UPSC Exam Preparation-Gist of Yojana September 2018 Issue: Employment and Self Employment

UPSC Exam Preparation: Gist of Yojana September 2018 Issue: Employment and Self Employment

Table of Contents: Employment and Self Employment

1. Introduction

2. Credible Employment Data: Need of the Hour

3. Using Payroll Reporting

4. Employment in India – An Improving Picture

5. Innovation And Entrepreneurship

6. Indian Economy: Boosting Employment

7. Livelihood Development and Diversification

8. Creating Livelihood Opportunities in Urban Areas

9. Accelerating The Pace

10. Fixing India’s 3Es

11. Harnessing the Demographic Advantage

12. MUDRA Fuelling Growth in Micro Entrepreneurship and Employment

13. Recognizing The Power Of MSMES

14. Road Development: Indirect Employment Opportunites

15. Dimensions of the Indian Labour Market

16. Employment Avenues for Differently Abled

17. Creating a New Job Ecosystem

 

Chapter 1- Introduction

Today India enjoys a place of pride in the international arena not only as a fast emerging economy but also as a vast pool of dynamic human resource. While most of the developed world is moving towards a nation of ageing population India is poised to be the youngest country in the world by 2022. The employability of this pool of creative talent has been the highest concern of successive governments.

Post-independence, India was primarily in agricultural economy with majority of population involved in agricultural practices. Ove the years, however, the phenomenon of modernisation and industrialisation gained momentum. More recently, the approach has been to promote self-employment.

Indian economy has very unique characteristics with formal-informal, rural-urban, agricultural-non-agricultural, skilled-unskilled components existing at the same time. Any effort to promote employment needs to address concerns these components holistically. MSME is one sector with huge potential to create not only self-employment but also opportunities to create jobs further since many MSMEs like handlooms and handicrafts are labour intensive. National Manufacturing Policy estimates the potential of this sector to provide employment for 100 million people by 2022. Hence, the government is also having a focussed approach to provide support to this sector by war of Entrepreneurship Skill Development Programme. PMEGP, Scheme for Fund for Regeneration of Traditional Industries (SFURTI), Cluster Development Programmes etc.

Overall urban job scenario is also undergoing a change with newer job and entrepreneurship opportunities becoming available in e-commerce, IT, data analysis, finance, service sector etc. MUDRA, Atal Innovation Mission, Skill India, Start up India-Stand up India, National Urban Livelihood Mission etc have been focussing on providing basic Requirements like skill, Finances, clearances and making it easier and feasible for youngsters to start their own business. Pradhan Mantri Gram Sadak Yojana, Smart Cities, AMRUT, Hunar Se Rojgar Tak etc. are some of the project which has created productive employment opportunities. These numbers, though not accounted for anywhere in the formal employment data, account for major chunk of employment generation and cannot be ignored. The task to prepare a more reliable employment data based on household survey has already been initiated. The data once completed will confirm the results of these initiatives.

The success of a modern economy is directly linked to status of employment in the country. Full employment is an economic situation in which all available labour resources are being used in the most efficient way possible. With recent upsurge in job landscape, India is not far behind.

Chapter 2- Credible Employment Data: Need of the Hour

India’s young and growing population requires massive job creation. It also demands good quality job, which alone would meet their aspirations. Therefore, it is quite normal for the state of employment or unemployment to be a much-debated topic in India. However, this much-needed debate is constrained by three realities.

  • First, that around 80 percent of employment is in the unorganised sector, which is, by its very nature difficult to measure.
  • Second, the efforts by the current government for promoting the new economy have opened up several additional employment opportunities in the unorganized sector. These are also not captured in any official data estimates.
  • Third, it is quite evident that the quality of jobs on offer and the remuneration packages available for new employment is often not in sync with the aspirations of our young jobseekers.

India’s economy is on a balanced growth trajectory which needs to be maintained in the coming years by providing jobs to the country’s growing youth population. As per India’s recent population growth rates, about 10-12 million people enter the job market every year. Given the low female labour force participation of 27-30 per cent (which is a matter of concern) the total number of jobseekers per year comes to around 8 million. This, in itself, is a formidable number for fresh job creation. Our argument is that current data, which is available, points rather unmistakably to the fact that the economy has generated sufficient number of employment opportunities to absorb these additions to the workforce. However, this still does not perhaps take care of the massive backlog of unemployed youth from earlier years.

Credible Employment Data:

  • The current discussion on increase or decline in employment in India is pranged by the lack of credible data.
  • The Employment-Unemployment survey conducted by National Sample Survey Office (NSSO), MOSPI (Ministry of Statistics and Programme Implementation) is the most comprehensive survey providing complete labour force scenario of India across sectors like agriculture, Industry, services, etc. in both rural and urban areas. This was last conducted for the fiscal year 2011-12. Thus, as we can clearly see, the data is more than six-years old.
  • The Annual Labour Survey by the Labour Bureau was last conducted for 2015-16. Hence, there is no credible data on employment for the last 3-4 years.
  • Labour Bureau’s most recent Quarterly Employment Survey, which has the most recent results for the third quarter of 2017, covers only 8 sectors, which cover less than 15 per cent of the economy and would not ideally reflect the job situation in the country.

Employment Data:

  • Over the last two year, the void in government employment data has been filled by the (Centre for Monitoring Indian Economy) CMIE-BSE producing triannual employment reports.
  • CMIE data is fraught with all kinds of problems which render it quite undependable for example, CMIE data show female labour participation rates dropping from 26.4 per cent in 2014 to 11.7 per cent in 2017. Such a steep decline in female LFP rate is simply inconceivable. Such discrepancies render the CMIE data and their employment/unemployment estimates to be quite unreliable.
  • Given the huge data gaps, a taskforce headed by former Vice Chairman NITI Aayog, Professor Arvind Panagariya, was formed to review the scenario of employment data in India in 2017. The taskforce recommended yearly survey on employment data in July 2017. The first report of the NSSO household survey on employment is expected to be released in the first half of 2019.

Employment Generation – Estimates:

Payroll Reporting:  

  • For the first time in India, there is an effort towards payroll reporting, which measures the number of formal jobs and its increase on a monthly basis.
  • As per the EPFO (Employee Provident Fund Organisation) payroll data across India’s formal sector, 41 lakh formal jobs were created form September 2017 to April 2018.
  • While the formal sector is covered through payroll reporting the unorganised sector too has many success stories to report on the new type of employment which has seen a recent growing trend as discussed below.

Unorganised Sector:

  • The new economy has created membership-based employment like driver partners in Ola/Uber or delivery professional in companies like Flipkart/Amazon/Snap deal or professional home service aggregators like Urban Clap/Quikr Services etc.
  • These professional are different from the formal employees who work in these companies and are, therefore, not covered in any official or informal employment estimates.
  • Just the cab business has created more than 2.2 million employments over the last four years.
  • Services like UrbanClap and Quikr Services individually have more than 2.5 million professionals registered on their portals offering services across the large metro cities.
  • Chartered accountants (CA), Company Secretaries (CS), lawyers and other professionals who join the work force each year, at least in thousands, also employ additional people as assistants and other service providers. These numbers are also not accounted for anywhere. They will further add to the number of new jobs generated in the economy.
  • None of those employed in the trucking industry are, to the best of knowledge, covered in any employment estimates. Similarly, auto rickshaw drivers or those working in the transport sector in peri-urban and rural areas are also not covered. Accounting for all those gainfully engaged in these informal service sectors could easily add more than 12-15 million employed persons in this sector alone.
  • The story can be repeated for a number of other informal sectors like road side eateries, tourism related workers, those self-employed in rural mandis, haats and related vocations.

In short, unless better estimates of employment in these informal or uncovered sectors can be made, it would be quite misleading to come to any conclusion about the employment situation or extent of job creation in the last four years.

Self-Employment:

  • Moreover, there is the aspect of self-employed persons whose numbers have quite clearly gone up significantly over the last four years.
  • MUDRA loans started by the current government is one of the major schemes which is helping entrepreneurs towards self-employment and job creation across India.
  • By adding the estimates given earlier, or jobs created in the informal services sector, we can safely conclude that the past four years have seen robust employment generation and demand for jobs has not lagged behind the supply of new entrants to the workforce.
  • This demand-supply balance in the labour market is perhaps best reflected in the movement of real wage rate in the economy.
  • All the peddling the narrative of jobless growth or unsatisfactory employment generation, must review their own methodology or at least hold their brief until NSSO releases its results based on household survey of employment.

