Transcript Strategies for Full Employment in India

Strategies for Full Employment
in India
Uncommon Opportunities:
Roadmap for Employment, Food & Global Security
November 21, 2004
International Center for Peace & Development, USA
The Mother’s Service Society, Pondicherry
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Unemployment
 1993-94
20M
 1999-00
27M
 Twice as high for lower consumption classes
 On daily basis
35M
 Youth Unemployment
13%
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Kerala
35%
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Natural Employment Generation
 New entrants to labour force
 Urban migration
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7-8M/yr
1M/yr
 Agriculture employment is flat
 Less growth in unemployment
 Natural job generation
-1M/yr
7-8M/yr
 The absence of social unrest and the fact that urban migration continues and
urban unemployment does not rise enormously indicate the surpluses are
being absorbed.
 This is unorganized, unconscious process akin to education without schools
Make the unconscious process CONSCIOUS
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How society stimulates employment
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New products
New services
Growth in demand
Technological innovation
Higher quality &/or productivity
Organizational innovation
Higher skills
Better access to information
Increased speed
Legislation & law enforcement
Administrative responsiveness
Environment/health consciousness
Change of attitudes
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Three Approaches to Employment Generation
 Expand existing activities
 Nursery schools, tutorial institutes, English teaching
 Borrow from other countries
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Credit rating & collection agencies
Trade shows & network marketing
Health clinics
 Promote culturally compatible activities
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STD & chit funds
Marriage halls
Mini-power plants
Rural information centres
Contract farming agencies
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Available Modes of Action
 Increase access to credit
 Provide incentives for new initiatives
 Strengthen or enforce legislation
 Impart training
 Use insurance as a stimulus
 Publicize opportunities in the media
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Where are the untapped potentials
 Raise farm productivity
 Renewable energy
 Agro-industrial linkages
 Service sector
 Employable skills
 Application of IT
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Prosperity 2000 Strategy
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Agriculture as engine for industrialization & employment growth
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Shift focus from meeting minimum production needs to maximumizing profit
per unit land & water
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Projecting market growth based on nutritional requirements
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Raise productivity of soil & water
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Shift to commercial crops which absorb more labour
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Develop industry linkages with industries
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Create 4.5 million direct & 5.5 million indirect employment opportunities per
annum
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India’s Crop Productivity Gap
(kg/ha)
Crop
USA
China
India
Maize
8900
4900
2100
Paddy
7500
6000
3000
Soy beans
2250
1740
1050
Seed Cotton
2060
3500
750
Tomato
6250
2400
1430
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Low farm productivity results in
 High unit cost of production
 High priced food
 Low farm incomes & purchasing power
 Low labour absorption
 High water consumption/unit of produce
 Limited export potential & threat from imports
(e.g. cotton)
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Technology Strategies
 Raise crop yields
 Raise water productivity
 Improve post-harvest storage & transport
 Expand & upgrade processing industries
Raising productivity can create millions of on-farm and
off-farm employment opportunities.
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Horticulture
 Labour content 6 times cereals
 Generates 10-30 times earning / unit area
 Filling India’s nutritional gap requires 40% growth
 Add 4M ha horticulture to raise production 40%
 Generate 8 million jobs
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Food Processing
 Improve storage & processing to reduce Rs 70,000 crores in
crop losses
 Global share of processed food exports is rising
 India processes only 2% fruits & vegetables vs. Thailand 30%,
Brazil 70%, Philippines & Malaysia 78-80%)
 India projected to process 10% fruit & veg by 2010
 Industry directly employs 1.6M
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Power Demand to Triple by 2020
1997
BAU 2020
BCS 2020
1400
1200
1000
800
600
400
200
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0
Industry
Transport
Agriculture
Commercial
Residential
Total
Oil Demand to Triple by 2020
1997
BAU 2020
BCS 2020
Total
Domestic
Commercial
Agriculture
Transport
Industry
Power
0
50
100
150
Projected demand for oil in million tonnes
200
16
250
Cotton & Textile Industry
 India is 3rd largest producer of cotton
 Domestic demand projected to grow 70% by 2010
 Export demand projected to triple by 2010
 Double productivity of cotton
 Double area under irrigated cotton
 12 million additional jobs in textile industry
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Forestry, Herbs, Medicinal Plants
 100 M rely on forests for main source of
livelihood, including half of India’s 70M tribals
 Objective to raise forest cover 50% in 10 ys
 Introduce corporate contract farming with bonded
performance guarantees & assured employment
for local population
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Fisheries
 World seafood market doubled in the 1990s
 India’s marine & inland fisheries employ 6M
 1/3rd of India’s marine fishery potential untapped
 China full-time employment in rural aquaculture
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1989 – 1.5M
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1997 – 3.3M
 Shrimp farming -- 4 direct & 4 indirect jobs per ha
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1999 – 161,000 ha generates employment for 1.3M
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Additional 120,000 ha would create 1M jobs
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Dairy
