The 2019 State of Working India (SWI) report has the following salient features —
1. The report proposes an Urban Employment Guarantee programme that can create employment opportunities for up to 50 million workers in small towns across the country.
2. It also proposes a Universal Basic Services programme that calls for increasing education spending to 6% of GDP and health spending to 3% of GDP, in order to create over 2 million good jobs while supplying high quality public services.
3. The call for greater public spending is backed by an analysis of India’s fiscal situation. It argues that employment generation and public service provision should not be compromised for meeting arbitrary fiscal deficit targets.
4. The report also calls for a concerted new industrial policy to revive Indian manufacturing.
The report also analyses employment trends since 2016, which were not part of SWI 2018. It finds that, in addition to rising unemployment among the higher educated, less educated workers have also seen job losses and reduced work opportunities since 2016. Five million men left the workforce between 2016 and 2018. The beginning of the decline in jobs coincided with demonetisation in November 2016, although no direct causal relationship can be established based only on these trends.
Some details on the policy proposals are extracted from the report below.
a. A National Urban Employment Guarantee: India has been a leader in implementation of employment guarantee programmes via the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). It is time to think about extending this to urban areas also. Such an urban employment guarantee scheme will provide employment within town or city limits to all those who ask for it and thereby provide services to all residents, build our civic infrastructure, and restore the urban commons. We propose a detailed programme that calls for providing 100 days of guaranteed work at ₹500 a day for a variety of works. It also provides for 150 contiguous days of training-and-apprenticeship at a stipend of ₹13,000 per month for educated youth. We estimate that such a programme will cost between 1.7 to 2.7% of GDP and will create work for 30-50 million people.
b. Universal Basic Services: Over the years, India has under-invested in basic social services. As a result Indians spend much more out-of-pocket on these services than citizens of other comparable countries. A bold public commitment to UBS will have the dual effect of supplying quality services while creating good jobs. A key condition for this is an investment in improved and increased public provision of healthcare, education, housing, security, transport, and utilities. This includes filling existing vacancies in the system, expansion of capacity, as well as regularising various forms of contract and ‘volunteer’ workers (such as ASHA and anganwadi workers). We argue that a well-executed UBS would go a long way in restoring public goods to their rightful place in society, creating millions of good jobs in the process.
c. Rethinking industrial policy: India’s experience with industrial policy (licensing, reservations, permits, subsidies and so on) during the planning years was mixed at best. Recent decades have seen hostility to industrial policy measures across the globe, barring a few such as tax breaks or the creation of special economic zones. On the other hand, we know that strategic industrial policy has played a key role in all the successful examples of industrialisation across the world. Prof. Jayan Thomas of IIT, Delhi discusses the importance of industrial policy to revive Indian manufacturing.
d. Employment-oriented fiscal policy: Fiscal deficits are generally viewed negatively and seen as a threat to financial and economic stability. While some of the concerns are legitimate, history and empirical analysis shows that many of the fears are either unfounded or overblown. There are major misconceptions about India’s fiscal policy, government debt, and fiscal sustainability that are belied by India’s own experience since the 1980s. Dr. Srinivas Thiruvadanthai of Levy Institute, New York argues that there is ample space for fiscal expansion necessary for job creation.