Chapter 3- Using Payroll Reporting

There is a need to determine and report the job situation in the country. A good place to start is analysing the supply of human capital in the jobs market.

  • Jobs by definition are split into the formal and informal sectors in India.
  • Formal sector jobs are characterized by social security coverage. Social security in India is provided by three organisations: EPFO, ESIC, and NPS (NPS is specific to government employees).
  • It is safe to assume that the formal sector generates close to 70 lakh jobs a year as this data is based on monthly contributions and payroll.
  • The skill development initiatives of the Government under the Pradhan Mantri Kaushal Vikas Yojana and National skill Development Corporation have successfully generated 5 lakh jobs in the previous year but may have been considered in other categories in the formal or informal sector accounting.
  • The total active labour force in India is estimated in various studies to be around 50 crore (estimated based on NSSO 2012) As per the World Bank, agriculture contributes to the creation of around 43 per cent of these jobs, thus bringing the workforce in industry and services to around 28.5 crore.

Efforts need to be directed towards greater job formalisation, including increased social security coverage and better data gathering so that appropriate polices can be made. Jobs creation among professionals like chartered accountants, lawyers, and doctors is the key in generating employment, and needs to be an integral part of our calculations. The total jobs created by this segment of the population are a factor of additional human resources employed by the professional for setting up a new practice.

Need of better jobs data:

  • It is important to note that India does not face a problem of not possessing the data to drive at its employment disposition.
  • The right data is lying with the government, the authors of the Ghosh report have demonstrated that a planned approach of using ‘Payroll Reporting’ can be used to unclutter this data and provide accurate and invaluable insights.
  • Most importantly, incontrovertible data proves that claims of jobless growth are completely unfounded and totally wrong.
  • The Indian economy has grown significantly between 1991 to 2018 at the rate of 8.7 percent a year such growth cannot be jobless growth.
  • Further, India’s current GDP growth rate of 7.5 per cent per annum would most certainly contribute towards a job growth rate of at the very minimum, 2.5-3 per cent per year.
  • As our Prime Minister said, we need better jobs data so that the focus is one good policy directed at creating more formal jobs rather than empty rhetoric about jobless growth

Chapter 4- Employment in India – An Improving Picture

It is found that the growth has been strong in 2017-18 – around 13 million jobs have been generated. This chapter discusses some of the policies that may have led to this expansion.

  • Some of the (seemingly) outsized employment gains in FY 18 might be due to the fact that the previous year employment levels were below normal – two successive drought, and major economic reforms (demonetisation and GST)

Estimates of Employment:

There is a great uncertainty with regard to the status of job creation in the last four years. This uncertainty is caused by the lack of a large scale NSSO (National Sample Survey Office) survey on employment – the last such survey was in 2011-12.  Therefore the discussions are based on private estimates on employment reforms, macro activity etc.  

‘Private’ Estimates of Job Growth:

As of now, three estimates of job growth exist.

  1. The first estimate is by a private data company, Centre for Monitoring Indian Economy (CMIE), in collaboration with the Bombay Stock Exchange (BSE), has been publishing monthly All India employment estimated since January 2016 These data point to a 3 million decline in jobs from May 2017 to April 2018
  2. The second estimate is contained in a joint paper by Pulak Ghosh (Professor, IIM Bangalore) and Soumya Ghosh (Group Chief Economic Adviser, SBI) In their paper “Towards Payroll Reporting in India”, they estimate the first ever payroll-based estimate of employment change in India. Establishment payrolls contain employee contributions to provident fund or social security payments (EPFO). Their first estimate of job gain was in March 2018 when they estimated that 7 million non-farm sector jobs were created, their latest estimate (July 18, 2018) is that a minimum of 1 Million jobs were created in FY 18
  3. The third estimate is provided by Tirtha Das and Surjit bhalla we estimates job growth of 12.8 million in FY18. Our estimates incorporate. EPFO data (for 18-21 year olds), labor force surveys in 2014 and 2015 and CMIE data pertaining to unemployment in 2016 and 2017

Demography In India’s Favour:

  • The national fertility rate is now at replacement levels (2.1 children per woman) and the population growth rate has declined to just 1.1 per cent a year, from a 1.8 per cent level two decades earlier.
  • The size of the young 15-24 age group is expected to increase by only 2.5 million over the next five years.
  • Even with the more expansive definition of the young (15.34 years) the increase is only 11.7 million over the next five years, compared to an increase of almost twice this rate between 202 and 2017
  • There has been a rather robust expansion of educational enrolment.
  • While labour force participation rates of women in India have declined, the decline is misunderstood. For two reasons. First, about half of the fact that more women are attending school (and college); and second while labour force participation rates for women have declined, male participation rates have also declined, and at about the same rate. The labor force participation rate for women, for ages greater than 24 years, has stabilized since 2009. Increased educational attainment of females should lead to an increase in their labour force participation, and employment in the future.

Chapter 5- Innovation And Entrepreneurship

The challenges for creating employment opportunities for Indian youth:

  • There are challenges in terms of low levels of education and skill and high dropout rates and discontinuance of education impacting the employability of the Indian youth and heterogeneity in sectoral distribution of economic activity across regions.
  • The choice of low skills jobs is evident from most of the youth entering farm sector followed by construction and manufacturing at the entry level (15-17 years) and shifting to trade and repair/transport sector followed by construction and manufacturing in the later years (18-29), though agriculture remains a dominant sector.
  • Further, the unemployment rates have shown an increasing trend with rise in educational qualification at 18.4 per cent it is highest for those with Graduate and above level education and at 3 per cent lowest for those with up to primary level education.
  • One of the reasons for low employability of youth is perhaps preference by majority of youth (85 per cent) in the age cohort 15-29 for general stream of education with only about 12.6 per cent for technical/professional education and only 2.4 per cent pursuing vocational education.
  • There is also a need to increase formal employment, which presently constitutes about 8 per cent of the labour force.
  • This is suggestive of schools evolving as learning institutions where vocational skills are included in the school curriculum right from Class VI onwards to arrest the disinterest among students/youth towards formal school education and enable them to develop an interest in learning skills for employment.
  • The transition from school to work requires encouraging youth to choose technical or vocational education over general education and incentivizing the fees for acquiring vocational/technical education as most of these institutes are in the private sector and out of reach of youth from the low income category.

Emerging avenue for the Indian workforce which is expected to increase to 600 million by the year 2022:

  • As per the Annual Survey of Industries 2013-14 Coke, and Refined Petroleum Products, Basic Metals, Food Products and Motor vehicles, Trailers and Semi-trailers across states contribute at least 80 per cent of gross value of output and more than 50 per cent of total industrial output is from capital intensive industries.
  • The overall job ecosystem in India, however, is witnessing changes. The growth of technology-based sectors are impacting availability of livelihood opportunities as new jobs are being created either replacing the existing or new jobs due to change in processes and technology.
  • The huge investments in infrastructure sectors such as Roads; Shipping; Smart Cities; Renewable Energy; Transport and Railways; Airports and Dedicated Freight Corridors are facilitating creation of jobs in the economy.
  • The Atal Innovation Mission; Focus on Women Entrepreneurship; Mudra; Start-up India and Stand Up India are impacting availability of jobs and livelihood opportunities for millions in the rural and urban sector even with low skills.
  • Besides these, sectors such as telecom; banking and financial services; healthcare; retail; automobile and tourism and hospitality sector also have the potential to generate employment.

This calls for an employment strategy focusing both on manufacturing and services led growth as suited to the demographic and educational/skill profile of the States/UTs addressing the three types of job deficits that India faces viz;

 (i) a deficit in the overall number of jobs

(ii) a deficit in the number of formal jobs

(iii) a deficit in the number of jobs for women

would be a better strategy to adopt.

Sectors that have the potential of creating maximum employment:

  • India has moved from agriculture led growth to service led growth even much before the technological revolution started impacting livelihoods. The services sector has adapted digital technology impacting a large pool of young labour force looking forward to job opportunities in the service sector.
  • Apart from skilling/re-skilling, the challenge that India faces in capitalizing upon its demographic advantage lies in the changes being brought to existing job descriptions as well as emergence of new job roles and skills in today’s digital age commonly referred to as the Fourth Industrial Revolution.
  • Sectoral bifurcation of jobs may fade out in the years to come with the integration of digital technology in all job roles across sectors and the prospectus would be for IT integrated job roles.
  • Already, manufacturing has been restricted to core manufacturing with rest of the jobs being outsourced and therefore it has been transferred to the service sector.
  • Area of Big Data Analytics, Artificial Intelligence, Robotic Process Automation, Internet of Things, Cloud Computing and Virtual Reality, Block Chain and Electric Vehicles will create highly skilled and high paid jobs in the future.
  • However, for the large segment of poorly educated and low skilled labour force, opportunities lies in apparel; textile and leather; tourism and hospitality sector; construction as also in the tech-based entrepreneurship which has seen rapid growth both in rural and the urban areas.