 Rs 100,000 crores by 2005
 India is largest and lowest cost producer
 70M dairy farmers
 Cooperatives provide employment for 11M
families
 Potential for 42M jobs
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Employment Potential -- summary
Crop productivity growth
5,000,000
Horticulure
8,000,000
Biomass power & bio-fuels
Agro-forestry
Cotton & Textiles
Dairy, animal husbandry, fisheries
Total
21,000,000
6,000,000
12,000,000
8,000,000
60,000,000
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Organization for Rural Prosperity
 Self Help Groups
 Contract Farming
 Rural Information Centers
 Farm Schools
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Self Help Groups
 1 million created in 3 years
 15 million members benefit
 90%+ repayment of loans
 Mostly for non-farm activities
 Commodity-wise SHGs for agriculture
 Appachi Foundation & ICICI – 60 SHGs for cotton
growers in Tamil Nadu
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Contract Farming
 Successful Indian model -- sugar mills
 Organize SHGs of farmers
 Role of the Contractor
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Provide quality inputs
Arrange credit with banks
Arrange crop insurance
Deliver extension services
Tie-up market with industry
Operate farm schools
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Farm Schools cum Extension
Objective: double farm yields in 3 years
 Lead farmers act as paid field training &
extension staff for the contractor
 Lead farmers run Farm Schools on village lands
 Demonstrate methods on farmers’ lands
 Train farmers & disseminates information
 Operate or link to Village Information Centre
 Link to soil test labs
 Link to agro-service centres
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Rural IT Knowledge Centres
 Mission 2007 – 500,000 village centres
 Can create 5 jobs per centre
 Can charge for services
 Soil analysis -- expert system for advice
 Multi-media farm training
 Input supply information
 Market information
 Educational information
 Health information
 E-government services
 Other vocational training
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Ag Enterprises -- Policy Issues
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On-farm training system
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Enforce sanctity of contracts
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Expand access to credit through SHGs with group guarantees & postdated checks, including present defaulters.
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Extend powers of Revenue Recovery Act to ensure repayment by SHGs.
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Tax credits for contractors who raise farm productivity
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Strengthen crop insurance program
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Penalties for false documentation by officials
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Penalties for adulteration of ag inputs
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Railways to provide refrigerated storage & transport
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Service Sector
 USA: provides 80% of jobs
 India:
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Grew by 60M jobs in 18 yrs
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Rose from 25% to 32% of total employment
 High potential fields
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Tourism
Transport, storage, communication
Education
Health care
Financial services
Internet-based activities
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Internet-based Self-Employment
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Desktop publishing
Web design
Web research
E-books
Translation
Technical writing
Engineering & technical services
Opportunities from Rs 5000 to 1 lakh per month
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Vocational Skills
 50% of firms in developing and industrialized
countries report severe shortage of skilled workers.
 India’s problem is not lack of employment
opportunities but lack of employable skills.
 Skills create employment and self-employment
opportunities.
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Vocational Skills Gap
 Only 5% of India’s workforce (20-24 years) have
vocational training compared with 28% in Mexico
and 96% in Korea.
 By 2010 major labour shortages will emerge in the
industrialized nations forcing movement of both
manufacturing & service jobs to wherever the skills
are best.
 Upgrading skills essential to tap global markets
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Vocational Training in India
 4200 ITIs
 1,654 government run
 2,620 private
 Courses offered
 43 engineering & 24 non-engineering trades
 Capacity – 6.3 lakhs
 State enterprise programmes – 1.7 lakh
 Including agriculture & other – 20 lakh
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Vocational Training Deficit
Students completing 8th-9th standard
300 lakhs
Students entering 10th-11th
150 lakhs
New entrants to workforce (per year)
70 lakhs
Vocational training in engineering, agriculture &
other fields
20 lakhs
New entrants to workforce w/o training
50 lakhs
Existing unemployed youth (15-29) of which 80%
are educated up to 10th
150 lakhs
Existing workers to be trained to raise non-ag
skilled portion to 25%
350 lakhs
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Three Models
 Farm Schools in every revenue village
 Vocational Schools
 Computerized & Televised Vocational Training
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Vocational Schools
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Promote vocational institutes at block and district level
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5000 govt
50,000 private
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Conduct exams for every skill as for drivers licenses
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Certify approved training centres, e.g. BPO
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Provide scholarships & incentives for trainees
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Computer-based learning is
twice as fast @ half the cost
 Multimedia
 Interactive
 Immediate Feedback
 Self-paced learning
 Eliminates need for trained teachers
 Responds rapidly to changing skill needs
 Uniform testing
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Computerized Vocational Training
 Establish 1 lakh CVT Institutes like internet cafes
 50,000 in private sector
 50,000 training centres at engineering and arts
colleges, ITIs, polytechs, high schools, NGOs, etc.
