Business

No Prime Minister, Earning Rs 200 a Day By Selling Pakodas is Not Employment

It should not be a source of pride that millions are managing to eke out a meagre income. Instead it should be seen for what it is – a sign of under-employment.

Narendra Modi pakoda

I admit I felt hurt by Prime Minister Narendra Modi’s recent assertion that a person earning Rs 200 a day by selling pakodas is also employed. The fact that the prime minister actually celebrates this kind of ’employment’ as a major success of his Mudra scheme is even more worrisome.

While earning something as meagre as Rs 200 a day may come as some solace to an unemployed person and she or he may clutch at it as the proverbial straw, the government must acknowledge that it only reflects under-employment and these earnings are just not enough to live life with dignity.

In fact, under-employment was underlined as major concern by the Niti Aayog in its three-year action plan released in August 2017. It noted that “not unemployment, but severe under-employment is the main problem facing the country” and that “what is needed is the creation of high-productivity, high-wage jobs”.

It is highly incongruous that something which is of highest concern for the Niti Aayog is projected as a big achievement by the prime minister. After all, the prime minister himself heads Niti Aayog.

The Mudra scheme – which clubs all previous loan schemes by banks, private bank and micro-finance institutions and classifies loans in three categories – has provided loans to over 10 crore beneficiaries in last three years. But nearly 90% of these beneficiaries have received loans under the ‘Shishu’ category, which provides for loans of under Rs 50,000. With such a low degree of investment provided to nearly nine crore Indians, the employment opportunities can hardly be of high value.

Howsoever impressive it may appear, the data on the Mudra scheme also needs to be read along with recent data on defaults in student loans. The Times of India has noted that public-sector banks reported a 47% increase in non-performing education loans between March 2015 and March 2017 and for at least five banks, the bad loans have almost doubled. Quite clearly, the defaults in education loans are a direct result of poor availability of good jobs. With huge cost of higher education being increasingly met from education loans, the poor employment scenario is leading to a situation where young people are starting their careers on a negative note marked by loan defaults. It is simply because that there are not enough jobs in market.

It would be interesting to see that how many graduates –and more specifically, the persons who availed education loans –have opted for Mudra loans. The government needs to come out with data that sheds light on the true state of under-employment in the country.

Also, the government must release the data on persons rendered unemployed after demonetisation and how many of them took Mudra loans just to sail through the difficult times.   

In equating the success of low-value Mudra loan disbursement with generation of employment, the prime minister has sought to shift the goalpost on employment creation.

The stated policy direction of Modi government was to ensure high value jobs to aspiring India. It rolled out Start Up India, Stand Up India and Make in India schemes with lot of promise and fanfare. As the government now steps into its last year, with its last full budget coming up in next few days, a proper assessment of these schemes would give a better insight into the employment scenario.

Start Up India‘, one of the flagship schemes of Modi government, had an earmarked Rs 10,000 crore ‘fund of funds’ for supporting start-ups. But till date, only 75 start-ups have actually taken off, while an expenditure of only Rs 605 crore has been committed so far.

Under-employment was underlined as major concern by the Niti Aayog in its three-year action plan released in August 2017. Credit: PTI

It is not just the government start-up scheme that is lagging. Private venture capital funds and angel investment have also fallen to a three year low. Start-up tracker Traxcn shows that number of deals for early stage funding has fallen from 1700 firms in the period 2014-2016  to only 482 firms in ten months of 2017. Number of new start-ups has fallen from 6,000 in 2016 to 800 in 2017. While the investment in start-ups have grown from $4.6 billion to $8 billion, of this, $4.4 billion has been infused in just two ventures – Flipkart and Paytm.

Also, it may be worthwhile to note that during the UPA regime, India saw several start-ups that grew into big businesses and became household names. To name a few, Paytm, Flipkart, Snapdeal, Urban Ladder, Policy Bazaar, Just Dial, Big Basket, Redbus and Zomato.

‘Stand Up India’ is another ambitious scheme that was announced by the prime minister from Red Fort in 2015. It had the noble aim of promoting SC, ST and women entrepreneurs. The scheme provided for loans between ten lakh and one crore rupees for starting greenfield ventures. It listed over a lakh bank branches and over 17,000 help centres for facilitate the programme. As things stand in December 2017, only about 35,000 beneficiaries have been disbursed loans amounting to Rs 5,658 crore. The aim was to help at least one SC, ST and women per bank branch!

