Job creation is always expected of the government, and many claim that the Narendra Modi led NDA has failed to do so. The lack of jobs and increasing unemployment has been used by the opposition to attack the Modi government. However, the Nikkei India Services Business Activity Index paints an entirely different picture. The index has improved in the month of March to 50.3 from 47.8 in February 2018.
The index fell below 50 in February, but has now turned around. The improving demand conditions and a renewed rise in work are responsible for the increasing jobs. This report also hints at the stabilization of the Indian economy. While the cost burdens on the service sectors remained the same, this accelerated the pace of job creation, which was the quickest since June 2011.
Notably, the output growth in manufacturing outperformed the service sector, hinting at more jobs in skilled and semi-skilled labour. New business across the manufacturing sector saw an increase for the fifth consecutive month. The Composite PMI Output Index also improved to 50.8 in March from 49.7 seen in the previous month. The numbers may not paint a rosy picture but they surely indicate the changing fortunes of job-seekers in the near future.
The number of vacancies across the 978 employment exchanges has been doubled since 2014. In February 2018, the number of job vacancies crossed the 1 million mark for the first time. A total of 1.5 million jobs were notified across the employment exchanges. The problem for the current government is the rapid increase in the number of job-seekers, which has doubled from 2015 to 2018. Even though the problem may seem complicated, the Narendra Modi Government has taken several steps that may yield rich dividends in the near future.
The present government has been targeted for the demonetisation and GST reforms, which were perceived as failures by some people. While both the moves may not have had any short-term benefits, financial experts believe that they will yield results in the long-run. The Insolvency and Bankruptcy Code is expected to ensure a rapid turnaround of stranded assets. The RERA act has benefited home buyers and brought more jobs in the real estate sector. With buyers investing their money with confidence due to the RERA, the real estate sector is poised for rapid growth. FDI and partnerships with foreign entities are bringing more money and jobs into the country.
There are two ways to achieve more jobs: One is doing it to show the public that the government is doing a good job, and not considering the economic impact. The second way to do it is steadily but with keeping long-term economic growth in mind. Luckily, the Modi Government is going down the second road.
The number of jobs is growing while keeping the fiscal deficit in check, controlling inflation, and stringent measures by the RBI. So, even though the rhetoric by the opposition pointing at the lack of jobs may continue, we can only hope that government continues to increase the jobs the way it has been doing – without ruining long-term economic growth.