Government initiatives like Start-up India; Mudra; Stand up India; Swachh Bharat are creating significant employment opportunities for low skilled workforce. Further, the sectors where government is investing hugely and policy interventions are promoting investments viz agriculture, infrastructure; auto motive; textiles and leather are throwing open new employment opportunities for the new entrant to the labour market as also to the existing labour through reskilling better employment opportunities.

Emphasising skills rather than mere degrees:

  • Labour markets in India are beset by a strange paradox wherein any job opening has vast number of applicants and yet, jobs requiring a medium of skills are difficult to fill.
  • The Skill requirements for modern manufacturing jobs are far more complex than those required for simple assembly operations.
  • In today’s technology driven economy it is not easy to predict which occupations will grow and which will decline.
  • The key challenge that our education system faces is training potential workers in skills that are transferrable across occupations while simultaneously meeting needs of specific industries.
  • This can be addressed through two-pronged approach

(i) Teaching skills that are transferrable across occupations; and

(ii) Imparting specific skills required by particular industry/occupation combination as a part of industry specific apprenticeship programmes.

  • Through work-based learning, students acquire the skills that are valued in workplace.
  • Work-based learning is also a way to develop public-private partnerships and to allow social partners and employers to get involved in the development of VET programmes, often including the definition of curricular frameworks.

There is an urgent need to align the National Education Policy with the National Skill Development Policy and alignment of vocational courses in schools with the National Skills Qualifications Framework (NSQF). The Atal Tinkering Labs are encouraging students develop the habit of innovative thinking and obtain transferable practical skills. There is need for each school to have a counsellor and provision for aptitude testing. There is also an urgent need to link the short term training programmes with the National Apprenticeship Program to ensure that students have hands on training for better employability and as per local requirements.

Need to change mind-sets in order to create employment and foster the spirit of entrepreneurship:

  • The   government of India has taken a large number of initiatives since 2014 which are changing the mindset of people to foster the spirit of entrepreneurship.
  • The earlier challenges in terms of access to credit, market linkages, space and network and mentors are being made available through programmes like Start-up India; Ease of Doing Business; Stand Up India, MUDRa and Atal Innovation Mission.

Chapter 6- Indian Economy: Boosting Employment

Labour Intensive Growth:

  • India is relatively more endowed with labour not capital. Therefore, growth should be labour intensive, unless the capital/labour choice is distorted. That input choice is a function of the relative prices of labour and capital.
  • Arguments are advanced about artificially high costs of labour in the organized sector, interpreted not just as wage costs, but also compliance costs of labour legislation. However, post-1991, these compliance costs have not increased. In this light, there arise a few questions:
    • Why has the capital/labour choice become ever more warped? The answer can be found in a relative decline in cost of capital reinforced by subsides (read tax exemptions) given to capital usage. Note that the present government has sought to neutralize this by subsidizing new employment.
    • Second, why are there complaints about labour shortage in some parts of the country, spliced with excess labour supply in others? Clearly, the reducing the number of intermediaries between prospective employers and employees isn’t working very efficiently. The phenomenon of labour contractors who are not registered is also known. National Career Service portal is one of the initiatives of the present government to address the issue.
    • Third, why is there an increasing gap, to the extent data exist, between work force and labour force? Why are work force participation rates declining, not just for females, but also for males? While increasing female work participation rates is part of any reform agenda, the decline (subject to unsatisfactory data) remains a conundrum. Also, we do not have a clear fix on voluntary versus involuntary unemployment.
    • Fourth, is this difference between the work force and labour force a consequence of the lack of correlation between education and skills? Education, publicly or privately funded, encourages higher salary expectations, but the skills that education delivers are not worth the price, according to market perceptions.
    • Fifth, regardless there is a skills problem. Thus, one should flag the National Skill Development Mission, with the National Skill Development Agency (NSDA), the National Skill Development Corporation (NSDC), and Directorate General of Training (DGT) as part of this framework.

When reliable data surfaces at the end of 2018, these initiatives are bound to show results measured as employment growth.

TID BITS:

Labour Force refers to the number of persons actually working or willing to work. However, workforce refers to the number of persons actually working. Thus, workforce does not account for those who are willing to work. The difference between labour force and workforce is the total number of unemployed persons.

Chapter 7- Livelihood Development and Diversification

As the Sustainable Development Goals (SDGs) bring out clearly, poverty is multi-dimensional and therefore requires a range of innervations. Non-farm livelihoods and multiple livelihoods that are required to make a difference. As recent data points out, half of manufacturing and one-third of the services sector is already part of the rural economy. Income and Employment through Livelihood Development and Diversification is clearly the way forward.

  • Besides the specific resource provision for Rural Poverty Programmes, the thrust on Swachh Bharat Mission (SBM), increase in the allocations of Ministry of Agriculture and other infrastructure and livelihood programmes for the poor, the total transfer of financial resources to rural India has been very significant. A large proportion of the same goes into improvement in incomes and employment.
  • The Department of Rural Development has focused on development and diversification of livelihoods of the poor households.
  • Developments based on Socio Economic Caste Census:
    • The Socio-Economic Caste Census (SECC) 2011 released in July 2015 provided an evidence based criteria for selection of beneficiaries under various government programmes.
    • The application of deprivation criteria of SECC to the Provision for LPG Gas connection under Ujjwala, free household electricity connection under Saubhagya, selection of beneficiaries under PMAY-G, and selection under Aayushman Bharat for National Health Protection have ensured that the benefits of development reach the most deprived on a priority.
    • The use of SECC in finalisation of Labour Budgets to States under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and insistence in enrolment of all women from households with deprivation under SHGs of Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) has also ensured that poor regions with larger number of poor households receive priority in programmes of rural poverty.
  • All programmes of rural development were aligned to livelihood development and diversification.
  • Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) focused on durable assets and water conservation, and also provided for livelihood generating individual benefits like farm ponds, dug wells, goat shed, poultry shed, housing support, and support for dairy shed.
  • The livelihood linkages in convergence with subsidy programmes for animal resources and for agriculture contribute to improved incomes in the Agriculture and Allied Sectors.
  • The increase in production of fruits and vegetables and the significant growth through animal resources over the last 4 years have been on account of this larger thrust on rural livelihood development and diversification.

NIPFP Report on impact of Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) on Income and Employment:

  • National Institute of Public Finance and Policy (NIPFP) was requested to assess the impact of Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) on Income and Employment.
  • The Report found that “By using information about the completed and under construction houses since 2016-17 that is made available through AwaaSoft and by the MoRD, it was estimated that the scheme could have generated about 52.47 crore person-days. Of this nearly 20.85 crore person-days are for skilled labour and the remaining 31.62 crore person-days are for the unskilled labour force in both years”
  • For rural infrastructure, the PMGSY has been a flagship programme. A significant stepping up of road construction programmes has also generated direct and indirect employment. (MGNREGS) has been a major source of strengthening livelihood security with full transparency during this period.
  • The expansion of the National Food Security Act (NFSA) with a provision of rice at Rs 3 per kg and wheat at Rs 2 per kg has facilitated food security in poor households. The increased in the Consumer Price Index for agricultural labour has been modest on account of the low food price inflation this period as food items comprise the largest chunk of the basket of goods and services for calculating the Consumer Price Index for agricultural labour.
  • The subsidies on rice and wheat, and the ready availability of cheap food grains to poor households need to be factored while looking at wage rates for agricultural labour. Even with nominal increases in real wage, the purchasing power goes up as major expenditure items like rice and wheat are heavily subsidised with effective availability.

Rural Poverty:

Rural poverty is truly multi-dimensional and there is a need to address it simultaneously for greater impact. The efforts over the last few years have been towards convergence of rural initiatives to make a real difference to the well-being of poor households. These interventions have targeted both the poverty of households and the poverty of geographies. The factors contributing to these are listed below:

Poverty of Households:

  • Lack of education and skills
  • Under nutrition and ill health
  • Lack of employment opportunities
  • Assetlessness
  • Lack of safe housing
  • Limited access to public services
  • Clutches of middlemen/corruption/moneylender
  • Absence of social capital – collective of women/youth/poor households

Poverty of Geographies

  • Low Price for produce – distress
  • Violence/crime
  • Unirrigated agri/vagaries of monsoon
  • Lack of basic infra-roads, electricity, Internet
  • Lack of access to markets and jobs
  • Lack of non-farm opportunities

Conclusion:

The financial resources made available for addressing rural poverty over the last few years have been contributing to both rise in incomes and employment through diversification and development of livelihoods. Such increases are bound to generate employment on la large scale.

