.
The agency also analysed employment across 1,473 companies over the past three years and found employment rose just 3.4 per cent to 5.18 million in 2016-17, from 5.01 million in 2014-15.
Banks, information technology (IT), mining, healthcare and textiles accounted for nearly 60 per cent of the total employment. Of a total of 31 sectors, 16 sectors recorded positive employment growth last financial year. The highest growth was in the electrical sector, which saw employment growth of 14.85 per cent, while employment in the financial sector rose 11.24 per cent.
There was negative employment growth in mining (-3.80 per cent), iron and steel (-2.89 per cent), fast moving consumer goods (-3.27 per cent), capital goods (-1.47 per cent), telecom (-8.78 per cent) and power (-3.08 per cent) sectors.
Media and entertainment (-3.71 per cent), real estate (-7.28 per cent), and alcohol (-6.32 per cent) also recorded negative employment growth in 2016-17.
Earlier this month, speaking at a International Monetary and Finance Committee meeting in Washington, Finance Minister Arun Jaitley had said that the highest priority for the government right now was to create new jobs.
India's economic growth slowed to 7.1 per cent in 2016-17 and further to 5.7 per cent in the April-June quarter following demonetisation and uncertainties surrounding the rollout of the Goods and Services Tax.
Last week, the government announced a booster shot to revive the economy, which included Rs 7 lakh crore investment to build over 83,000 km roads.
This initiative to push infrastructure could pave the way for creation of jobs and that could change the employment scenario going ahead, said CARE Ratings. However, it warned that growth alone couldn’t foster employment generation and had to be backed by strong investment and new business opportunities.