Modi-fication of Indian Economic Data
As Jobs Problem Emerges
Although economic growth remains incontestably faster in India than in most other countries, worrying signs have emerged over the last few months, that the rapid growth of recent years may be slowing down, and that India may have a jobs crisis in the making. And one which the Indian Government - in an election year - might prefer analysts didn't notice.
The latest data to highlight the potential problem are the India Sales Managers Indexes
for March, all of which suggest continuing growth in March, but also reflect a longer term slowdown in economic activity. From the Headline Sales Managers Index, to the Business Confidence, Market Growth, and Sales Growth indexes, the same story is apparent. Continuing rapid growth but at a significantly lower level than seen in 2017 and 2018.
The most worrying Index of all, and one that clearly reflects some distress in Government circles, is that relating to Jobs, which is now suggesting the job market is growing quite slowly. In a country with a young and rapidly expanding workforce, this spells trouble.
In one recent instance, the Business Standard, a respected Indian newspaper, published leaked findings from an unemployment survey produced by the National Sample Survey Office, a Government agency. Two commissioners responsible for reviewing data in the report, who had suggested that the report be released, resigned in protest when it appeared the Government wasn't so inclined.
The leaked unemployment rate, at 6.1%, doesn't sound so bad compared with many other countries, but in India with its huge workforce, a 6% unemployment rate translates into 30 million+ people without a job, not including the millions of young people coming into the workforce each year. And 6% also represents a 40+ year high. The report also almost certainly understates the real picture, because it leaves out semi employed people, who are considered employed unless jobless for most of the year.
Other recent reports have suggested that the combined effects of the hastily executed demonetisation policy and the somewhat unorganised introduction of an all embracing Goods & Services Tax have resulted in millions of job losses since 2016, and that the true unemployment rate may be higher than 6%.
All this in an election year has brought job data into the front line of politics.
Measuring employment and unemployment in India is inherently difficult, if not impossible to do accurately. Nevertheless the accumulation of evidence of different types from different organisations does tally with the conclusion of the Sales Managers Index
The Indian economy continues to grow. But the government is having difficulty keeping its fast growing workforce employed, and a reduction of the growth rate in months to come could make the task very difficult.