Make in India was envisaged as the flagship programme to increase the contribution of manufacturing sector from 16% to 25 % of GDP. It was expected to generate quality employment in private sector and defence sector. But as government moves into the last financial year, the ‘Make-in-India’ programme has failed to take off as planned. There are hardly any major defence manufacturing projects that have kicked off. Several projects, cumulatively worth 3.5 lakh crores are still stuck in procedures.

While GDP from the manufacturing sector has increased to 5355.42 billion rupees in the third quarter of 2017 from 5131.39 billion rupees in the second quarter of 2017, it is nowhere close to the 25% target. Stalled projects constitute 25% of total manufacturing projects. As reported by India Briefing, in September 2017, the value of stalled projects stood at 13.22 trillion rupees. Also, the full impact of demonetisation and faulty implementation of GST on the manufacturing sector is yet to be studied.

The failure of these flagship programmes of the government may have forced the prime minister to yet again shift the goal post. The objective and success of the government is no more in addressing the concerns of an aspiring India, but to provide meagre income enough to earn ‘do waqt ki roti’. For an individual who is unemployed due to any reason, be it demonetisation or global distress or lack of adequate manufacturing and agricultural growth, any income that sustains his daily meals may be a matter of solace. But the prime minister of India cannot and should not take pride in it.

Under-employment is accompanied with the economic costs of social and family distress, health problems, impact on education etc – the head of the government cannot be oblivious to this. His vision has to accommodate the economic costs of under-employment. He does not have the luxury of looking at the economy only from the view point of a common unemployed citizen. That’s why the success of Mudra does not automatically translate into success for India’s economy and is why earning 200 rupees a day by selling pakodas cannot be considered a happy state of affairs.

Gurdeep Sappal is former CEO of Rajya Sabha TV.

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  • Ashok Akbar Gonsalves

    As this government enters the home stretch of its term, lets be prepared for more such outrageous spin on and distortion of obvious ground realities. And oh yes – also more of the “poor-me/hang-me/believe-me/oh-so-great-me/boohoo” emotional drama from the 56 inch chest.

  • Harvinder singh

    Govt lacks the vision and policy and existing employers like reliance communication scrapped the 10,000 jobs without giving them compensation and rather then serving notice to reliance govt has given reliance defence deal ,this is one example .. there are many examples where govt could not protect labour laws for existing employees … GOVT SHOULD FOCUS ON SUSTAINABILITY and please say GOOD BYE to indian voters for making india hell for youth..

  • delta1980

    Didn’t know that the definition of ‘yesterday’ was 9 years. Also quite a Freudian slip that you should say “trying hard to do something to the masses” instead of for the masses.

    • Ek Aur India

      “Also quite a Freudian slip that you should say “trying hard to do something to the masses” instead of for the masses.” That made my day!

  • Aditya Mishra

    I think where the congress had left india, this govt has done tremendous job to bring the country to this position. It will definitely take some 4 to 5 years to completely repair the damages and to make india a good place. Usually a country takes a minimum of 20 years to do that. Let us give some time to them.

    • Ek Aur India

      No a fan of congress or bjp but if everything else before Modi is where congress left us then didn’t congress leave us with IIT, IIM, AIIMS, IT industry, Garment Export as well? Govt. of the past, this includes every party, did their fair bit to propel the country forward including the current Govt. However, you have to call a spade a spade. Pakoda-wala doesn’t come under employment. And, if MUDRA scheme is giving loans to people to start pakora business then like the video says we Indians eat a hell lot of pakodas.

  • Ek Aur India

    Just one point “As to your points on fall in number of new start-ups, it just implies that India’s start-up ecosystem is maturing. I mean, nation can’t produce 6,000 new start-ups every year for the next 10 years.”. When you launch an effort SPECIFICALLY to increase the number of startups and don’t achieve your targets its called a failure in real world. In Modi bhakt world its called “intent is good”.

  • Ek Aur India

    “Unemployed to Underemployment to then employment as per qualification and skills set. What is wrong with this? ” Nothing is wrong with that. So give some credit to congress to build the infrastructure where Modi can sit and promote his rhetoric. This is not about giving time, did he ask for time? He said give me 5 years and i will give you 15 lakhs so its obvious questions will be asked.