Chapter 8- Creating Livelihood Opportunities in Urban Areas

As per Census, 2011, over 31 per cent of the total population lived in urban areas and estimates suggest that this will rise to over 50 per cent by 2050. As cities increase in number and existing cities become larger and denser, the pressure to support livelihoods will keep mounting. The changing technological landscape in manufacturing and service industries, and further mechanization of agriculture, is expected to lead to more robust job growth in urban areas. It is estimated that over the next two decades, about 70 per cent of the new jobs will be created in urban India.

 

  1. Developing the Skills Ecosystem

 

  • The National skill Development Policy was released in 2009 and the National Skill Development Corporation (NSDC) was established with a mandate to skill 150 million people by 2022. Structured as a PPP with government ownership restricted to 49 per cent of the equity, majority ownership of NSDC rests with the private sector with the shareholdings equally dispersed among 10 Chambers of Commerce and sector-specific industry organizations.
  • The skills landscape in India has evolved considerably, with 22 Ministries offering various type of skill training programs. Recognizing the need for a consistent policy direction and outlook on skills, the Skill India Mission was launched.
  • The skilling ecosystem is being complemented by a parallel effort to broaden access to formal financial services which is essential to promote self-employment opportunities. The JAM+ architecture, comprising of Jan Dhan, Aadhar, and Mobile based services has led to achievement of financial inclusion.
  • An integrated approach to support both wage employment and self-employment is part of the Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM), under the Ministry of Housing & Urban Affairs (MoHUA). This Mission has been working towards creating livelihood opportunities for the poor and vulnerable population, in all the statutory towns.

 

  1. Multi-dimensional Livelihoods Strategies

 

  • City Livelihoods Centers (CLCs) established under the Skill India Mission help to organize the informal hyper-local services sector at the Urban Local Body (ULB) level.
  • Self-employed and freelancing service providers such as electricians, carpenters, plumbers, painters, tailors, tutors etc. are registered at the CLCs and customers can access these services by calling the CLC.
  • CLCs also provide marketing support to microenterprises.

 

  1. Employment through Skill Training & Placement

 

  • The ESTP component aims to enhance employability of the urban poor.
  • The emphasis is on wage and self-employment through placement focused, outcome driven skill training programs.
  • To ensure that the programs respond to domestic demand, a skill gap study has been conducted. Candidates are selected through a screening process and counselled, so that they can choose courses, aligned to their aspirations as well as the industry demand.
  • The mode of training is primarily short-term skill training courses ranging from 3 to 6 months.

 

  1. Self-Employment Program

 

  • The Self-Employment component of the Mission support individuals and groups to establish micro-enterprises by facilitating bank loan @ 7 per cent ROI. Three types of subsidized loans are offered.
  • Capacity Building under the Entrepreneurship Development Program is provided to beneficiaries to provide knowledge and skills, needed to sustain and grow micro enterprises.

 

  1. DAY-NULM Mission Evaluation and New Initiatives

 

  • In order to address the gap identified through the mid-term evaluation, DAY-NULM has undertaken a major initiative to set up a web portal for interest subvention – which has enabled the transfer of interest subvention directly to the loan accounts of the beneficiaries through Direct Benefit Transfer (DBT).
  • MUDRA loans which are already available at subsidized rates of interest have also been made eligible for interest subvention through DAY-NULM as a convergence measure.
  • The Mission is making strides towards enhancing placements of trained candidates by engaging models and through partnerships with private sector players in high growth sectors.
  • A mechanism to get direct feedback from trained candidates has been introduce, called PARAS (Personalized Rapid Assessment System), which is helping States to assess and improve their training programs
  • A ranking system called SPARK has been introduced to induce completion among the states based on outcome parameters of the Mission.

 

  1. Recognizing and Addressing Key Risks

 

As Ministry of Housing and Urban Affairs looks towards the future, its priorities are evolving based on the emerging risks and opportunities. Three key national challenges being addressed by the Mission are –

  1. Informal nature of employment
  2. Lower participation of women in the labour force
  3. Capacity constraints of the implementing agencies

 

  1. Formalizing the Urban Informal Workforce.

 

  • Trends show that the high rate of urbanization in the country is not accompanied by a proportionately high rate of formalization, with more informal enterprises being added to urban areas.
  • Informal sector outcomes are likely to reflect the economic impact of urbanization, as much as the formal.
  • Sectors such as construction and sanitation employ a large proportion of the informal urban force and have the worst health and safety conditions.

 

DAY-NULM is addressing this challenge through two initiatives.

 

  1. First, Recognition of Prior Learning (RPL) has been adopted in convergence with the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), as a mechanism to recognize, certify and formalize those who have acquired skills informally. The RPL process and certification, especially in vulnerable sectors such as construction and sanitation, is expected to improve health and safety standards, enable informal workers to take pride in their skills, and move up the qualification levels.
  2. Further, the mission is also doing its bit to build capacities of the sanitation workers and promote green livelihoods in collaboration with the Sector Council for Green Jobs Council and the Swachh Bharat Mission. City Livelihoods Centers (CLCs) which are supposed to be established in all cities under DAY-NULM are being revitalized, with a renewed focus on creating a robust database of freelance service providers, making their services available through mobile apps etc. Many CLCs are collecting and training, informal workers and facilitating their formal employment through municipal contracts.

 

TID BITS:

 

CLS in Nahan, Himachal Pradesh for example, has trained informal sweepers from the Balmiki Basti. They have now been provided formal contracts by the Nahan Municipal Corporation, with detailed Terms of Reference and safety equipment’s.

 

  1. Improving Women’s Participation in the Urban Workforce.

 

  • The Female Labour Force Participation Rate (FLFPR) in India could rise by 21 percentage points (78 per cent) if all women who expressed a desire to work were enabled to do so.
  • DAY-NULM directly address this gap, by mobilizing women into Self Help Groups.

 

  1. The Way Forward

 

  • Various missions of the Ministry viz PMAY-U, SBM-U, AMRUT, HRIDAY and SCM are making significant investments in the urban areas.
  • Urban mobility is also improving through mass rapid transport projects.
  • The creation and maintenance of this growing urban infrastructure is generating tremendous employment opportunities; thus, complementing the efforts of DAY-NULM.
  • MoHUA is encouraging certification of workers in the construction sector, with the twin objective of improving livelihoods and the quality of public works.
  • As the standard of living improves with rise in disposable income of urban Indians owing to sustained growth of the India economy, new sectors are emerging which have high employment potential. These include e-commerce delivery, on demand taxi services, fitness and wellness, elderly care, child, home-based services etc. DAY-NULM is encouraging courses relevant to these emerging sectors and exploring partnerships with private sector employers, in order to improve the income potential of candidates skill trained under the Mission.
  • In Order to tap the global demand for skilled Human Resources, NSDC has launched Pravasi Kaushal Vikas Yojana and India International Skills Centers and being established.
  • A detailed skill gap study on global skill demands is also being conducted by NSDC so that India’s positive demographic dividend can be suitable harnessed to fill the global gap in demand and supply of skills.

Chapter 9- Accelerating The Pace

Provision of quality employment is instrumental to achieving economic and social development. Ministry of Labour & Employment (MOLE) plays a pivotal role in facilitating employment-related services and protecting the interests and welfare of the employees. It done so by fulfilling its core mandates like managing social security needs of the workforce, collection and compilation of data on the status of employment condition of workers, providing employment related services, extending assistance to physically challenged and weaker sections of society in joining the workforce etc.

National Career Service (NCS) Platform:

 

To enhance the availability and accessibility of employment opportunities for the teaming youth, the Public Employment Service in India has been transformed through the National Career service (NCS) platform to bring together job seekers, employers and training providers on a common platform through the efficient use of information technology.

·         This is a National Career Service Platform

The salient features of NCS include:

1.       Provision of career related services to job seekers

2.       counselling services

3.       call centres

4.       Model Career Centres

5.       rich repository of career content

6.       Capacity building and

7.       Other facilitation services.

·         The NCS also provides a variety of employment related services like job matching, e-linking all employment exchange and organising job fairs on a regular basis.

