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Wednesday, November 28, 2018

India had fastest wage growth in south Asia in 2017


Globally, the rate of growth in wages in 2017 fell to its lowest level since 2008, but workers in India had the highest average real wage growth in Southern Asia of 5.5% over the period 2008-17. At the same time, India and Pakistan had the dubious distinction of having the highest gap between what men earn and what women do. The mean gender pay gap of 34.5% for India and 34% for Pakistan on the basis of hourly wages were the worst among 73 countries for which data was available. Globally, women continue to be paid about 20% less than men. Not surprisingly, the gender gap in wages was lowest in high income countries and highest in low and middle income countries. These were among the findings of the Global Wage Report 2018 brought out by the International Labour Organisation (ILO). Globally, growth in wages in real terms (that is, adjusted for price inflation) declined from 2.4% in 2016 to just 1.8% last year, far below the level of 3.4% before the global financial crisis. If China with its huge population and rapid wage growth were excluded, the global real wage growth would be just 1.8% in 2016 and 1.1% in 2017. The slowdown in wage growth in 2017 occurred in spite of more rapid economic growth. Workers in Asia and the Pacific have enjoyed the highest real wage growth among all regions over the period 2006–17 with countries such as China, India, Thailand and Vietnam leading the way. However, even here, wage growth in 2017 was lower than in 2016, falling from 4.8% in 2016 to 3.5% in 2017. Again, if China were removed, the growth would be even lower. Over a longer period, 1999 to 2017, real wages have almost tripled in the emerging and developing countries of the G20, while in advanced G20 countries they have increased by just 9%. Yet, in many lowand middle-income countries, average wages remain low and insufficient to adequately cover the needs of workers and their families, pointed out the report. According to the report, gender pay gap is wider at the high end of the pay scale in high-income countries, while in low- and middle-income countries the gender pay gap is wider amongst the lower paid workers. The report also shows that traditional explanations, such as differences in the levels of education between men and women workers, play a limited role in explaining gender pay gaps. “In many countries women are more highly educated than men but earn lower wages, even when they work in the same occupational categories,” said Rosalia Vazquez-Alvarez, econometrician and wage specialist at the ILO and one of the authors of the report. “The wages of both men and women also tend to be lower in occupations with a predominantly female workforce. To reduce pay gaps, more emphasis needs to be placed on ensuring equal pay for women and men, and on addressing the undervaluation of women’s work,” she said

Source: Times of India, 28/11/2018

Tuesday, November 27, 2018

Economic & Political Weekly: Table of Contents


Vol. 53, Issue No. 46, 24 Nov, 2018

What is scully effect in sociology?

This refers to a social phenomenon wherein movie characters can surprisingly inspire behavioural changes in people in the real world. It is named after Dana Scully, a woman character in the American television series The X-Files which was aired mostly in the 1990s. Studies have found that the character, portrayed as a medical doctor and a special agent successfully working for the Federal Bureau of Investigation, inspired many women who watched the series to take up education and careers in the fields of science, technology, engineering and mathematics and with various law enforcement agencies.

Source: The Hindu, 27/11/2018

Margins of New India

Adivasis in Madhya Pradesh and Chhattisgarh are doing poorly, economically and educationally.

