The Maratha Agitation for Reservations: Part II

Neeraj Jain

Neeraj Jain

neerajj61@gmail.com

 

In the previous article, we had analysed how the demand for reservations being raised by the Maratha community and the government bowing to their demand and granting them 16% reservation is not going to result in the creation of any significant jobs for these youth. In this article, we discuss some of the demands that need to be raised, not just by the Maratha youth but by youth of all communities together, for meaningful job creation in the country.

Some Proposals for Creating Jobs

i) Increase Spending on Agriculture

As discussed above, Indian agriculture is in crisis because of the neoliberal economic reforms. Because of this crisis, which is pushing thousands of farmers to commit suicide every year, employment generation in agriculture has fallen to near zero. To bring the agricultural sector out of this crisis and stimulate job creation in this vitally important sector, the government needs to make farming profitable by:

  • reducing input costs by increasing subsidies on fertilisers, electricity, water, etc.;
  • providing output price support;
  • increasing public investment in agriculture—which is absolutely essential for agricultural growth; and
  • waiving all farm debts, including debts to private moneylenders, and ensuring availability of institutional credit to farmers at subsidised rates.

In other words, the government needs to increase public investment in all agriculture related sectors. It needs to be at least doubled or trebled. Where will the money come from for this? We discuss this issue later in this essay.

This will reverse the decline in Indian agriculture and bring back employment generation to at least the pre-globalisation levels. Had employment generation in agriculture during the post-reform years continued at the same rate as during the period 1983 to 1993–94 (when CAGR was 1.51%, see Table 3 in Part I of this article), total employment in agriculture would have gone up to 308 million by 2009–10 instead of 245 million. In other words, instead of the net 2.4 million jobs created during the 16-year period 1994–2010, 65.5 million jobs would have been created in the agricultural sector—an additional 63 million jobs!

ii) Provide Incentives for the Small Scale Sector

As discussed above, the overwhelming proportion of employment in the country is provided by the informal sector, including what the government calls the Micro, Small and Medium enterprises (MSMEs). The Modi government has announced a scheme known as Mudra Yojana. Under this, the government provides a loan of between Rs 50,000 to Rs 10 lakh to people wishing to be entrepreneurs and setting up micro enterprises. According to official statistics, over the last three years since the scheme was launched in 2015, nearly 13 crore people have been sanctioned a total of Rs 6 lakh crore under this scheme till May 25, 2018 (of which Rs 5.81 lakh crore has been disbursed). A simple calculation shows that the average of sanctioned loans under this Yojana comes to Rs 46,530 while the disbursed amount is Rs 45,034.[i] While the Modi Government has been claiming  that this scheme has helped create several crore jobs, this is obviously another of its big lies; the amount of loan being disbursed under this scheme is too inadequate for setting up any kind of small scale business.

The government must substantially boost the financial incentives it provides for entrepreneurs interested in setting up MSMEs, including both the amount of loan and the interest subsidy for this loan, as well as provide other incentives, such as reserving production of several items for this sector and banning imports of these items to protect this sector from unfair competition with subsidised imports by recession hit automated plants of multinational corporations. The money for this is there—we discuss this later in this essay.

iii) Create More Jobs in the Large Scale Private Sector

As mentioned above, job creation in the Indian factory sector has slowed down considerably. With the result that only 2.5% of the total workforce in the country in 2009–10 was employed in factories, and this includes both small and large factories! The Niti Aayog, the government’s policy think-tank, has admitted in a report that the few jobs being created in India’s manufacturing sector are mostly being created in small-scale industries. Consequently, small firms employing less than 20 workers contributed 12% of the manufacturing output in the country, but employed 72% of the country’s manufacturing workforce (in 2010–11). Similarly, in the service sector, a 2006–07 NSSO survey of service firms found that the 650 largest enterprises accounted for 38% of the output of this sector, but employed only 2% of service workers.[ii]

As it is, large firms employ less workers due to high mechanisation levels. Now, taking advantage of the recent steps taken by the Government of India to introduce hire-and-fire policies in industry, they are retrenching permanent workers and replacing them by contract workers. While these contract workers are often forced to work longer hours than permanent workers, they are paid much less and they also have no social security. Therefore, the increase in productivity has not benefited workers. Data from the Annual Survey of Industries shows that while real productivity of workers in the three decades to 2013 has increased at an annual average of 7%, real wages of workers have been virtually stagnant, increasing at an average annual rate of 1% only between 1983 and 2013.[iii]

This has resulted in a huge rise in profits for the capitalist owners of these firms; they have almost exclusively cornered the gains resulting from the rise in productivity. This can be clearly seen from Chart 1 which shows that:

  • Wages as percentage of net value added in industries have actually fallen from 30.9% in 1982–83 and 25.6% in 1990–91 to 12.9% in 2012–13;
  • On the other hand, profits as percentage of net value added have risen sharply during the post-reform period: from 19.9% in 1982–83 and 22.1% in 1990–91 to 50.0% in 2012–13.