·         It provides counselling by the young professional at the Centres to the job seekers to select the jobs best suited to their ability, aptitude and satisfaction.

·         107 Model Career Centres (MCS) have been set up and additional 100 MCSs are being planned.

·         NCS is inter-linked with the major private job portals through signing of MoUs.

·          NCS portal is inter-linked with all Government portals and particularly with the ‘Employment News’ portal of Mol&B

·         21 National Career Service Centres for Differently Abled (NCSC-DA) persons are being run by DG(E).

·         25 National Career Service Centres for SCs and STs (NCSC-SC/ST) for providing  employment related training and guidance are being run by DG (E)

 

Shram Suvidha Portal:

 

  • The Ministry of Labour & Employment has developed a unified Web Portal ‘Shram Suvidha’ – catering to four major organisations under its aegis:
  1. Office of Chief Labour Commissioner (Central)
  2. Directorate General of Mines Safety
  3. Employees’ Provident Fund Organization; and
  4. Employees’ State Insurance Corporation.

 

 

  • Ministry of Labour and Employment has also been focusing on reforms in labour laws to address the emerging needs of the industry and economy at large.
  • The Shram Suvidha Portal facilitates inspection of establishments in a scientific and transparent manner.
  • It also provides for a common registration under Employees’ Provident Fund Organisation (EPFO) and Employee’s State Insurance Corporation (ESIC) and facilitates submission of monthly Electronic-Cum-Challan (ECR).
  • The Shram Suvidha Portal provides for a transparent and accountable enforcement mechanism.

 

Vocational Training To Transform Jobs Into Careers:

Under the Directorate General of Employment & Training (DGET), Women’s Training teaches women to play different roles as workers, supervisors and entrepreneurs. Skills training for women will stimulate extra opportunities among women of various socio-economic strata and different age groups as well as create better homes and families.

Women’s Vocational Training Programme covers many areas such as:

  1. Wage-employment in industry
  2. As instructors
  3. To promote self-employment

To efficiently enable this and give them head-start the Programme offers:

  1. Industrial skills training under Craftsmen Training Scheme (CTs)
  2. Instructor skills training under Craft Instructors Training Scheme (CITS)
  3. Demand-driven short-term courses
  4. Special programmes for training ITI Instructors
  5. Tailor-made courses as per industry demand
  • The Ministry has been working on Simplification, amalgamation and rationalisation of multiple existing Acts into four Labour Codes, viz., Code on Wages, Code on Social Security, Code on Indistrial Relations and Code on Occupation Safety, Health & Working Conditions.
  • The “Pradhan Mantri Rojgar Protsahan Yojana (PMRPY)” is also being implemented from 2016-17 with the objective of incentivising industry for promoting employment generation

 

Pradhan Mantri Rojgar Protsahan Yojana:

  • The Pradhan Mantri Rojgar Protsahan Yojana, or PMRPY Scheme is aimed at incentivising employers to generate employment, where the Government pays the employers’ Employee Pension Scheme share of 8.33 percent, for new employees for the first three years of their job.
  • Government is paying 12 per cent towards EPS and EPF for all sectors for employers’ contribution since 1.4.2018 to all the eligible new employees
  • It will be for the next three years and all new employees should have Universal Account Number (UAN) seeded with Aadhaar.

The approach of the government has been at striking the desired balance between quantitative and qualitative dimensions of employment so that employment emerges as a key catalyst for achieving the Sustainable Development Goals (SDG) 2030.

Chapter 10- Fixing India’s 3Es

India’s 3 Es of Education, Employability and Employment – is a crucial part of raising our productivity and eradicating poverty. The diagnosis of jobs vs wages is important because if “wages” is thought of, as a problem, i.e. productivity different path of formalisation, urbanization, industrialisation, financialisation and human capital can be taken.

How can India’s productivity be improved?

Raising India’s productivity needs

  • Raising formal employment to 50 per cent of the labour force (from 25 per cent today)
  • Raising the number of cities with more than a million people to 200 (from 50 today)
  • Reducing farm employment to less than 10 per cent of the labour force (from 50 per cent today)
  • Reducing gold and real estate to less than 50 per cent of savings (from 90 per cent today)
  • Getting the difficult balance of cost, quality and quantity from our schools, skills and college system.

Formalisation:

  • On the surface, India’s entrepreneurship ecosystem seems healthy –
  • 50 per cent of our labour force is self-employed, and we have one enterprise for every four non-farm workers.
  • But most of the enterprises are dwarves (Only 11 per cent of manufacturing companies in India employ more than 200 people, compared with 52 per cent in china).
  • Vary considerably in productivity (there is a 22-times productivity difference between a firm at the 90th a 10th per centile by size in manufacturing).
  • And 40 per cent of our labour force comprises the working poor (people who make enough money to live but not enough money to pull out of poverty).
  • India is not producing enough enterprises with the productivity to pay higher wages.
  • Of India’s 6.3 crore enterprises 1.2 crore do not have an office, 1.2 crore work from home only, 70 lakh had a tax registration pre-GST, only 14 lakh make the mandatory employer social security payments, and only 10 lakh are incorporated as companies.
  • Most tragically, only 17,500 companies in India have a paid up capital of more than Rs 10 crore.
  • India’s regulatory cholesterol had traditionally stunted enterprise growth and formality but GST is an important game changer, the number of enterprises with an indirect tax registration has increased by 50 per cent since GST went live. This number is expected to reach 15 million soon Improving the ease of doing business would create a Cambrian explosion of new venture creation and massively increase productivity among existing enterprises.
  • This requires rebooting the thought world of the Medium and Small Enterprises (MSME) Ministry, improving access for non-collateral credit, getting rid of the labour and tax inspector Raj, simplifying the goods and services tax (GST), growing the venture capital industry, but most importantly, adopting the India stack for all employer-employee and employer-government interface by moving all laws to Paperless, Presence less and Cashless.

Urbanisation:

  • Instead of focusing on taking jobs to people, emphasis must be on taking people to the jobs because fertile habitats for job creation are hard to create. The unintended consequence of this low urbanization is the massive divergence of real and nominal wages in big cities.

Industrialisation:

  • India has too many people on farms (50 per cent of our labour force), too many people self-employed (50 per cent of our labour force), and too little people in manufacturing (11 per cent of our labour force). All three are closely related; the migration from farms is retarded by the lack of non-farm jobs, and the poor cannot afford to be unemployed so they are self-employed. Not everybody can be an entrepreneur.
  • Both agriculture and self-employment in India suffer from what Russian economist Chayanov called self-exploitation (small farms, are viable because you don’t have to pay yourself, your spouse or your kids a salary) But Indians are tired of self-exploitation and that is why massively increasing formal wage employment and manufacturing employment are important.

Financialisation:

  • Indians have traditionally mostly saved in physical assets like land and real estate and mostly raised capital for enterprises from nationalised banks. This has led to massive mispricing of real estate and the lack of a bond market and a small private bank sector.
  • A radical disruption in favour of financialisation has been demonetisation because it has created 18 lac crore New Lending Capacity, 15 crore New Monthly Digital Transactions, 3 lac crore New Financial Savings, lowers Interest Rates.

Human Capital:

  • India needs a radical restructuring of education and employability regime but there are contradictory objectives: quality, quantity and inclusiveness.
  • Radical changes to the world and the world of work mean that education and employability need radical change.
  • Reading, writing and arithmetic are key foundations for new job.
  • Employability also needs us to add the four Rs of relationships or soft skills, Metrics need shifting from inputs to outcomes because only money is not working.

Our past policy narratives around education, employment and employability were about running away from something rather than towards something, and often blaming external variables of opening balances rather than taking responsibility. As Karl Marx said “Philosophers have tried to describe the world in thousands of ways. The point, however, is to change it”. India’s low productivity and poverty has many reasons but we finally have a strategy in formalisation, urbanisation, industrialisation, financialisation and human capital.

Chapter 11- Harnessing the Demographic Advantage

India is passing through a demographic transition which makes India the youngest nation in the world with an average age of 29 years. This offers India the unique opportunity to provide skilled manpower not only to the rapidly growing domestic economy but also to the ageing economies of the west.

There is large heterogeneity among the states in their demographic profile and evolution A clear divide exists between peninsular India and the hinterland India. While the peninsular states are exhibiting a pattern akin to the developed economies, the hinterland states are relatively young and dynamic, characterized by a rising working age population.

