India’s
position
on
the
global
value
chain
is
shifting
due
to
government
incentives
and
a
digitally
savvy
economy
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Premiums
NEW
DELHI
—
As
India
gears
up
for
the
second
phase
of
its
general
elections,
the
issue
of
unemployment
is
increasingly
taking
centerstage,
with
opposition
leader
Rahul
Gandhi
charging
Prime
Minister
Narendra
Modi
and
his
ruling
BJP
of
making
the
country
“a
center
of
unemployment.”
Joblessness
is
particularly
high
among
India’s
youth
—
with
those
aged
15
to
29
making
up
a
staggering
83%
of
all
unemployed
people
in
India,
according
to
the
“India
Employment
Report
2024,”
published
last
month
by
the
International
Labour
Organisation
(ILO)
and
the
Institute
of
Human
Development
(IHD).
“Modi
has
aggravated
unemployment
in
the
country.
Those
able
to
provide
jobs
have
been
devastated
due
to
demonetization
and
wrong
Goods
and
Services
Tax
regime,”
Gandhi
said
Saturday
at
a
rally
in
the
eastern
state
of
Bihar
in
India.
In
a
move
that
was
widely
criticized,
Modi
announced
in
2016,
during
his
first
tenure,
that
500-
and
1,000-rupee
notes
will
be
demonetized,
or
cease
to
be
legal
tender.
Demonetization
—
aimed
at
curbing
black
money,
or
funds
earned
through
illegal
activity that
avoid
taxation
—
was
labeled
“monumental
mismanagement”
by
Modi’s
predecessor,
Manmohan
Singh.
However,
it
did
not
stop
Modi
from
securing
a
second
term
in
2019
with
an
even
stronger
mandate.
The
country’s
unorganized
sector
has
still
not
recovered
from
the
impact
of
demonetization,
Arun
Kumar,
economist
and
a
former
professor
at
New
Delhi-based
Jawahar
Lal
Nehru
university
told
CNBC,
adding
it
was
one
of
the
key
reasons
for
the
high
unemployment
in
the
country.
India’s
unorganized
sector,
which
is
made
up
of
millions
of
small
businesses
that
are
privately
owned,
make
up
about
93%
of
the
country’s
total
workforce.
The
ILO-IHD
findings
have
been
highlighted
by
the
opposition
to
corner
Modi’s
ruling
Bharatiya
Janata
Party
on
the
unemployment
front,
with
the
president
of
the
Indian
National
Congress,
the
country’s
main
opposition
party,
calling
the
country’s
joblessness
situation
a
“ticking
bomb.”
The
issue
has
found
resonance
among
the
voters:
A
survey
earlier
this
month
by
the
New
Delhi-based
Centre
for
the
Study
of
Developing
Societies
and
Lokniti
—
a
research
program
at
CSDS
—
showed
that
joblessness
was
the
No.
1
concern
among
India’s
voters.
As
many
as
32%
of
the
respondents
said
increasing
unemployment
was
the
key
reason
why
they
would
not
elect
the
BJP
again.
About
62%
of
those
surveyed
said
securing
employment
had
become
more
challenging
over
the
past
five
years.
The
same
survey,
however,
also
showed
that
44%
of
the
respondents
were
willing
to
give
the
Modi
government
another
chance
as
opposed
to
the
39%
who
did
not
wish
to
reelect
the
incumbent
government.
India’s
Labour
Ministry
did
not
immediately
respond
to
CNBC’s
queries
pertaining
to
the
country’s
unemployment
situation.
The
shift
toward
the
organized
sector
from
the
unorganized
sector,
and
from
the
labor-intensive
industries
(such
as
leather
goods
and
textiles)
to
capital-intensive
sectors
(such
as
e-commerce)
has
led
to
the
deterioration
in
India’s
jobs
generation
capacity,
Kumar
said.
Former
Reserve
Bank
of
India
governor,
Raghuram
Rajan,
echoed
similar
concerns
last
week,
pointing
to
the
fall
in
employment
in
labor-intensive
sectors
such
as
leather
goods.
Rajan,
who
was
speaking
about
how
to
make
India
an
advanced
economy
at
the
George
Washington
University,
said:
“Unemployment
numbers
are
high,
disguised
unemployment
is
even
higher.
Labor
force
participation
is
low,
female
labor
force
participation
is
really
alarmingly
low.”
A
slowdown
in
hiring
in
India’s
huge
information
technology
sector
is
also
to
blame
for
the
lack
of
well-paying,
white-collar
jobs.
Manufacturing
puzzle
India’s
manufacturing
push
has
so
far
not
been
able
to
address
the
jobs
situation
due
to
limited
value-addition
and
increasing
mechanization,
Kumar
said,
citing
the
mobile
phone
sector.
“We
are
assembling
the
phones
here,
not
manufacturing
the
parts
that
would
lead
to
higher
job
creation.
If
an
Apple
phone
costs
$1,000,
we
are
adding
value
worth
$50-$60,
and
the
jobs
being
created
are
commensurate
to
that
value
addition,”
he
told
CNBC.
Manufacturing
has
become
capital-intensive
and
labor-saving.
With
increasing
mechanization,
job
creation
in
India
has
become
capital-intensive,
with
a
smaller
number
of
workers
employed
between
2019
and
2000
than
in
the
1990s,
according
to
the
ILO-IHD
report.
“We
are
going
down
in
those
[labor-intensive]
areas.
No
wonder
we
have
more
of
a
job
problem,”
Rajan
said,
questioning
the
government’s
priorities
“Think
about
these
chip
factories.
So
many
billions
going
to
subsidize
chip
manufacturing.”
The
government
has
been
introducing
measures
such
as
production-linked
incentive
schemes
to
help
boost
the
manufacturing
sector,
but
it
has
yet
to
translate
into
meaningful
job
creation,
amid
increasing
mechanization,
according
to
economists
such
as
Kumar.
The
PLI
schemes
with
an
outlay
of
1.97
trillion
rupees
(nearly
$24
billion)
for
five
years
beginning
2021-22
could
potentially
create
6
million
new
jobs,
according
to
the
Indian
government.
Just
a
‘political
narrative’?
While
the
ILO-IHD
headline
numbers
on
youth
unemployment
have
become
a
major
talking
point
this
election
season,
some
of
the
key
metrics
that
point
to
improving
jobs
scenario
have
been
lost
in
the
debate.
Youth
unemployment,
which
was
at
17.5%
in
2019,
fell
to
12.1%
in
2022
and
to
10%
in
2023,
the
ILO-IHD
report
stated.
Overall,
unemployment
fell
to
3.1%
in
2023
from
3.6%
in
2022
and
4.2%
in
2021,
according
to
government
data.
Former
IMF
executive
director,
Surjit
Bhalla,
also
a
former
member
of
prime
minister’s
economic
advisory
council,
told
CNBC
that
a
lot
of
the
noise
around
unemployment
is
just
a
“political
narrative.”
Even
though
unemployment
is
at
the
front
and
center
of
voters’
mind
and
has
been
the
key
issue
raised
by
the
opposition
parties
to
put
the
ruling
BJP
on
the
backfoot,
a
whole
host
of
surveys
have
shown
that
Modi
will
likely
win
this
election
with
another
strong
mandate.
If
Modi
does
return
to
power
for
the
the
third
term,
he
will
be
just
the
second
prime
minister
to
have
achieved
this
feat
after
Jawaharlal
Nehru,
the
country’s
first
prime
minister.
—
CNBC’s
Naman
Tandon
contributed
to
this
story.