Chhattisgarh and Madhya Pradesh are among the four Indian states — other than those in the Northeast — with more than 20 per cent Adivasi population. Chhattisgarh, in fact, has an Adivasi population of more than 30 per cent. However, the Scheduled Tribes (STs) have hardly found a mention in the election campaigns in the two states. Along with the Muslims, the Adivasis seem to be the main losers in “New India”.
In both states — where the BJP has held office for a long time — the Adivasis lag behind other social groups and are losing ground, economically and educationally. According to the India Human Development Survey, in 2011-12, the annual per capita income of the STs in Chhattisgarh represented 51 per cent of the per capita income of the non-STs, a significant climbdown from 2004-2005, when this proportion was 68 per cent. In Madhya Pradesh, this proportion has fallen from 65 to 55 per cent. The Adivasis are worse-off in only one other state, Gujarat — also BJP-ruled. In Gujarat, STs’ annual per capita income represents only 35 per cent of the annual per capita income of the others. In all three states, STs are poorer than SCs — in Gujarat, their per capita income is 45 per cent of that of SCs, in Chhattisgarh, 58 per cent, and in MP, it’s the highest among the three states, at 75 per cent.
The appalling socio-economic condition of the Adivasis is a reflection of their lack of education. Only 1.7 per cent of STs in the two states are graduates. The data suggests that quotas are not being filled in the university system as well as in the public sector. The economic situation of the Adivasis is, in fact, closely related to their under-representation among salaried people. In Chhattisgarh, only 6.2 per cent of Adivasis are salaried. In MP, only 3.5 per cent were salaried in 2011-12, compared to 4.9 per cent in 2004-05. In Chhattisgarh, 34 per cent of Adivasis are “labourers”, which means that they till the land of others. In MP, 46 per cent of them are “labourers”.
The fortunes of the STs in Chhattisgarh and MP — as well as in Gujarat — stands in stark contrast to their condition in South India. This is not because these states are richer, but because they are more egalitarian. In Karnataka, in 2011-12, the annual per capita income of STs represents 80 per cent of the annual per capita income of the other groups, up from 62 per cent in 2004-05. In undivided Andhra Pradesh, it has jumped from 76 per cent to 86 per cent in the same period. In both states, the annual per capita income of STs is either equivalent to (Andhra) or more (Karnataka) than that of SCs, and even of Muslims. This has something to do with education — the percentage of graduates among the Adivasis is 2.6 per cent in Andhra and 3.4 per cent in Karnataka (a proportion equal to that of SCs and superior to that of Muslims).
Their poor socio-economic condition notwithstanding, Adivasis voted for the BJP in the last three elections to the MP assembly. The party cornered 90 per cent of the Adivasi seats in 2003, 60 per cent in 2008 and 66 per cent of the seats in 2013. But the BJP gave three ministerial posts to Adivasis in 2003, two in 2008 and in 2013, three Adivasis held ministerial positions in MP: A group which constitutes more than 20 per cent of the state’s population has only a 12.5 per cent representation in the ministry.
Chhattisgarh is no different. The STs were offered only two ministerial positions in 2013, they held five positions in 2008 and eight in 2003. This could signal the growing distance between the BJP and Adivasis in the state. In the first election after the formation of the state, in 2003, 25 out of 34 ST seats were cornered by the BJP. This figure fell to 20 of 32 in 2008 and further to 11 out of 31 in 2013 — the Congress got 20 that year. This year, the BJP could benefit if the Mayawati-Ajit Jogi combine cuts into the Congress’s Adivasi vote.
In both states, the Forest Rights Act (FRA), that provides legal rights to Adivasis over their forestlands, has not been fully implemented. More than 40 per cent of them operate “marginal holdings” and their holdings are shrinking, according to the Agriculture Census. MP hasthe largest forest cover in the country, but Adivasis here have found it very difficult to obtain land titles. More than 60 per cent of the forest rights’ claims in the state have been dismissed. Wthe FRA allows for a maximum claim of four hectares (ha), the average size of the land distributed under the act in the state is about 1.45 ha. Chhattisgarh, Adivasis have filed 8,56,150 claims over land since 2006, of which 4, 57,969 (53 per cent) have been rejected. The average land distributed is a mere 0.85 hectare, while the Adivasis are entitled to 4 ha. In a contravention of the spirit of the FRA, Section 165 of the Chhattisgarh Land Code Act has been amended to facilitate the acquisition of tribal land by the government.
According to the Statistical Profile of STs in India (2013), 15 per cent of the Adivasis in the country live in MP. But more than 20 per of the crimes against STs are committed in the state, according to the Crime Bureau — including 40 per cent of the murders. In terms of literacy rate, the gap between the Adivasis and non-Adivasis is about 19 percentage points in MP — at the all-India level, this gap is about 14 per cent.
Why does the BJP get re-elected in Adivasis strongholds in MP despite the decline of the community during the party’s tenure in office? First, because STs are not in a majority in most of the reserved seats. Second, as Tariq Thachil points out in Elite parties, poor voters,the Sangh Parivar’s social work — free healthcare services, for instance — does have some impact. Third, the strategy of polarisation and Hinduisation works among STs. Fourth, the Adivasis are not a block: Like the SCs, they are divided into hundreds of subgroups, whose leaders can be co-opted. The current elections will show whether these factors still operate.
Source: Indian Express, 27/11/2018

To fix the unemployment problem, India must strengthen the manufacturing sector

Efforts to reduce the trade deficits must correct the imbalance between domestic absorption and domestic production; and manufacturing-led growth can ensure this