  • Ek Aur India

    mate, writing in caps doesn’t makes your point any more valid. Here is an explanation of Employment. https://www.thebalance.com/what-is-employment-1918114

    You can distort facts whichever way you like but first get your facts right. These are not my words btw but i do believe in that.

  • Ek Aur India

    I’m really tired of this 70 year bs and this give them some time bs. Who asked them to correct everything in 5 years? They set the benchmark themselves by promising 15lakhs, employment in 5 years etc. so its obvious they will be judged against it. If i say i will do this tomorrow and if its a month and i have not done it are you going to give me leeway and say iske pahle jo aaya that even that person didn’t do it i will give you some time?

  • Ek Aur India

    And, here i thought their skills were being polished in the last 4 years.

  • Ek Aur India

    “It is astonishing how you attribute things. I think PM was telling a very conservative number of Rs-200/- /day but in reality, i think pakoda vendor makes more money than a software engineer/month with less stress.” How heartless one has to be to say something like that. Just look at each of these men in the video and tell me which one earns the kind of salary you are talking about. Beside, whats the salary of this perceived software engineer? I’m surprised you are coming to this website because you want a news thats thought provoking but your comment lack basics of critical thinking.

    “On an average, almost every house has either a nanny, utensils/clothes washing help & every home people buy requires carpenter, electrician, furniture, electronics purchase, etc.,” These are not average household, these are middle to upper middle class households and no, they don’t make up for average household. Majority of India still lives in tier II and tier III cities.

  • Ek Aur India

    You are right, its not Govt.’s responsibility to babysit private companies. As far as programs by Govt. to generate employment, it wouldn’t be right to say this or previous Govt. have done anything. This Govt. has created employment but just like previous Govt. those were schemes where people were employed in exchange for work that was undertaken by Govt. and no private institution would have started that job. Remember PM’s dig on congress when he said the definition of employment for congress was giving poor man money to dig a hole on the ground? Well, Modi’s Govt. has done the same. You are right in pointing out that our Govt. lacks vision when we talk about Pakoda-wala as employed.

    Many schemes were started, like make in India, startup India, standup India, clean India, MUDRA etc. with an aim to create jobs but those have failed to live up-to expectations. Personally, i’m not ready to cut Modi slack for showing intent like many have pointed out. Do a few things and do them with full focus, whats the point in dipping your feet in 50 things and you can’t take a single initiative to its conclusion within the time-frame defined by your own standards? Why even set a standard when you don’t want to be held accountable to it?

  • Ek Aur India

    I’m sorry if i gave you an impression that any job is small. I totally agree with you that “we as Indians should value “Dignity of Labour”. Every job and person should be respected no matter how much they earn and what work they do.
    But my friend, debate is not about should we or should we not value “Dignity of labor”. Its about the fiscal policies of India and how much formal employment was created as a result of such policies in recent past. Formal employment doesn’t consider self-employment. Why it doesn’t do that is a separate debate. Modi is trying to hide behind the numbers by saying self-employment should be included in the employment data as well. When we have always looked at formal employment in the past don’t you think for the sake of consistency we should also look at formal employment now so really see how much difference has been created due to Modi’s fiscal policies? If he really has done good job one should only expect the number to go up. Right?

  • Ek Aur India

    Sorry to have sent you on a different tangent. You have mistaken understood that job creation means Govt. opening factories. No, thats not what it means and i’m not saying that. Govt. being a big machinery can nudge the economy in one direction or the other which then creates job. For example. Say India Govt. doubles taxes on automobiles, what that would do is promote manufacturing of automobiles in India which in turn would give jobs to folks in India. I don’t agree with your view of who suffers the most, self-employed or employed. Economies work in their own ways that neither you understand nor me, we can just give it these small nudges.

    Next time you step out ask thelewala and pakora wala if they would do what they are doing or rather have your job and see what they say. Be genuine in your effort and don’t be selective in your views.

    Good for you to have read Dr. Kalam’s book. For me there is no 2020 vision, its a jumla for someone like you. India needs continued work and anyone who comes along and says i can do this and i can do that in 5 years is lying, just like they did in 2014.

  • Ek Aur India

    Good for you! and Best of luck to your spouse for their startup.