People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 35

August 27, 2006



Need For A Paradigm Shift


THROUGH these columns, we had repeatedly expressed our concern at the phenomenon of ‘jobless’ growth that accompanies the current phase of capitalist globalisation. This has been confirmed internationally by the statistics put out by the International Labour Organisation (ILO). However, when we analyse that such global ‘jobless’ growth translates into domestic ‘job loss’ growth in developing countries, particularly in India, the liberalisation pundits dismiss this as the usual expression of communists’ ‘rhetoric’ denouncing capitalism. 


However, a recent study conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) on “the relationship between GDP and employment” shows a distinct decline in employment in the organised sector in recent years. By no stretch of imagination, can the ASSOCHAM be considered as an organisation having communist sympathies or even remotely associated with the political Left! 


The study shows that though India had registered an average 5.3 per cent GDP growth between 1998 and 2003, the growth of employment in the organised sector over this period declined by 4.14 per cent. When similar figures were adduced by us during the NDA regime, these were dismissed by their spokesman like the then disinvestment minister, Arun Shourie, as being due to the decline in the “ailing” public sector (read: due to the relentless privatisation of the public sector that the Vajpayee government pursued). Further, it was argued that the fall in employment in the public sector was being more than compensated by the rise in employment in the private sector. 


Nailing such untruths, the ASSOCHAM study shows that of the overall 4.14 per cent decline in the employment rate, 4.32 per cent was due to the fall in the public sector and 3.74 per cent in the private sector. There is, therefore, a secular decline in the employment rate both in the public and private sectors. 


This surely must be a cause for serious concern for all who wish to see the Indian economy strengthening and the benefits of such growth reaching all the people. The time has come for this UPA government to, once again, realise that a part of the people’s mandate in the 2004 general elections, which brought them into power, was the desire for a change in the focus of the economic policies from being solely preoccupied with corporate profits towards improving people’s welfare.


Refusing to believe such reality, the liberalisation pundits continue to argue that the fall in employment in the organised sector is more than made up by the growth of employment in the unorganised sector. Through these columns, we had repeatedly pointed out in the past, that if this was ever so, much of this is because the corporate world has been increasingly shifting the nature of employment from permanent jobs into those with contracts and casual status. 


There is a double advantage seen by the corporate sector in such a strategy. First, they need not take any responsibility for providing any social security welfare measures for contract of casual labour. Secondly, such workers would be more prone, given the insecurity of their future, to stay away from trade union activity.


The findings of the ASSOCHAM study are indeed revealing on this score. The contribution of the unorganised sector to the GDP declined between 1994 and 2000 by 4.6 per cent. During this period, including the trend of increasing contract casual appointments, the employment growth in the unorganised sector was a mere 1.12 per cent! Hence, the myth that the unorganised sector is more than compensating for ‘job loss’ in the organised sector stands exposed.


If this alarming trend of declining unemployment rate has to be stemmed, then the UPA government must address this issue in right earnest on the basis of the commitments made in the Common Minimum Programme. The CMP spoke of significantly higher levels of public investments to create the necessary social and economic infrastructure. This, indeed, needs to be substantially higher than present given the fact that the 4.14 per cent decline in employment is accompanied by a 5.3 per cent GDP growth and a 11.5 per cent growth in the rate of capital formation between 1998 and 2003.


The time has, therefore, come for this UPA government to affect a paradigm shift in the policy prescription of economic reforms. This shift must centre on significantly higher doses of public investment, again which we had repeatedly argued in these columns, will generate larger employment and strengthen the purchasing power in the hands of vast sections of the people, boosting aggregate domestic demand. This, in turn, shall fuel the growth of the manufacturing sector and contribute to the overall growth of the economy. Such a strategy, needless to add, will have to treat as its axis the agrarian sector. The current agrarian crisis accompanied by acute distress manifested in the continuing suicides of the farmers needs to be tackled not only on humanitarian considerations. This agrarian crisis, in the first place, is both the consequence and manifestation of the faulty policies of economic liberalisation.


Such a shift in the direction of the economic policies is essential for the building of a better India. This must also be seen in the context of the fact that 54 per cent of the Indian people today are below the age of 25 years. The economic policy prescriptions must address the task of providing this huge asset of human resources with education, health and skills. If India marches ahead to emerge as the major economic force and a knowledge power house in the world, it can only be on the shoulders of this youth. 


Popular pressure must be mounted on the UPA government to affect such a shift in the direction of economic policies for building a better India.