These are average figures for all industries. Obviously, the large-scale industries must be earning even higher profits and paying out lower wages than these averages.

 

Chart 1: Profits and Wages as % of Net Value Added in Indian Industry, 1982–83 to 2012–13[iv]

 

 

 

 

 

 

 

 

 

 

 

 

 

Such being the huge profits being made by large-scale industries, let us come together and demand that large factories increase the number of workers employed by them by reducing working hours by half, that is, to 4 hours per day (without reducing wages). That would result in a doubling of the number of workers employed in large-scale factories. Orthodox economists would call our proposal ridiculous, claiming it would lead to large-scale industries suffering huge losses, forcing them to shut down. But as we can see from Chart 1 above, in 2012–13, while wages as percentage of net value added were only 12.9%, profits as percentage of net value added were 50%. Therefore, if wage costs for large-scale industry doubled, they would not be driven into loss, they would still be making considerable profits—their profits would still be 37% of net value added. Furthermore, since employment would increase, it will lead to an increase in demand, and so large industries which today are working at much below full capacity (capacity utilisation in Indian industry is at around 72% today[v]) will be able to increase production and improve capacity utilisation, leading to further rise in profits.

There are 16 million employed in the organised manufacturing sector. Of this, around 30% or 5 million are employed in large-scale industry, according to Niti Aayog.[vi]  Doubling employment in large-scale industry would therefore lead to the creation of around 5 million jobs, and more via the multiplier effect.

iv) Create More Government Jobs

Lakhs of youth are mobilising across the country demanding reservations for their castes—when there are no government jobs! They are all fighting for a slice of the public employment ‘cake’, when there is no cake on the table.

Instead, we all need to unite, across castes and communities, and demand more government jobs. To make an estimate of how many government jobs can possibly be created in India, let us compare the number of government jobs in India with that in the USA and other developed countries, per lakh of population.

Unlike the propaganda being daily fed to us by our politicians and bureaucrats, public sector employment in India is not high; on the contrary, it is very low when compared to the developed countries, all of whom are unabashedly free market economies (see Table 7). An important reason why public sector employment in the developed countries is high is because of their high social sector expenditures. Most developed countries spend substantial sums on providing social security for their citizens, including universal health coverage, free school education and free or cheap university education, old age pension, maternity benefits, disability benefits, family allowance such as child care allowance, and much more. This obviously requires that they employ a large number of people in the social sectors to provide these services to their population.

The USA has one of the lowest levels of public sector employment (per lakh of population) among the developed countries. Even if we take this as the level that India should reach, that is, if India is to have the same number of public sector employees per lakh of population as the USA, then India’s public sector employment would have to increase to at least 88.9 million.[vii] Presently, there are only 17.6 million public sector employees in India. This means an additional 71.3 million or 7.13 crore jobs would be created—that too, decent, formal jobs!

Table 7: Public Sector Employment per Lakh of Population[viii]

Sweden

15,070

France

8,760

USA

7,220

India

1,430

Therefore, instead of fighting amongst ourselves on the basis of caste, religion, region and so on, let us unite and demand that the government should increase its social sector spending, and create more public sector jobs. That would create at least a few crore jobs! Creation of such a large number of public sector jobs will lead to the creation of at least as many private sector jobs if not more, as the creation of so many well-paid jobs in the public sector will give a big boost to demand and will therefore lead to a huge increase in private sector production—as Keynes had pointed out several decades ago.

For instance, if in Maharashtra State alone, the government decides to take urgent and decisive steps to send all children compulsorily to school, and provide them free and good quality education (of Kendriya Vidyalaya standards) up to Class XII, this would require the opening of thousands of schools and recruitment of a very large number of teachers. How many? We have estimated that for this, the government would need to recruit an additional 19 lakh teachers in the minimum![ix]

And if so many school teachers are recruited, that would call for a big increase in the number of associate staff, from clerks to laboratory assistants to peons and so on. So many schools would need to be constructed, furniture made, school textbooks printed, and so on. This would lead to a big increase in jobs in all these industries. The recruitment of so many school teachers and associate staff in schools would lead to a big increase in the demand for consumer goods and so there would be much job creation in these industries too. So much job creation, in just a single state in the country, only by investing in providing compulsory, good quality education to all children!

And it is not just education, but all welfare services, that are in a terrible state in our country. Therefore, we are not at all exaggerating when we estimate that if the government indeed decided to provide good quality essential services to all people in the country, it would lead to the creation of several crore jobs.

But Where Will the Money Come From?

Our readers will say—that is all ok, but where will the money come from for all this? India is a poor country, the government does not have enough money to implement this.

