Unemployment in India

India’s employment situation is nothing less than a massive crisis situation, with millions of workers joining the workforce every year without even 10% of the required jobs being created. The Indian reforms stated in 1991 did not lead to major employment generation, as most of the value creation was done through capital intensive means. The problems in labor laws has been a major reason for the capital intensive path that the Indian industry has taken till now. It has also led to the contract model, where most organizations use short term contracts to hire people.

This has led to low wages and job insecurity, while organized workers have become a privileged class doing less work for much higher wages. This problem is most acutely seen in the government sector, which has high wages and a situation of a job for life. This has led to millions of applications being seen for a paltry few hundred jobs of sweepers.

India’s employment situation is so bad that I think nothing can solve this crisis, with most workers fated to lead a low wage destitute life. In the first decade of the 21^st century, large numbers of jobs were created as there was a massive boom in some sectors such as telecom, aviation, retail etc. However, the massively corrupt regime of the Congress in 2009 led to a sharp stop in job creation, as industry stopped growing. There were no reforms as large scale plundering took place, with a sizable growth of the black economy.

Government Measures to solve unemployment problem in India

Though the new Indian government has tried to solve this problem through new initiative such as Make in India, Skill India etc., the problem is too huge to be solved. The main cause is India’s population, which is the world’s second largest and soon to become the world’s largest. India’s resources in terms of land, water etc. is too small to cater to the demands of a billion plus population.

While India has shown huge growth in services, the employment situation has not improved too much. Even India’s IT industry which has been the main engine behind the development of a strong Indian middle class is getting saturated. The IT industry is steadily reducing new hires, as automation and new technologies reduce the requirement of large numbers of engineers. In the coming years, a large number of even existing IT professionals may be made redundant, as new technologies such as Big Data, Analytics and Social Media become more dominant.

Industry is also not expected to create too many jobs, given that robotics and automation have sharply reduced the number of workers required in factories. Too much global capacity already exists for India to develop large scale export industries. New sectors are not growing in India, to utilize the millions of educated and semi-skilled workers joining the ranks of the unemployed.

India needs a major war effort to tackle the growing employment crisis, which is already manifesting itself in the form of social unrest such as the Jat and Patel agitation. Unemployed youth can create a huge social problem as can be seen in many parts of the country.

E-Commerce sector in India

E-Commerce which has been a major new growth sector employing many people in logistics, IT and customer services is facing its own hour of crisis. Funding has sharply reduced to this cash burning sector, leading most firms to tighten their belts. Major employers such as Snapdeal and Flipkart have been laying off thousands of people, while some of the smaller players such as TinyOwl are shutting operations. News of new hires being left in limbo has become common, even as reputed companies such as Grofers fail to honor their word. Being left in the lurch by the e-commerce companies has become a common theme, leading to an exodus of talent from this sector.

 The number of startups that recruited from the institute during the latest placements season more than doubled to 125 from 56 a year ago. But prominent startups including Grofers, TinyOwl, Ola and Snapdeal that had registered for placements hiring at the institute dropped out.

Grofers, however, visited other campuses for placements.

“We visited more than 80 engineering and management campuses this year across India to offer various profiles at Grofers in design, marketing”

Source

NTPC to build solar plant in India

India’s government owned companies have never been good investments. The main reason is that profit maximization has never been their main objective, but they have mainly been used by the government and its ministers for their own personal reasons. They are highly corrupt organizations with many minsters and bureaucrats milking the organizations. A telecom minister is in the news these days for using 300 high speed lines from state owned telecom company at his residence for providing communication services to his brother’s company for free. There are numerous other cases.

Besides corruption, harebrained schemes are another huge problem for these companies. They do not have focus and go on a tangent making investments without rhyme or reason. NTPC which is one of the better run government companies is thinking of building a 1 GW poly to modules plant in India. Note NTPC is a power generating utility, without much experience in manufacturing of anything let alone solar panels or polysilicon. While the company is making big time investments in solar generation thanks to the government mandate of 100 GW by 2022 from 4 GW now, NTPC has no reason to start building a manufacturing plant for solar equipment. This is same as NTPC building boilers and turbines for its thermal power plants. The company has no competence and experience. It will be better off buying the equipment from firms specialized in this industry. I don’t think they have read Taylor’s rules on specialization.

The ostensible reason given for building the solar factory is that there is going to be huge demand in India and the government wants to bring down the total costs of a solar system from Rs 6/watt to Rs 4.5/watt . I don’t think in a million years will NTPC be able to compete on costs and efficiency compared to the likes of a SunPower or Trina Solar. Also there is going to be a massive demand in road building so should NTPC also start to quarry stones?