Labour Bureau Data Proves What Modi Govt Isn't Admitting - Demonetisation and GST Hurt Employment

Though the government is being adamant that there is no data on the impact of demonetisation and GST on the jobs front in India, Labour Bureau data indicates otherwise.

A look at sector-wise data during 2016-17 and 2017-18 also reveals that the manufacturing sector saw a sharp loss in jobs following demonetisation. Credit: Reuters

New Delhi: While in response to written questions in the Lok Sabha on the impact of demonetisation and Goods and Services Tax (GST) on employment generation, the Ministry of Labour and Employment has insisted that it does not possess any data, Labour Bureau data supplied by it clearly indicates that employment generated under various national schemes fell soon after demonetisation was announced in November 2016.

Employment generation dropped under major schemes

According to Labour Bureau data provided by the ministry in response to questions in the Lok Sabha, employment generation under the Prime Minister’s Employment Generation Programme (PMEGP) fell sharply in 2017-18 in comparison to the previous year. While in 2016-17, 407,840 persons got jobs under the scheme, in the first three quarters of 2017-18, only about half as many, or 208,576, were covered by PMEGP.

Likewise, the person-days generated under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) also showed a comparative slide in the first three quarters of 2017-18 in comparison to the 23,583 lakh person-days generated in 2016-16. The figure for April to December 11, 2017 was just 16,029.

While the figure for candidates placed in jobs after training under Pandit Deen Dayal Upadhayaya Grameen Kaushalya Yojana (DDU-GKY) during the first three quarters of 2017 almost kept pace with the annual average as 64,967 people were placed till December 2017 in comparison to 84,900 through the previous year, it is the data on placement of skilled and trained persons under Deendyal Antodaya Yojana National Urban Livelihood M ission (DAY-NULM) which clearly showed how the demonetisation drive had a major impact on economic activity and job generation alike.

The figure of placements from April to November 2017 under DAY-NULM fell sharply to 69,255 in comparison to 151,901 during 2016-17.

Manufacturing sector took a major hit

A look at sector-wise data during 2016-17 and 2017-18 also reveals that the manufacturing sector saw a sharp loss in jobs following demonetisation. From registering an increase of 83,000 in the October-December 2016 quarter and a subsequent 1.02 lakh in the January-March 2017 quarter, the sector witnessed a sharp decline and nearly 87,000 job loss in the first quarter of 2017-18 as the effect of demonetisation began impacting the manufacturing sector due to a crunch in liquidity leading to closure of several units. This period also witnessed a fall of nearly 3,000 in the transport sector.

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Overall too, between January and July 2017, the employment generation was sluggish across sectors indicating that demonetisation may have impacted many of them. During these two quarters, only about 2.49 lakh jobs were added and considering that the number was 0.32 lakh in July-September 2016 quarter, 1.22 lakh in October-December 2017 quarter and 1.85 lakh in the January-April 2017 quarter, the sharp fall to 0.64 lakh in the April-July 2017 quarter indicated that not only was a gradual rise in employment impacted by the sucking out of currency, it also triggered a negative impact.

The ministry’s claims

In response to a query on “the estimated losses suffered by huge number of labourers engaged in various unorganised sectors in the country due to demonetisation” and “whether a large number of workers engaged in unorganised sector have been rendered unemployed due to demonetisation and had to migrate to their villages”, minister Santosh Kumar Gangwar submitted that “there is no such estimation available at Central level” and that “employment in unorganised sector depends on variety of factors and it is difficult to pin point the degree of impact of demonetisation thereon.”. He also stated that there was no such input available with his ministry.

In response to another question on the impact of GST on the job market and “whether GST will affect the employment scenario of the country in different sectors of the economy”, Gangwar said, “GST has provided a significant opportunity to improve economic growth momentum by removing barriers to trade, business and related economic activities.”

Expected increase in employment generation

He said while GST, rolled out from July 1, 2017, is expected to lead to “greater economic growth and consequent increasing in employment generation opportunities for the vast pool of young population of the country,” he admitted his inability to put numbers to the claim saying “it is not possible to ascertain the impact of GST on employment right now”.

Giving out the Labour Bureau data for the quarters and years under question, he said, “Labour Bureau has also been conducting quarterly quick employment surveys in eight selected labour intensive and export-oriented sectors namely textiles, leather, metals, automobiles, gems and jewellery, transport, IT/BPO and handloom/powerloom.”

However, a closer look at these sectors did not indicate any encouraging signs for the economy due to the two landmark decisions of the Narendra Modi government over the past year-and-a-half.

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