That the Indian Government has no money is a myth, propagated by the government and its propagandists. The reality is, the Indian Government has been doling out subsidies to the rich to the tune of several lakh crore rupees every year. To give two stunning examples:

  • Successive governments at the Centre have been giving tax concessions to the country’s corporate houses and super-rich every year, for the last several years, ever since the economic reforms began. Over the 13–year period 2005–06 to 2017–18, these tax write-offs total a mind-boggling Rs 58.6 lakh crore![x]
  • Over the 15-year period 2004–18, Indian public sector banks have written off a whopping Rs 4.6 lakh crore worth of loans given to big corporate houses. Of this amount, Rs 3.1 lakh crore has been waived by the Modi Government during its four years in power.[xi] Apart from this, during this period, banks have also restructured loans—which is a more roundabout way of writing off loans—given to these high and mighty, probably to the tune of Rs 10 lakh crore or so.[xii]

Apart from this, other concessions being given to the rich include handing over control of the country’s mineral wealth and resources to private corporations in return for negligible royalty payments, transferring ownership of our profitable public sector corporations to foreign and Indian private business houses at throwaway prices, direct subsidies to private corporations in the name of ‘public–private–partnership’ for infrastructural projects, and so on. These transfers of public wealth to private coffers also total several lakh crore rupees.[xiii]

If the government reduces these concessions / transfers of public money to the country’s uber rich, it can substantially increase its expenditure on agriculture and the social sectors.[xiv] That would lead to a big increase in agricultural jobs, as well as create several crore government jobs.

To Conclude

Friends, the reason why there are no jobs, the reason why there is such acute joblessness in the country, is not because of the ‘other’—unemployment is not because reservation for Dalits and STs and OBCs has snatched away jobs. The reason is that there are simply no decent, formal sector jobs. And that is because of globalisation, because of the neoliberal economic policies being implemented in the country. Once we well and truly realise this, only then, instead of mobilising against the ‘other’, ‘we’ will unite with the ‘other’ and unitedly raise demands that challenge the economic policy orientation in the country and will truly lead to job creation and enough decent jobs for all.

 

References:

[i]
          “Mudra Yojana is a Mission or Mess? 5-Point Fact Checker”, May 29, 2018, https://www.indiatoday.in.

[ii]      “Severe Underemployment More Serious than Unemployment: Niti Aayog”, May 28, 2017, http://www.businesstoday.in.

[iii]       Prabhat Singh, “Higher productivity equals higher wages? Not for the Indian industrial worker”, October 10, 2017, http://www.livemint.com.

[iv]       Ibid.

[v]       “India’s Manufacturing Capacity Utilisation Weakened Further: RBI Survey”, October 4, 2017, https://www.bloombergquint.com.

[vi]       Prabhat Singh, “Higher productivity equals higher wages? Not for the Indian industrial worker”, op. cit.

[vii]    Calculations done by us, from references given in endnote 32.

[viii]   Calculations done by us. Population and employment figures for developed countries taken from: “Sweden / France / USA – Economic Indicators”, https://tradingeconomics.com; public sector employment percentage taken from Niall McCarthy, “Scandinavia Leads The World In Public Sector Employment”, July 21, 2017, https://www.forbes.com. Note that the population and employment figures are for 2017, while public sector employment figures are for 2015. India figure is for 2012; public sector employment in India was 17.6 million in 2012, and population of India for 2012 taken as 1,230 million and calculated from figures given in: “Population of India”, http://statisticstimes.com.

[ix]     Calculations done in our booklet, The Unemployment Crisis: Reasons and Solutions, op. cit., pp. 66–68.

[x]     “P Sainath on Corporate Bailout #Rs 36.5 Trillion #Budget 2014”, July 13, 2014, http://www.indiaresists.com; Neeraj Jain, “Budget 2018–19: What is in it for the People?” op. cit.

[xi]     We have calculated this from the following data: Loans written off by public sector banks over the period 2004–15 totalled Rs 2.11 lakh crore (‘PSU Banks’ Write-Off of Bad Loans at Rs 1,14,000 Cr in 2013–15: RBI’, February 8, 2016, http://www.domain-b.com); “PSU Banks Write Off Rs 2.49 Lakh Crore of Loans in 5 Years”, August 7, 2017, http://economictimes.indiatimes.com; “Public Sector Banks Write-Off Bad Loans Worth Rs 1.2 Lakh Crore in 2017–18”, June 15, 2018, https://www.businesstoday.in.

[xii]    Dinesh Unnikrishnan, “For State-Run Banks, Delayed Economic Recovery Would Mean More Pain from Restructured Loans”, December, 26 2014, http://www.firstpost.com; “Infrastructure Loans Emerge as Banks’ Biggest Stress Point”, April 25, 2014, http://www.livemint.com; “Restructured Loans Cross Rs.2.27 Trillion; Pace Slows”, April 5, 2013, http://www.livemint.com.

[xiii]   More for examples of these concessions given to the rich, see our booklet: Is the Government Really Poor, Lokayat Publication, Pune, 2018, https://lokayat.org.in.

[xiv]   We have discussed the potential of how much money the government can spend on the social sectors by cutting down the subsidies it gives to the rich in our essay: Neeraj Jain, “Budget 2018–19: What is in it for the People?” op. cit.

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