The India Skills Report 2018, brought out by Wheebox, indicates that only 46 per cent of youth coming out of higher educational institutes are employable. This raises the issue of skill gap; skill mismatch or skills shortage. There is a paradoxical situation with industry complaining of shortage of skilled manpower and large number of educated youth not getting suitable employment.

A successful skill strategy needs to be complemented with creation of decent jobs including entrepreneurship opportunities across sectors so that livelihood creation becomes an outcome of economic growth. There is an emergent need to strengthen the entrepreneurship ecosystem to meet the aspiration of youth

Major Challenges.

The challenges in the skill ecosystem are a consequence of the labour market conditions and requirement of rapid economic growth and impacts quality, access, outreach and relevance.

  • Large pool of poorly educated youth
  • High demand for skilled manpower vis-à-vis low employability
  • Skilling formal school dropouts to provide them a second chance to acquire basic numeracy, literacy and functional skills for accessing jobs in the formal sector
  • Limited and unequal distribution of training capacities vis-à-vis youth demographics.
  • Availability of good quality trainers due to lack of focus on development of trainers’ training programmes and career progression pathways for them
  • Multiplicity in assessment and certification systems leading to inconsistent outcomes and confusion to the employers
  • Preponderance of informal/unorganised sector and mapping of existing skills and skills required.
  • Achieving convergence and coordination across sectors.

These challenges point to the fact that he growing Indian economy needs to meet the aspirations of its youth in a way that it fulfils the requirements of skill demand and supply of the domestic as well s the global employment market.

Change in Governance Structure:

Since the earlier governance structure and the skill ecosystem remained fragmented with 21 Ministries implementing 40 schemes with different standards, inputs and norms, a dedicated Ministry of Skill Development and Entrepreneurship (MSDE) was formed in November 2014 as the nodal ministry for all skill development activities in India. To consolidate the infrastructure and programme to achieve optimum utilization of the existing skill development institutions such as Directorate General of Training, NSDC and NSDA and later many programmes have been transferred to MSDE. The new Governance structure as outlined in the policy is depicted below:

Broad basing National Policy:

The National Policy on Skill Development 2009 has been revisited and a new policy with focus on entrepreneurship also was launched in 2015 – “National Policy for Skill Development and Entrepreneurship 2015”. The policy has redefined the vision for Skill India in terms of creating an ecosystem of empowerment by Skilling on a large scale at Speed with high Standards and to promote a culture of innovation based entrepreneurship which can ‘generate wealth and employment so as to ensure sustainable livelihoods for all citizens in the country. The 2015 National policy on Skill also recognizes the value of on-the-job training, by making apprenticeships in actual work environments an integral part of all skill development efforts.

Systemic Interventions:

Number is initiatives have been undertaken to improve the availability of information; synergy in delivery of training and standardization of competencies.

A Labour Market Information System (LMIS), an integrated database has been put in place to make available both demand side and supply side information at one place including trends in wages; focus areas for skilled manpower, occupational shortage etc.

To synergise the implementation of skill development schemes across Ministries/Departments and States, the Common Norms have been notified. This is likely to enable a common framework, improve quality and bring consistency across stakeholders.

A competency based framework NSQF has allowed all such skills to be tested and certified under Recognition of Prior Learning and is enabling millions of experientially skilled to derive proper economic and social benefit of their skills.

All training programmes have been aligned with NSQF framework, requiring them to be industry validated.

The workers in the labour intensive sectors are likely to be the biggest beneficiaries.

Increasing Training Capacity:

The long term training capacity of the ITI’s increased significantly. The PMKVY centres are spread across various states and UT’s and efforts are made to make available the training facility in each district.

Improving Quality and Relevance:

Over 5,000 ITI’s and 15,000 training centers have been graded on parameters including infrastructure, equipment, trainers and past performance/industry linkages to help identify the quality differential among training centers. This would facilitate choice for the prospective trainee and build in the competition. The strengthening of accreditation and affiliation norms for ITI’s has improved the training infrastructure.

Further, a system of concurrent monitoring through SMART portal has been introduced for maintaining quality of training.

Technology has been extensively used for the purpose of evaluation and monitoring including mobile app for center inspections, monitoring visits to assessments, allowing for real time monitoring of scheme progress

The efforts for improved quality led to increased placement percentage Further, to improve the quality special focus is laid on training of trainers. Takshila portal has been launched to mobilize the trainers and assessors, capturing their profile and mapping their pathway inside the skill ecosystem.

Formalizing the Informal Skills: Recognition of Prior Learning (RPL) and Apprenticeship:

In India, about 93 per cent are informally employed. Most of these have no formal vocational training blocking their pathways to progression. To facilitate these workers and to map the skilling requirement of the informal sector a programme “Recognition of Prior Learning” has been introduced whereby the skills of workers are tested, assessed and certified. Evaluation of trade learned skills and certification through assessment helps the trainees through increased mobility options to the formal sector employment. RPL certification helps workers to negotiate better wages in vertical progression in their careers.

The apprenticeship model leads to the creation of an industry-ready workforce. Most countries around the world have implemented the apprenticeship model – Japan Germany USA.

A user-friendly online portal has been launched in order to facilitate the easy processing of the entire apprenticeship cycle and for effective administration and monitoring of the scheme.

MSDE is working towards promoting the skilling ecosystem through its initiatives to provide incentives to employers and creating a regulatory framework to promote compliance. It is felt hat initiatives such as NAPS will enable creation of an industry-ready workforce and help to transform India into the Skill Capital of the World’

Making Skill Acquisition Aspirational:

Lack of lucrative wages and information asymmetry in the job market are key factors inhibiting move towards vocational education. Progression pathways have been.

The Participation in World Skills competition and regional level skill competitions has provided a platform to get recognition and showcase excellence. In the recent World Skill Competition 9 Medallions of Excellence, silver, and bronze medals were won by young Indians in Abu Dhabi.

For the first time, graduation ceremonies are held at ITI’s and Skill centres to award certificates. The Kaushal melas are organized for motivating youths and their communities to make skill as an alternative career option.

Making India Skill Capital of the World:

Indian workers have been migrating out of India for employment. There has been a shift in emigration trend from relatively prosperous states such as Karnataka and Kerala to states such as Bihar and Uttar Pradesh. Uttar Pradesh has witnessed the highest emigration with 25 per cent of the total workers migrating out of India for skilled and unskilled work belonging to the state.

In order to facilitate mobility of Indian workers globally MSDE has set up with MEA India International Skill Center to provide skill training along with Pre departure orientation and basic language skills.

Integrating Micro Industries to Marketplace:

With the advent of technology, creating and integrating more micro enterprises at village level to larger marketplaces may limit migration and increase the chances for continued livelihood. There is need to encourage states to take advantage of State component of PMKVY to have locally relevant skill training.

Skill Wage Premium:

Wage premium for skilled labour is still not a reality in the Indian industries which are more cost focused and thus unable to realize the benefits of a skilled workforce. The lack of any wage advantage, on one hand causes the students to directly seek employments as unskilled labor and learn on-the-job rather than undertaking a skill development programme.

Informal and Unorganized Economy:

To address the skill requirement of the informal sector there is need to generate accurate information of the skill demand/job opportunities through district level skill studies.

Encouraging Private Sector Funding:

While industries are a direct beneficiary of the skilled manpower, the skilling initiative has been entirely funded by government initiatives. We need there is need for availability of quality employment requiring convergence across macro and labour policies and mapping of the jobs wage/self-employed created across sectors for continuous upgrading of the skill training programmes and keeping it industry relevant.

 

Chapter 12- MUDRA Fuelling Growth in Micro Entrepreneurship and Employment

Micro Units Development and Refinance Agency Limited (MUDRA) have been set up for ‘funding the unfunded’ micro enterprises in the country. MUDRA will refinance all banks. Micro-finance Institutions (MEIs) and other lending institutions, which are in the business of lending to micro / small business entities, engaged in manufacturing, trading and services activities. Thus, MUDRA will strengthen the Last Mile Financial Institutions by extending refinance and other development support to expand their outreach. This will, in turn, help micro businesses across the length and breadth of the country. MUDRA’s mandate also includes developing the micro enterprise sector into a viable economic sector, for which various development interventions including financial/business literacy programmes are planned.