 Partnership with industry to develop multimedia
training software
 Provide training to a minumum of 4 million students
per annum
 Government certification of courses
 Generate self-employment opportunities for 50,000
entrepreneurs
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Multimedia vocational courses
RWH
Child care
Nutritionist
Selling skills
Real estate
Law clerk
Telemarketing
Insurance agent
Quality manager
Catering
Video editing
Furniture design
Farm mgmt
Pharma rep
Textile design
Reporter
Dry cleaning
Electrical repair
Travel agent
Internet research
Graphic design
Bookkeeper
Organic farming
Interior design
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CVT Job Shops
 Privately owned, self-employment
 Each centre with 1 to 10 computers
 Stocked with a library of training software
 Training material on CD-Rom format
 Fees based on an hourly rate
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CVT Job Shop: Assumptions
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Three computers per Job Shop
20 training programmes per Job Shop
Each computer utilized 300 hours per mo
Operating expenses for rent, two paid
employees, phone, electricity may range from
Rs 15,000 to 20,000 per month
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CVT Job Shop: Economics
 Capital investment Rs 1.5 lakh.
 Cost of operations per computer hour = Rs 20 / hour.
 Cost of amortising of computers and software over two
years = Rs 14 per hour
 Average cost of training = Rs 35 per hour
 Average retail price of training = Rs 50 per hour
 Net profit = Rs 15 per hour or Rs 1.5 lakhs / yr
 50 hours of computerized vocational training, equivalent to
about 250 hours of classroom training, would cost the
student only Rs 2500.
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Training Software: Economics
 Cost Rs 50 lakhs per course
 Retail price Rs 1000 per set
 Sale of 10,000 sets generates Rs 50 lakhs profit
 Offer 50% government subsidy for development
of approved courses
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CVT Action Plan
1. Delivery CVT through all state-owned engineering colleges, ITIs,
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Polytechnics, liberal arts colleges, high schools, other institutions.
Provide financial assistance/ incentives under Central Government selfemployment schemes to promote private training institutes.
Encourage financial institutions to provide loans to entrepreneurs.
Negotiate with computer software companies to develop a wide range
of vocational training courses.
Recognized institutional authorities to certify course contents.
Finance bulk purchase of approved training software with 50% subsidy
to minimize the cost of training.
Train entrepreneurs to set up/manage private institutes.
Provide scholarships to low income youth to cover training fees.
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IT Incubator Business Parks
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Computerised vocation training
Computerised tuitions institutes
Computerised language training
Software training
Video-conferencing services
High speed data transfer services
Web, graphic and animation design services
Computer repair and maintenance services
International Internet telephony
Computer hardware parts manufacturing and assembly
Customer and technical support call centres
Back office processing
Medical transcription
Digital photography, scanning and image processing
Internet research services
Accounting services
Computerized testing laboratories
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Who creates enterprises?
 Skilled experienced workers leaving existing jobs
create enterprises
Machinists
 taxi drivers
 hotel servers
 bus cleaners
 Printers
 tailors
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 Do entrepreneurial training programmes work?
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Promoting Entrepreneurship
 Extend bank credit & seed capital to employees
with 5 years experience
 Require training & certification for new enterprises
to reduce failure rate
 Existing entrepreneur to sign as guarantor
 Insurance companies can ensure loans based on
qualifications
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Issues for Study
 Natural job creation
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How many jobs are being created?
In which sectors & fields?
By what process?
How can the natural process be magnified and accelerated?
How are rural migrants absorbed in the cities?
 Occupational demand
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Identify high growth occupational categories at all levels
Measure growth in pay/income levels by category
 Emerging Activities
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Identify emerging occupations in all sectors,
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Farm managers & Soil technicians
Servicing for cell phones, ACs, computers, VCDs, etc.
Home delivery, floor cleaner, masseuse
 Skills for national development
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Compile a complete list of skills needed for India’s development to next higher level
 Job creation in other countries
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Study which job categories grew rapidly in US during a comparable period?
 Efficacy of Entrepreneurial Development Programmes
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