The Labour Bureau’s last household survey (2015-16) reports India’s unemployment rate at 3.6% (by the Usual Principal Subsidiary Status definition), a figure lower than that of several advanced economies. So why are jobs such a hot button issue?
Dig a bit deeper and startling facts emerge. An examination of unemployment rates (UR) across different age groups shows that UR for the youth (age group 15-29 years) stood at 10.3%, considerably higher than that for the older job seekers (30-59 years) at 1%. Additionally, detailed analysis of the UR across different educational categories shows that the UR increases with educational qualifications. The UR for those with graduate and post graduate (and above) degrees was significantly high at 13.7% and 12.5% respectively. In contrast, the UR for those who are not literate and are literate below primary level was less than 1% in 2015-16.
A further disaggregated analysis of UR by age and educational qualification shows that UR for youth with graduate degrees and postgraduate and above degrees was close to 30%. These statistics reflect that India’s youth, and the educated ones in particular, face a serious employment crisis — a predicament that is only likely to exacerbate as the young population gets more educated. India’s educated aspirational youth are seeking well paying productive jobs commensurate with their educational qualifications. So where will these productive jobs come from?
India’s inability to create productive jobs for its rapidly rising young workforce stems largely from the failure of its manufacturing sector to become an engine of job creation. Unlike other countries at similar levels of development, India has achieved spectacular growth rates without witnessing growth of its manufacturing sector. The share of manufacturing in GDP and employment has remained virtually stagnant at 15% and 12% respectively over the past three decades. The rapid service-led growth experience over the last decade has lent credence to the belief that not only has India leapfrogged the phase of manufacturing-led development and set out its own idiosyncratic path of structural transformation, but also that the idea of manufacturing-led growth is obsolete . This could not be further from the truth.
Manufacturing generates the strongest forward and backward linkages across other sectors of the economy, which are important transmission links to growth and job creation. With a strong multiplier effect, manufacturing has the potential to generate faster growth of employment in the organised sector than the services sector. Apart from generating direct employment, rapid manufacturing growth drives rapid growth of employment in other sectors too, as the production processes in manufacturing increase the demand for raw materials, energy, construction and services from a broad array of supplying industries. Additionally, manufacturing activity raises growth of non traded services through the income effect.
The India Employment Report (2016) identifies another compelling reason for making a transition from service-led growth to manufacturing-led growth. Services-led growth has created a large imbalance between domestic absorption (requiring mainly goods) and domestic production (of mainly services) that has led to unsustainably large trade deficits. Services exports simply cannot finance the required goods imports. A country cannot trade services for most of its goods. Efforts to reduce the trade deficits must correct this imbalance between domestic absorption and domestic production; and manufacturing-led growth can ensure this. As India’s trade and current account deficit widens, this issue becomes more pertinent than ever before.
There are many who argue that India has missed the manufacturing bus and that automation and robotics will spell the end of manufacturing jobs. While it is true that workers are likely to be displaced by technological changes, it is also true that several new tasks and occupations will emerge, thereby creating a reinstatement effect. Importantly, in developing countries such as India, where labour costs are still relatively low and there are significant financial costs associated with adopting and implementing new technologies, the pace of automation is likely to be slower than in the advanced world. Therefore, even though it may be technically feasible to automate, it may not be economically feasible. This gives India a longer window of opportunity to adapt and prepare for technological changes and build a strong robust manufacturing sector. Ignoring the potential of this sector in addressing India’s employment and macroeconomic challenges would be a monumental mistake.
Radhicka Kapoor is a fellow at ICRIER, and has worked with the Planning Commission and International Labour Organization
Source: Hindustan Times, 27/11/2018

A Story for Sri Rama


O Rama, there is a great rock that is full of tenderness and affection, which is obvious and ever clearly perceived, which is soft, which is omnipresent and eternal. Within it, countless lotuses blossom. Their petals sometimes touch one another, sometimes not, sometimes they are exposed and sometimes they are hidden from view. Some have their roots intertwined, some have no roots at all. O Rama, this rock is indeed the cosmic consciousness; it is rocklike in its homogeneity. Just as one conceives or imagines different forms within the rock, this universe is also ignorantly imagined to exist in this consciousness. Even if a sculptor ‘creates’ different forms in the rock, it is still rock; even so in the case of this cosmic consciousness that is a homogenous mass of consciousness. Even as the solid rock contains potentially diverse figures that can be carved out of it, the diverse names and forms of the creatures of this universe exist potentially in cosmic consciousness. Even as rock remains rock, carved or uncarved, consciousness remains consciousness whether the world appears or not. The world-appearance is but an empty expression; its substance is naught but consciousness. Even these manifestations and modifications are but Brahmn, the cosmic consciousness — though not in the sense of manifestation or modification. Even this distinction is meaningless in Brahmn. When such expressions are used in relation to Brahmn, the meaning is quite different, like water in a mirage. … When this truth is realised, duality ceases. All is Brahmn.