PMMY loans are extended through Member Lending Institutions viz: Banks Micro Finance Institutions (MFUIs) and Non-Banking Financial Companies-MFIs (NBFC-MFIs) for an amount of upto Rs 10 lakh for income generating activities. The loans fall in three categories i.e. Shishu (upto Rs 50,000) Kishore (Rs 50,000 to Rs 5 lakh) and Tarun (Rs 5 lakh to Rs 10 lakh)

Impact on Employment:

  • PMMY loans have increased the availability of credit at the bottom of the pyramid.
  • They have also provided a fillip to new enterprises, thus generating employment.
  • Around 90 per cent of the loans by number are from Shishu category. Their impact has been substantial on the informal business sector, thereby promoting growth and employment.
  • The fact that around 55 per cent of the borrowers are from SC/ST/OBC category indicates the fulfilment of social objectives, putting the underserved first.

Ease of Borrowing:

  • Borrowers particularly value three attributes of PMMY namely, the lack of requirement for a guarantor or collateral, the simple documentation and quick processing.
  • PMMY loans have been instrument in extending loans to women and expanding their participation in the labour market.

Beyond the Money: Creating a Positive Lending Ecosystem

PMMY’S ground-breaking contribution lies in the changes it has brought about in the formalisation of the eco system for such loans, thus acting as a catalyst for employment generation.

This has happened because of the following elements:

  • Portfolio Credit Guarantee: For PMMY loans, a Portfolio Credit Guarantee has been introduced, with 50 per cent loss coverage
  • Refinance: Refinance from Mudra Ltd for PMMY comes at low rates, with caps on lending rates, in effect reducing interest rates to the borrowers.
  • Mudra Card: It is Rupay Debit Card which is an innovative credit product providing the facility of working capital I the form of cash credit/overdraft and can be used for drawing cash from ATMs or BCs or make purchase using PoS machine even on holidays and beyond banking hours. No interest rate is charged for amounts borrowed and deposited the same day
  • Credit Histories: Loans disbursed under PMMY are captured by credit bureaus which help formalise which entrepreneurs, enhancing employment.
  • Catalysing Change in MFI space: PMMY’s architecture, through refinance and credit guarantee which is performance linked, in effect rewards and promotes better MFIs.
  • Loans, not Grants: All customers are borrowers and not beneficiaries under PMMY. With recovery being inbuilt in the loan, with no subsidies, disciplined borrowing and lending is ensured, leading to a positive eco system creating “Mudrapreneurs”

Linking with Value Chains:

  • The extension of the Financial Inclusion programme through the Jan Dhan Aadhaar Mobile (JAM) Trinity, has created an enabling infrastructure in extending institutional credit to a substantial number of borrowers through PMMY
  • With the emergence of new and innovative solutions like Fintech, the contours of contactless lending have been outlined. The interconnections among various data collection points viz; Trade Receivables Discounting System (TReDS), Government e-Marketplace (GeM), GST IT Returns etc can, in turn, formalize and ensure ease of borrowing.
  • PMMY has played a significant role in formalizing the informal and funding the unfunded.
  • The Global Findex Report released by the World Bank earlier this year, revealed that the number of account holders have risen from 35 per cent of the adults in 2011 and 53 per cent in 2014 to 80 per cent in 2017 among MUDRA loan beneficiaries, women account for almost 75 pe cent (World Bank, 2018).
  • MUDRA MITRA is a mobile phone application providing information regarding ‘Micro Units Development and Refinance, Agency Ltd (MUDRA) and its various products/ schemes. It will guide a loan seeker to approach a Banker in availing MUDRA loan under Pradhan Mantri Mudra Yojana (PMMY) Users can also access useful loan related material including sample loan application forms.

 

Chapter 13- Recognizing The Power Of MSMES

Micro Small and Medium Enterprises contribute significantly to total industrial activity in our country and play a vital role in boosting employment generation. Currently, there exist over seven crore MSMEs that create around twelve crore jobs in the country across various types of enterprises. This sector offers wide range of opportunities for self-employment as well as jobs after the agricultural sector. In addition, the labour – capital ratio tends to be much higher for MSMEs.

 

Agenda for Action:

MSME sector is critical for the growth of the economy. This is because the sector tends to have a multiplier effect on other sectors in the economy. As envisaged in the National Manufacturing Policy (NMP), the manufacturing sector has the potential to provide employment to 100 million people by 2022. However, in order to do so, it is imperative to bring about certain changes. Some of the suggestions through which employment can be boosted are:

  1. Encourage growth in labour – intensive industries
  2. Improve quality of training imparted in schools, colleges and universities by setting up innovative labs
  • Enhance labour productivity by adopting best practices
  1. Ensure timely credit flow
  2. Facilitate good market access

Increasing Market Access:

  • In order to increase market access for MSMEs and uplift the marginalized sections of the society, Public Procurement Policy (PPP) of Government of India is providing a drive towards entrepreneurship by way of giving preferential market access to MSEs
  • National Scheduled Caste/Scheduled Tribe Hub (NSSH) was launched by the Prime Minister in October 2016. The Hub has a clear focus on promotion of entrepreneurship among. Scheduled Caste and Scheduled Tribe Communities.
  • President of India launched “MSME Sampark” portal – a digital platform where the recruiters would have access to the increasing talent pool of trained manpower, facilitating their placement.

Timely Access to Credit:

  • MUDRA has been a flagship programme of the present Government, facilitating unprecedented credit flow into the micro enterprise eco-system.
  • Another major initiative of the Government in the MSME sector has been the enhancement of the Credit Guarantee Fund (CGTMSE) from Rs. 2500 crore to more than Rs. 8000 crore.
  • MSME Ministry has launched a new scheme – Mission Solar Charkha. Under this initiative, it is envisaged to set up 50 clusters in the first phase giving employment opportunities to nearly one lakh people in the rural areas mostly to women.

These schemes have a huge social context as these are majorly aimed to benefit women and the marginalized sections of the society such as Scheduled Caste and Scheduled Tribe communities. 

Conclusion:

As per the last NSSO Survey, there are around 6.34 crore MSMEs in the country. They are steadily migrating to the formal economic sytem – registering in the GST network. An overwhelmingly large percentage of entities registered in the GSTN are MSMEs. They deserve all support for their growth.

 

Chapter 14- Road Development: Indirect Employment Opportunites

 

With over 1,26,000 kms of length, the National Highways in India serve as the lifeline of Indian economy. Though they comprises only about 2 per cent of the total road network in the country, the NHs carry almost 70 per cent of the country’s passenger traffic and more than 60 per cent of freight.

The National Highway Development Program (NHDP), which started with the Golden Quadrilateral in 1998, followed by the North-South and East-West Corridors in the year 2000, has been the mainstay of the Indian Highway success story over the past decade and a half. Another major ambitious umbrella Road Development Programme is the Bharatmala Pariyojana. It focuses on optimizing efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps.

  • The Road Development Programme of MoRTH, as mentioned above, is expected to significantly boost investment in the sector and create large scale employment opportunities across the entire value chain of highway construction.
  • The increased emphasis on use of technology such as LiDAR (Light Detection and Range) in preparation of DPRs for more accurate project designing has also led to a spurt in demand for manpower trained in remote sensing applications.
  • Road construction has a multiplier effect in terms of indirect employment opportunities in supporting industries such as material and equipment suppliers and other induced employment generation.
  • Simultaneously, the National Highways are expected to boost local economies due to better access to the urban markets, and better employment opportunities as a result of the enhanced connectivity.
  • The Ministry is also implementing schemes for training and up-gradation of skills in the highways and transport sector.

The Ministry has now commissioned a study to assess the job potential arising out of investments in the National Highways sector and skill development needs in the road construction sector. The findings and recommendations of the study would help the Ministry to further design a strategic framework and action plan for implementation of strategies for skill development and up-gradation of human resource in the road construction and transportation sector.

Chapter 15- Dimensions of the Indian Labour Market

ILO’s World Employment and Social Outlook for 2015 had projected that the global employment outlook would deteriorate in the coming five years where employment growth may not match economic growth.

  • In the face of globalisation and exposure to international markets, immunity shields have vanished.
  • Economic cooperation through fora like G-20, BRICS etc need to be leveraged for a concerted effort to address labour and employment issues. For instance, BRICS countries represent nearly 42 per cent of world population and contribute to 20 per cent of global GDP giving it a unique position to leverage, its varied potential for meeting the global requirements, especially in technical resources.
  • India too has followed the textbook path of economic development witnessing a sharp decline in the contribution of the primary sector in the GDP from 52 per cent during 1950-51 and has declined to 17 per cent in 2017-18. The corresponding contribution of the services sector to the GDP has gradually risen from 35 per cent (1950-51) to 54 per cent (2017-18)

Encouraging Private Investments in Industry:

In recent years a policy ecosystem has been evolved around

  1. Make in India
  2. Skill India
  • Digital India
  1. National Manufacturing Policy 2015
  2. Ease of Doing Business
  3. Atal Innovation Mission
  • 100 Smart Cities and 500 Amrut Cities project
  • Start-up India
  1. Stand-up India.

