Economic Survey hits out at pvt sector for not creating enough jobs
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Economic Survey cites exponential profit growth but not adequate job creation by pvt sector
By Our Special Correspondent
New Delhi, July 22: The Economic Survey 2024 has come down heavily on the private sector for not creating enough jobs in the economy. The Economic Survey almost accused the private sector of pocketing the gains from the lower corporate taxes.
The Economic Survey 2024 also accused the private sector for not adding to the capital formation. It added that the private sector saw their profits soaring by even four times after the lowering of the corporate taxes.
“The Annual Survey of Unincorporated Enterprises for 2022-23, when compared with the results of the NSS 73rd round of the ‘Key Indicators of Unincorporated Non-Agricultural Enterprises (Excluding Construction) in India’ shows that overall employment in these enterprises fell from 11.1 crore in 2015-16 to 10.96 crores,” said the Economic Survey on employment situations in the country.
The Economic Survey noted that “there was a reduction of 54 lakh workers in manufacturing but the expansion of the workforce in trade and services gained in jobs limited the overall reduction in the number of workers in unincorporated enterprises to around 16.45 lakhs between these two periods”.
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“This comparison masks a big jump in manufacturing jobs that seems to have occurred between 2021-22 (April 2021 to March 2022) and 2022-23 (October 2022 to September 2023). On employment generation, the Periodic Labour Force Survey provides quarterly data
on urban employment indicators and annually for the entire country, including rural India,” added the Economic Survey.
It stated that a “surge in agriculture employment is partly explained by reverse migration and the entry of women into the labour force in rural India”. “The Annual Survey of Industries has data on workers in nearly 2.0 lakh Indian factories. The total number of factory jobs grew annually by 3.6 per cent between 2013-14 and 2021-22,” added the Economic Survey.
Somewhat more satisfyingly, they grew faster at 4.0 per cent in factories employing more than a hundred workers than in smaller factories (those with less than a hundred workers), added the Economic Survey. It also stated that the annual growth rate was 1.2 per cent in the latter set of factories.
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“In absolute numbers, employment in Indian factories has grown from 1.04 crore to 1.36 crore in this period. India does not yet have a corresponding Annual Survey of Services. The lack of availability of timely data on the absolute number of (formal and informal) jobs created even at annual intervals, let alone at higher frequencies, in various sectors – agriculture, industry including manufacturing and services – precludes an objective analysis of the labour market situation in the country,” added the Economic Survey.
It also stated that the “results of a sample of over 33,000 companies show that, in the three years between FY20 and FY23, the profit before taxes of the Indian corporate sector nearly quadrupled. Further, newspaper headlines told us that the corporate profits-to-GDP ratio rose to a 15-year high in FY24”.
The Economic Survey quoted a news report of Business Line, headlined “The corporate profit for the Nifty-500 universe was up 30 per cent last fiscal to ₹14.11-lakh crore against ₹10.88 lakh crore in FY23. The nominal GDP grew 9.6 per cent y-o-y to ₹295-lakh crore (₹269-lakh crore).”
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The Economic Survey underscored that “hiring and compensation growth hardly kept up with it. But it is in the interest of the companies to step up hiring and worker compensation”. “The Union government cut taxes in September 2019 to facilitate capital formation. Has the corporate sector responded,” asked the Economic Survey/
It argued that “between FY19 and FY23, the cumulative growth in private sector non-financial Gross Fixed Capital Formation (GFCF) is 52 per cent in current prices. During the same period, the cumulative growth in general government (which includes states) is 64 per cent. The gap does not appear to be too wide”.
However, when we break it down, a different picture emerges, added the Economic Survey. “Private sector GFCF in machinery and equipment and intellectual property products has grown cumulatively by only 35 per cent in the four years to FY23. Meanwhile, its GFCF in ‘Dwellings, other buildings and structures’ has increased by 105 per cent. This is not a healthy mix,” added the Economic Survey.
It also stated that “the slow pace of investment in M&E and IP Products will delay India’s quest to raise the manufacturing share of GDP, delay the improvement in India’s manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs than otherwise”.
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