Skip to main content

Growth alone can't lead to more jobs, admits World Bank: At current rate, India would "require" 18% GDP growth

By A Representative
Even as recognizing that “India’s economy has bottomed out from the deceleration caused by one-time policy events such as demonetization and GST introduction”, and the GDP growth has “accelerated to 6.5 and 7.2 percent in Q2 and Q3 FY17/18, with private consumption remaining its main driver”, the World Bank has warned, “Growth alone will not be sufficient for employment rates to catch-up with those of comparable countries.”
Over a 20-year transition period, the number of new jobs needed every year would be gigantic, up to 13 million per year, the World Bank report, “South Asia Economic Focus Spring 2018: Jobless Growth?”, says. It insists, “Assuming the same job creation per percentage point of growth as before, growth rates should reach 18% in India.” As of today, it estimates, India creates between 540,000 and 750,000 jobs per percentage point of GDP growth.
The report says, “These rates are implausibly high, implying that rapid growth alone will not be enough”, adding, if India is “serious about increasing employment rates, more jobs will need to be created for every percentage point of growth”. However, ironically, it does not out what should be done at the policy level for to achieve a higher employment rate.
In fact, according to the World Bank, while the share of the working-age group in the total population increased by around 0.5% per annum in the decade from 2005 to 2015, “The employment rate decreased on average more than 1.5% per year in India.”
The World Bank recalls, “The relationship between economic growth and jobs is often interpreted in connection with Okun’s Law, which posits that when growth accelerates above potential the unemployment rate falls below its ‘natural’ level.” It adds, “The intuition is straightforward: if growth accelerates, the demand for labor increases and, given that the labor force is stable in the short term, the unemployment rate must decline.”
Pointing out that this empirical regularity was first identified by Arthur Melvin Okun in the early 1960s for the US (Okun, 1962), the report says, “Okun’s Law is central to modern macroeconomic analysis and is a key tool for policymaking.”
Suggesting that this has not worked as far as India is concerned, which has seen a deceleration in jobs creation, the report says, “As economies develop, it is expected that individuals will move out of agriculture into more productive, non-agricultural employment.” It adds, “Such transformation … was slower in India”, with manufacturing employment not increasing.
Providing a mixed picture of the state of the economy, the report regrets, while investment growth picked up in India “and grew at 12% year-on-year in Q3 FY17/18, investment rates remain below levels. Services accelerated during FY17/18, with sectoral value-added growing at 7.7 percent in Q3 FY17/18.”
It adds, “In contrast, agricultural growth decelerated to 2.7 percent growth during the summer, driven by uneven rainfall and a high base effect. Growth in manufacturing and construction, most affected by GST and demonetization, accelerated to 8.1 and 6.8 percent growth during Q3 FY17/18.”
The report says, “Growth has bottomed out and is expected to stabilize at 7.5 percent in the medium-term. GDP growth is projected at 6.7 percent during FY17/18. A further acceleration to 7.5 percent by FY19/20 is dependent on a sustained recovery in private investments, which is expected to be supported by policy measures that improve the investment climate.”
Against this backdrop, the report says, “Two crucial engines of growth have underperformed. First, private investment has been low compared to pre-crisis levels, driven by factors that constrain credit supply and investment opportunities. Second, exports have slowed and India’s share in world trade has stagnated.”
“With lackluster export performance and rapidly growing imports, trade deficits are gradually widening. India’s monthly trade deficit increased by roughly one third in recent months, from USD 19 billion in September 2016 to USD 25 billion in January 2018”, the report says, adding, “In India, on the other hand, only imports are expected to increase, while exports are seen as stable.”

Comments

TRENDING

'Violation of Apex Court order': Delhi authorities blamed for dog-bite incidents at JLN Stadium

By A Representative   People for Animals (PFA), led by Ms. Ambika Shukla, has held the Municipal Corporation of Delhi (MCD) responsible for the recent dog-bite incidents at Jawaharlal Nehru Stadium, accusing it of violating Supreme Court directions regarding community dogs. The organisation’s on-ground fact-finding mission met stadium authorities and the two affected coaches to verify details surrounding the incidents, both of which occurred on October 3.

The silencing of conscience: Ideological attacks on India’s judiciary and free thought

By Sunil Kumar*  “Volunteers will pick up sticks to remove every obstacle that comes in the way of Sanatan and saints’ work.” — RSS Chief Mohan Bhagwat (November 6, 2024, Chitrakoot) Eleven months later, on October 6, 2025, a man who threw a shoe inside the Supreme Court shouted, “India will not tolerate insults to Sanatan.” This incident was not an isolated act but a continuation of a pattern seen over the past decade—attacks on intellectuals, writers, activists, and journalists, sometimes in the name of institutions, sometimes by individual actors or organizations.

Adani Power controversy, legacy of pollution and broken dreams in Bihar

By Kumar Krishnan*  The decision to lease 1,050 acres of land in the Pirpainty region of Bhagalpur district to Adani Power for 33 years at a mere ₹1 per acre annual rent has become a major political issue in Bihar. Congress President Rajesh Ram, Bihar in-charge Krishna Allavaru, Legislature Party Leader Dr. Shakeel Ahmad Khan, and Legislative Council Leader Dr. Madan Mohan Jha have already marched from Sadakat Ashram to Rajendra Babu's samadhi in Patna over this issue. Pawan Khera and Kanhaiya Kumar are vocally opposing it. Additionally, allied parties of the Mahagathbandhan (Grand Alliance) are also protesting. The Congress party even held a march in Patna on this matter.

