The Issue Is Not About India’s GDP, But Its JDP

Relevance: GS 3 - Economic Development, issues relating to planning, mobilization, of resources, growth, development and employment.

(Source: The Hindu, 08/19/23)

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Why in the news?

This article highlighted that India’s GDP growth has not led to a proportional increase in the number of jobs.

The issue is job potential

• The Paradox of Growing MGNREGA Demand: Despite India's robust economic growth, the demand for minimum wage work provided by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme is on the rise.
• While India's real GDP has achieved an annualized growth rate of 5.3% under the Modi government, the demand for MGNREGA work has surged at a slightly higher rate of 5.4% annually.
• Dissonance Between GDP Growth and Job Creation: Analysis of data from the Reserve Bank of India shows that in the decade 1980 to 1990, every percentage point of GDP growth produced two lakh formal jobs.
• However, this job creation ratio declined significantly in subsequent decades, halving to just one lakh jobs per percentage point of GDP growth in the 1990s and further diminishing thereafter.
• Flawed Economic Rationale: India's recent foray into semiconductor manufacturing, although strategically motivated, lacks a robust economic justification due to its automated nature.
• Industries like traditional manufacturing and semiconductors, marked by high automation, fail to generate substantial employment, despite contributing to GDP.
• Social divide: The formal service sector jobs generated by GDP growth largely favor individuals from higher castes, magnifying disparities.In stark contrast, a significant 80% of workers enrolled in the MGNREGA program belong to oppressed castes like Dalits, tribals, and backward castes.

The Mines and Minerals Bill, India’s future

• Transition to Electric Mobility: The new Mines and Minerals (Development and Regulation) Amendment Bill, 2023, Bill could boost India's economy amid the global shift to electric vehicles driven by minerals like lithium and cobalt.
• India's vast mineral deposits remain largely unexplored, India has not explored even 10% of its potential mineral deposits below the earth.
• Inclusive Job Creation: Unlike sectors like semiconductor manufacturing, mining can be socially more inclusive by absorbing large numbers of people from the oppressed castes (Other Backward Classes, Scheduled Castes and Scheduled Tribes) in the workforce.
• Challenges: lack of access to the latest mining technologies, environmental concerns and previous incidents of labour exploitation in mines,the new MMA Bill lacks details

Change the discourse

There is a need for a shift in the economic discourse from merely pursuing high GDP growth to prioritizing job creation.

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FAQs

MCQ

Question: Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC-2018)

(a) industrial output fails to keep pace with agricultural output.

(b) agricultural output fails to keep pace with industrial output.

(c) poverty and unemployment increase.

(d) imports grow faster than exports.