A sharp decline in GDP in FY20 will shrink job creation in India, leading to at least 16 lakh fewer government and low-paying jobs in the financial year. The slow pace of growth will have a direct impact on payroll creation as labour remittances are declining, says an SBI Ecowrap report. As per the EPFO data, India created 89.7 lakh new payrolls in FY19. But this year's numbers could be around 15.8 lakh lower, says the report. "Even in the NPS (National Pension System) category, state and the central government could create close to 39,000 jobs less in FY20. This could result in 16 lakh lesser payrolls in FY20 than in FY19," says the report.
The Indian economy is expected to expand at 5 per cent (SBI's estimate is 4.6 per cent) in FY20, compared to 6.8 per cent in FY19, the report said. There's also evidence of a decline in remittances by labourers in India in the last one year. "These migrants have been making significant financial contributions to their families in their places of origin. The remittance data shows a decline in remittances in states like Assam, Bihar, Rajasthan Odisha & UP," Soumya Kanti Ghosh, chief economic adviser, SBI, said in its report.
The report says the stagnant productivity growth remained at 9.4-9.9 per cent in the last five years, which has manifested in low wage growth. "In the absence of commensurate productivity and wage gains, we must strive to improve the quality of jobs offered," the report added.
According to the 2011 Census, migrant labourers constituted 37.5 per cent of the total population of India. Migrants make significant contributions to the national economy by providing human capital in sectors such as textiles, hospitality, construction, mining, brick-making and small industries. "To look at such a trend, we looked at a sample of data on remittances by migrant labourers to selected states in the last 1 year. The data shows a decline in remittances," says the report.
The first advance estimates released by the Central Statistics Office has pegged India's nominal gross domestic product (GDP) growth at 5 per cent for the financial year 2019-20. The Reserve Bank of India in its last bi-monthly monetary policy review had also lowered the GDP forecast to 5 per cent.
Unemployment has become a big concern for the Modi government. India's unemployment rate increased to 7.7 per cent in December 2019, slightly higher than 7.48 per cent reported in the previous month, the Centre for Monitoring Indian Economy (CMIE) said. Six out of India's 10 states with the highest unemployment rate are either ruled by the BJP or it is an alliance partner with regional parties. Tripura, Haryana and Himachal Pradesh witnessed highest unemployment levels of more than 20 per cent, while Karnataka and Assam reported the lowest unemployment rate of 0.9 per cent each.