Modi must provide more jobs for young India

It is akin to blasting a crater in one's racial memory, one simply cannot ignore the demographic time bomb that is ticking in India. India is arguably the only country in the world where the working population will be far in excess of those dependent on them and, as per the World Bank this will continue for at least three decades till 2040. There is an assembly line of young people joining the "workforce" with no employment in sight.

We call it the "dividend" because we are increasingly recognising this phenomenon as a potential source of significant strength for the national economy, but that is only if we are able to equip and continuously upgrade the skills of the population in the working age group. It is a gargantuan task and one of the key reforms to be undertaken by the new government is to skill these people. As such Prime Minister Narendra Modi, conscious of this rapidly moving and burgeoning conveyor belt, has his eyes on the skill devevlopment and vocational training ball.

The key is to be job ready, India's working-age population will rise by 12.5 crore over the coming decade, and by a further 10.3 crore over the following decade. That is a scary prospect, which can lead to anarchy if employment opportunities are not provided. By 2022, it is estimated that unless action is taken, there will be a gap of 10.3 crore skilled laboureres in the infrastructure sector, 3.5 crore in auto and 1.3 crore in health care, to name a few. Even as I write this, India faces an acute shortage of two lakh skilled welders. S Ramadorai, one of the builders of the modern Tata Consultancy Services (TCS), who is involved in the government's skilling programme, wants design and delivery models to be put in place to respond to market realities.

Convergence

At the very kernel of Modi's economic imperative is convergence, wherer he seeks to coalesce the work done by various sections of the government so that there is a genuine outcome. The Ministry of Skill Development and Entrepreneurship is already in consultation with 18 other departments which are a part of the skill mission to provide a cohesive answer to India's skilling problems. Former prime minister Manmohan Singh roped in S Ramadorai to be his skill adviser while setting up the National Skill Development Corporation (NSDC) based on the now familiar bedrock of public-private partnership.

Since, this is one of Modi's favourite hobby horses, linkages are being drawn between the National Rural Livelihood Mission, small and medium enterprises ministry, National Yuva Kendra Sangathan and a national skill development policy among others to update and refurbish the skilling programme. In order to revitalise the economy and move fast from the pain of the lost decade under the UPA, there are many other challenges before the government with two state elections out of the way.

Finally, an effort has been made to tackle the ballooning oil subsidy bill. On Saturday evening, the government kicked off its reforms yatra with the long required oil and gas sector reforms. Buoyed by global crude prices plummeting to $84, the government finally took the plunge into the deep end by linking domestic diesel prices to international crude prices. Four years ago, the Centre had done a half way house on oil sector deregulation by doing the same for petrol pricing, leading to massive distortions in India’s automobile sector.

Given that India is a diesel economy and its wheels move on diesel, the UPA conglomeration was loathed to touching the politically sensitive diesel pricing. Much later they realised their own folly and introduced the Re 0.50 monthly hike which incidentally has worked like a charm. With global crude prices on an ever-lowering trajectory, oil companies actually started making a profit on diesel, which is what has led to a salutary impact on the economy.

Reforms

So, what next? Reforms is a continuous process. Privatisation or restructuring of two elephants always present in the room which everyone chooses to ignore. Air India in the sky and Coal India on land, both need serious resuscitation. Do they need to be broken up? They certainly need a strong dose of disruption if they are to raise their efficiency levels.

Both suffer from one harsh fact they have bloated human resource setups. Equally, there are two more state-owned entities which suffer from the same affliction – maladroit and inertia laden – telecom twins BSNL and MTNL have lost out in competitive climes. Even as these four entities require a detailed health check-up, the entire mass of bleeding and loss-making public sector entities cannot continue to see a situation where good money chases bad.

A top bureaucrat, involved in policy-making, explained this week that untying the knots itself takes up considerable time and bandwidth. A combination of scams, regressive and retrograde taxation, welfare economics, judicial over reach and policy-making lassitude saw a nation in drift. The fact that double incumbency also kicked in, meant that it was a perfect breeding ground for a new leadership. The new man Modi provided the impetus to a tired BJP in battle, with a fatigued Congress.

Development

His plank was development and that prospect appealed to India after the wasteland left behind by consistently high inflation and high interest rates. Now, the onus is on the prime minister to deliver. There is no silver bullet, it is a long and arduous road, but Modi has shown in the past that he has the gumption and the stomach for a fight. The Goods and Services Tax will widen and deepen tax revenues and the Direct Tax Code to clarify controversial and adversarial tax issues are part of the reforms agenda and their expeditious roll out is vital.

The draconian Land Acquisition Bill brought in by the UPA in January this year can lead to de-industrialisation if not fixed. Attention deficit is something the BJP-led formation cannot suffer from in the next few months, economic imperatives must goad them in their endeavour to repair what was clearly broken. India’s expectations are enormous and propitiously food and fuel prices have come down dramatically to provide an edifice for the required change.