Source: Economic Times, 27/11/2018

Wednesday, November 21, 2018

World War I: a turning point for the Indian economy

The centenary celebration of the end of World War I has mostly focused on its political impact, especially the implosion of multinational empires that led to the creation of new ethnic nations in Europe, as well as the communist capture of power in Russia. In India, the return of Punjabi soldiers after the end of the war also galvanised political activity against colonial rule in that province, which became the spark for wider protests.
Less attention has been lavished on the economic impact of the conflagration. World War I ended the first era of globalization. It was followed by three decades of economic misery thanks to the collapse of global trade, a rising tide of protectionism and deep recessions in several countries. The balance of global economic power began to shift as the US and Japan made a deeper impact on the world economy.
World War I also proved to be a turning point for the Indian economy. The economic historian Tirthankar Roy has explained in his work how the British engagement in World War I had a complicated impact on India. There was a sharp increase in demand for Indian goods in Britain as production capabilities in Britain itself were diverted to the war effort. However, the disruption in shipping lanes because of the war also meant that Indian industry faced dislocations because of the shortage of inputs that were earlier imported from Britain and Germany. There was excess demand as well as supply bottlenecks.
One result was inflation. Industrial prices nearly doubled in the six years after 1914. Accelerating prices benefitted Indian industry, as was also the case during World War II a few decades later. Farm prices rose as well, but at a slower pace than industrial prices. The internal terms of trade moved against agriculture. This trend continued for most of the next few decades, and especially during the collapse in global commodity prices during the Great Depression. The rapid rise in industrial prices as well as improving internal terms of trade for Indian industry benefitted industrial enterprises.
However, that was not the entire story. The war years also saw a shift in colonial policy away from laissez faire to a more interventionist approach—a shift that had a profound effect on the subsequent policy framework. There were two primary forces driving this shift.
First, the British realised that their most important colony needed strategic industrial depth if it had to be successfully held during disruptions such as a world war. Second, the long nationalist campaign for the state to support Indian industrialization began to bear fruit. The colonial state finally accepted the need for a specific policy framework to support industrial investment in India.
In March 1916, Ibrahim Rahimtoola proposed in the Imperial Legislative Council that a committee should be appointed to examine what policies were needed to promote industrial development in India. The Viceroy accepted the proposal. There were four Indian members in the group that wrote the Indian Industrial Report that was made public in 1918, or 100 years ago. These Indian members were Fazulbhoy Currimbhoy, R.N. Mookerjee, D.J. Tata and Madan Mohan Malaviya.
The Indian Industrial Report recognised the need of state support for industrial growth, but also stopped short of the original demand by Rahimtoola that the power to impose import, export and excise duties to promote domestic industrial investment should be shifted from London to New Delhi. Fiscal autonomy was rejected, and the anodyne conclusion was: “A powerful and well-directed stimulus is needed to start the economic development of India along the path of progress. Such a stimulus can only be supplied by an organised system of technical, financial and administrative assistance.”
More powerful than the official report itself was the scholarly dissent note written by Malaviya. He marshalled data from Indian economic history as well as the recent experience of late industrializers such as Germany and Japan to argue for a more meaningful government support for Indian industrial growth. This was at a time when mainstream Indian nationalism was enthusiastic about rapid industrialisation, and a few years before the Gandhian idea of village self-sufficiency took hold of the public imagination. The dissent note written by Malaviya is a treat to read even 100 years later.
His protest was not wasted. The die had been cast. The next few years after 1918 would see the setting up of a Fiscal Commission to provide some element of fiscal autonomy for India as well as a Tariffs Commission that would offer temporary protection for a handful of industries that had been carefully identified based on the comparative advantage.
The coming three decades would be tough as the world economy stuttered. India also lost out to the Japanese in key areas such as textiles. However, what happened in the six years after 1914 had an impact over the longer term. The extraordinary profits earned during World War I provided the initial capital for several Indian industrial groups that would become dominant in the years to independence. The acceptance of state support for industrial development should be seen as the precursor of the more structured calls for national planning from political leaders as diverse as Jawaharlal Nehru, B.R. Ambedkar, V.D. Savarkar and Subhas Chandra Bose.
The initial success followed by the eventual failure of Indian planning is another story altogether.
Niranjan Rajadhyaksha is research director and senior fellow at IDFC Institute. Read Niranjan’s previous Mint columns at www.livemint.com/cafeeconomics

Source: Mintlive epaper, 21/11/2018