N-power plant at Mithi Virdi: CRZ nod is arbitrary, without jurisdiction

By Krishnakant* A case-appeal has been filed against the order of the Ministry of Environment, Forest and Climate Change (MoEF&CC) and others granting CRZ clearance for establishment of intake and outfall facility for proposed 6000 MWe Nuclear Power Plant at Mithi Virdi, District Bhavnagar, Gujarat by Nuclear Power Corporation of India Limited (NPCIL) vide order in F 11-23 /2014-IA- III dated March 3, 2015. The case-appeal in the National Green Tribunal at Western Bench at Pune is filed by Shaktisinh Gohil, Sarpanch of Jasapara; Hajabhai Dihora of Mithi Virdi; Jagrutiben Gohil of Jasapara; Krishnakant and Rohit Prajapati activist of the Paryavaran Suraksha Samiti. The National Green Tribunal (NGT) has issued a notice to the MoEF&CC, Gujarat Pollution Control Board, Gujarat Coastal Zone Management Authority, Atomic Energy Regulatory Board and Nuclear Power Corporation of India Limited (NPCIL) and case is kept for hearing on August 20, 2015. Appeal No. 23 of 2015 (WZ) is filed, a...

History, culture and literature of Fatehpur, UP, from where Maulana Hasrat Mohani hailed

By Vidya Bhushan Rawat*  Maulana Hasrat Mohani was a member of the Constituent Assembly and an extremely important leader of our freedom movement. Born in Unnao district of Uttar Pradesh, Hasrat Mohani's relationship with nearby district of Fatehpur is interesting and not explored much by biographers and historians. Dr Mohammad Ismail Azad Fatehpuri has written a book on Maulana Hasrat Mohani and Fatehpur. The book is in Urdu.  He has just come out with another important book, 'Hindi kee Pratham Rachna: Chandayan' authored by Mulla Daud Dalmai.' During my recent visit to Fatehpur town, I had an opportunity to meet Dr Mohammad Ismail Azad Fatehpuri and recorded a conversation with him on issues of history, culture and literature of Fatehpur. Sharing this conversation here with you. Kindly click this link. --- *Human rights defender. Facebook https://www.facebook.com/vbrawat , X @freetohumanity, Skype @vbrawat

New RTI draft rules inspired by citizen-unfriendly, overtly bureaucratic approach

By Venkatesh Nayak* The Department of Personnel and Training , Government of India has invited comments on a new set of Draft Rules (available in English only) to implement The Right to Information Act, 2005 . The RTI Rules were last amended in 2012 after a long period of consultation with various stakeholders. The Government’s move to put the draft RTI Rules out for people’s comments and suggestions for change is a welcome continuation of the tradition of public consultation. Positive aspects of the Draft RTI Rules While 60-65% of the Draft RTI Rules repeat the content of the 2012 RTI Rules, some new aspects deserve appreciation as they clarify the manner of implementation of key provisions of the RTI Act. These are: Provisions for dealing with non-compliance of the orders and directives of the Central Information Commission (CIC) by public authorities- this was missing in the 2012 RTI Rules. Non-compliance is increasingly becoming a major problem- two of my non-compliance cases are...

Epic war against caste system is constitutional responsibility of elected government

Edited by well-known Gujarat Dalit rights leader Martin Macwan, the book, “Bhed-Bharat: An Account of Injustice and Atrocities on Dalits and Adivasis (2014-18)” (available in English and Gujarati*) is a selection of news articles on Dalits and Adivasis (2014-2018) published by Dalit Shakti Prakashan, Ahmedabad. Preface to the book, in which Macwan seeks to answer key questions on why the book is needed today: *** The thought of compiling a book on atrocities on Dalits and thus present an overall Indian picture had occurred to me a long time ago. Absence of such a comprehensive picture is a major reason for a weak social and political consciousness among Dalits as well as non-Dalits. But gradually the idea took a different form. I found that lay readers don’t understand numbers and don’t like to read well-researched articles. The best way to reach out to them was storytelling. As I started writing in Gujarati and sharing the idea of the book with my friends, it occurred to me that while...

Celebrating 125 yr old legacy of healthcare work of missionaries

Vilas Shende, director, Mure Memorial Hospital By Moin Qazi* Central India has been one of the most fertile belts for several unique experiments undertaken by missionaries in the field of education and healthcare. The result is a network of several well-known schools, colleges and hospitals that have woven themselves into the social landscape of the region. They have also become a byword for quality and affordable services delivered to all sections of the society. These institutions are characterised by committed and compassionate staff driven by the selfless pursuit of improving the well-being of society. This is the reason why the region has nursed and nurtured so many eminent people who occupy high positions in varied fields across the country as well as beyond. One of the fruits of this legacy is a more than century old iconic hospital that nestles in the heart of Nagpur city. Named as Mure Memorial Hospital after a British warrior who lost his life in a war while defending his cou...

Citizens’ group to recall Justice Chagla’s alarm as India faces ‘undeclared' Emergency

By A Representative  In a move likely to raise eyebrows among the powers-that-be, a voluntary organisation founded during the “dark days” of the Indira Gandhi -imposed Emergency has announced that it will hold a public conference in Ahmedabad to highlight what its office-bearers call today’s “undeclared Emergency.”