These initiatives are building the basic to stimulate job creation momentum. The policy ecosystem for generating employment has two sides – supply side and demand side. The demand side impetus would mainly come from Make in India and National Manufacturing Policy initiatives and would be supported by initiatives like Smart City Project, Digital India, Start-Up and Stand-Up India. Demand side can be further reinforced by providing incentives to agro-based industries, labour-intensive industries like textile and leather, increasing public investment in education and health etc.

Enhancing Skill Base of Workforce:

The government has launched the National Skill Development Mission and established a Ministry of Skills Development & Entrepreneurship to focus on enhancing the skill base of workforce in a coordinated manner.

Enhancing Non-Farm Employment Opportunities:

For skilling of rural workforce, programmes like the National Food Security Mission, Rashtriya Krishi Vikas Yojana (RKVY), Custom Hiring Centres, Establishment of Agri-Clinics and Agri-Business Centres (ACABC), Small Farmers’ Agribusiness Consortium (SFAC), National Cooperative Development Corporation (NCDC) Development of Women cooperatives have been initiated.

Modernising Public Employment Service (PES):

The National Career Service initiative aims at transforming the employment services using technology to improve delivery and quality of employment services.

Labour Law Reforms:

The broad objectives of the labour reforms include:

  • Reducing uncertainty and complexity in labour legislation
  • Creating a robust and comprehensive floor of rights
  • Modernising dispute resolution and enforcement systems for good governance.

 The existing Labour Laws are being grouped into Labour Codes on functional basis. Four Labour Codes on Wages, Industrial Relations, Social Security and Welfare and Safety and Working Conditions are being drafted by simplifying, amalgamating and rationalizing the relevant provisions of the Central Labour Laws.

Increasing Female Labour Force Participation:

Government has taken several steps to increase the participation of women in the labour force like, MGNREGA, vocational training for skill enhancement etc. Government has amended the rules to facilitate women governmental employees for upbringing of their children by providing for 2 years child care leave.

Mainstreaming Informality:

Government announced three Social Security Schemes pertaining to the Insurance and Pension Sectors, namely

  1. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  2. Pradhan Mantri Suraksha Bima Yojana (PMSBY)
  3. Atal Pension Yojana (APY)

to move towards creating a universal social security system, focused especially at the poor and the under privileged. The schemes provide essential and affordable social protection to all citizens in a convenient manner linked to auto-debit facility from bank accounts. These schemes are expected to address the issue of low coverage of life and accident insurance and old age income security in the country.

Active Labour Market Policies (ALMPS):

  • Allocating adequate budgetary resources to Active Labour Market Policies (ALMPS) are reported to be desirable as studies have shown that this can improve employment outcomes.
  • Undertaking impact evaluations are important in developing an evidence-based approach to policy design.
  • In a vast country like India with a strong demographic dividend, it is important to improve measures of employment through administrative statistics complemented by periodic surveys.

Evolving policies so that economic growth translates into increased and decent employment for the working force population would be important. Identifying and formalising changing context and forms of work (fixed term employment) would also assist in strengthening the employment market. Another step would be to encourage innovative solutions to address employment challenges. It is this, important to strengthen systems for data collection on labour market and promote evidence based analysis and research.

Chapter 16- Employment Avenues for Differently Abled

The new Act (Rights of Person with Disability Act 2016) has increased the job reservation from 3 to 4 per cent for people with disabilities. The government has identified positions in various departments and sections that are to be reserved for persons with disabilities based on their ability to perform the work of the position.

Few steps by the Government in this direction:

  • The Government provides that persons with disabilities should not be denied promotion in their employment on account of the disability/medical fitness if they are otherwise medically fit and can discharge their duties satisfactorily
  • The government established special employment exchanges for persons with disabilities in all state capitals and special employment cells have been set up in all district headquarters for recruitments to government posts reserved for persons with disabilities. In places where special employment exchange has not been established, special employment cells have been set up within regular employment exchange.
  • The government provides for employment of persons with disabilities in the private sector through incentives to employers.
  • Scheme of National Awards for the Empowerment of Person with Disabilities, in order to recognise their effort and encourage others to strive to achieve excellence in this field, separate awards are being presented to the most efficient/outstanding employee with disabilities.
  • The National Handicapped Finance and Development Corporation (NHFDC) functions as an apex institution for channelizing the funds to persons with disabilities through the State Channelizing Agencies (SCAs) nominated by the State Government (s). The schemes include loans for setting up small business in service/trading/industrial units, for higher studies/professional training, for manufacturing/production of assistive devices of disabled persons, for agricultural activities, for self-employment amongst persons with mental retardation Cerebral Palsy and Autism.
  • RBI has circulated the information in March 2015 that, on priority loan sector to PwDs will be eligible under the classification of weaker section.
  • Persons with disabilities are eligible for income tax deduction under Section 80U. Legal guardians of dependent persons with disabilities are eligible for income tax deduction under section 80DD for expenditures incurred on medical care, training and rehabilitation expenses or annuity paid. Persons with disabilities are exempted from payment of professional tax.
  • The Skill Council for Persons with Disabilities (SCPwD) is promoted by Confederation of Indian Industry (CII) under the Ministry of Skill Development and Entrepreneurship and Ministry of Social Justice and Empowerment. It targets skill development of people with Disabilities as per industry needs which can help them to be gainfully employed and contribute to India’s growing economy.
  • Prerna is the marketing assistance scheme of National Trust with an objective to create viable and widespread channels for sale of products and services produced by Person with disability (PwD) covered under National Trust Act.

Chapter 17- Creating a New Job Ecosystem

India, in this globalised era, reflects the universal scenario and is in middle of transformation. Increased digitalisation and automation is expected to significantly affect both the quality and quantity of jobs. New types of jobs and employment are changing the nature and conditions of work by altering skills requirements and replacing traditional patterns of work and sources of income. They open opportunities, to enter new, fast-growing sectors and catch up with more advanced economies.

  • On the economic front, according to World Bank’s “Global Economic Prospects – A Fragile Recovery” report, India has achieved the fastest growth rate among major economies in 2017.
  • The overall jobs landscape in the country is evolving rapidly.
  • Growth of e-commerce and technology-based start-ups are leading to the creation of new job ecosystem, which are becoming a large source of employment.
  • Given the government’s renewable energy, urban transport, shipping, affordable housing, smart cites, swachh bharat, rural roads program, national waterways, airports and industrial corridors, etc., infrastructure has become one of the largest creators of jobs in the country. The overall push for entrepreneurship through schemes such as Stand-Up India, Start-Up India and MUDRA Yojana is also beginning to positively impact jobs and opportunities for livelihood.
  • India is the third largest start up ecosystem in the world today.

Viewed in the light of new age industrial revolution (Industry 4.0) it is extremely important to understand how the future of jobs would look like and therefore how can we reskill and upskill existing and future workforce. There are glimpses of the future with examples such as advanced humanoid robot ‘Sophia’ that recently was given citizenship by Saudi Arabia, Hadrian X- an Australian based robot that completes tasks meant for three-four human bricklayers, Tally-World’s first fully autonomous self-auditing and analytics-based robot that ensures goods are adequately stoked, placed and priced and Tesla’s new $5 billow Giga- 100 per cent automated factory with limited human intervention.

India, too, has its own robot Lakshmi in Union Bank, Chennai, who greets and welcomes the customers making the front desk officers redundant. Future of jobs in 2022 in India will be determined by the country’s response to the inevitable impact created by the interplay of three primary forces – globalisation demographic changes and the adoption of Industry 4.0 exponential technologies by Indian industries.

Government’s “Make in India” initiative is a move in the right direction to increase manufacturing. As a labour-abundant country India can reap greater employment gains by specialising in labour-intensive sectors, such as apparel and leather, where it holds a comparative advantage. India could more proactively seek to negotiate bilateral Free Trade Agreements (FTAs) with the UK and Europe to support the exports of these sectors.

In conclusion it can be said that the need for a partnership between industry and government has never been more important than today, when disruptive forces are expected to have large-scale impact. Industry associations and leading companies are willing to support the government by providing inputs on how the Indian society, workforce and education systems should adopt to the changing global needs, enthusiastically participate in all engagement platforms and support the implementation efforts through resources, knowhow and well-designed PPP models.