Why have Modi’s job schemes led to high unemployment?

09 January 2019
Despite the sound and fury of the Narendra Modi-led BJP government’s employment generation schemes, data on manufacturing shows that the sector has not seen any growth in the past four years.
Danish Siddiqui/Reuters
Despite the sound and fury of the Narendra Modi-led BJP government’s employment generation schemes, data on manufacturing shows that the sector has not seen any growth in the past four years.
Danish Siddiqui/Reuters

In the run-up to the 2014 general elections, Narendra Modi and the Bharatiya Janata Party campaigned aggressively on the plank of job and employment generation. Having promised to create over two crore new jobs every year, the prime minister has since reiterated this commitment with the launch of a slew of schemes and programmes over the past four years. In August 2018, Modi claimed that, in the previous financial year, “more than 70 lakh jobs were created in the formal sector alone.”

But a January 2019 report by the Centre for Monitoring Indian Economy, or CMIE, a business information company, reveals that as many as 1.1 crore people lost their jobs in 2018, while the unemployment rate shot up to 7.4 percent in December 2018, the highest in 15 months. According to the annual household surveys, conducted by the labour bureau, India’s rate of unemployment has seen a persistent upward trend since 2013-2014. This trend accelerated steeply in 2018, as per the report. Most of the Modi government’s policies on employment have focussed on self-employment, skill development, incentivising employers to facilitate employment generation and promotion of export-oriented manufacturing. These policies have been executed via several schemes: Make in India; the Pradhan Mantri Kaushal Vikas Yojna, or PMKVY, also known as Skill India; the Pradhan Mantri Employment Generation Programme, or PMEGP; the Pradhan Mantri Mudra Scheme, or PMMS; and the Pradhan Mantri Rozgar Protsahan Yojana, or PMRPY.

Modi claimed in August 2018 that high unemployment numbers are because “traditional matrix of measuring jobs is simply not good enough to measure new jobs in the new economy of New India.” But all these schemes are far behind their targets. Modi’s claims notwithstanding, his government’s labour reform policies have prompted ten central trade unions to call for a nationwide-strike on 8 and 9 January 2019 against what they termed were the Modi government’s “pro-corporate” and “anti-people” polices.

In July 2016, the Modi government introduced PMRPY to generate new employment by incentivising employers. Under the scheme, the central government provides the entirety of the employers’ contribution towards the Employers Provident Fund, or EPF, scheme—12 percent—for a period of three years for new employees who earn less than Rs 15,000 a month. But according to Tapan Sen, a secretary of the All India Trade Union Congress, “At least 40 percent of the eligible employees in the country are still outside this scheme.”

A case study based on a sectoral analysis of the power loom industry in Solapur district of Maharashtra showed that lax implementation of the scheme is one of the major reasons behind its inefficacy. In September 2015, employees from 15 power loom units owned by the Myakal group, a company of textile traders, approached the Employees Provident Fund Organisation, or EPFO—a tripartite body under the Ministry of Labour and Employment with representatives from employees and employers associations—with complaints of non-implementation of the EPF scheme. The Myakal group’s 15 units are run as a partnership owned by six family members, but each of these units is registered as an independent entity. This structure is ostensibly to bypass a rule in the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, which stipulates that all industrial units employing 20 or more employees are required to register their firms with the EPF scheme. Myakal refused to register with the EPF claiming that none of their units had more than seven workers.

In May 2017, over 14,400 workers employed in 13,850 power-loom factories in Solapur, including the Myakal group, approached the EPFO raising the same issue. Two months later, the regional EPFO commissioner, Hemant M Tirpude, directed the Myakal group to implement the EPF Act retrospectively from 2002 and asked enforcement officers to identify similar clusters from among the remaining units. This prompted a strike by the Power Loom Owners Association in October 2018, following which the Mumbai bench of the Central Government Industrial Tribunal-cum-Labour Courts issued a stay on Tirpude’s order. The state labour department has not taken any steps to resolve the issue despite the BJP government’s claims of promoting inclusion under the EPF scheme.

Nileena MS is a reporting fellow with The Caravan. 

Keywords: Narendra Modi employment-unemployment survey unemployment employment MNREGA labour labour rights Make in India BJP jobs EPF unions Loans
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