The problem of NPAs
The third problem with UPA’s higher growth and private investment phase was that it led to rising big ticket corporate defaults, initially concealed through debt restructuring, which ultimately left a huge pile of legacy Non-Performing Assets in the banking system.
The Modi government is claiming credit for restoring the health of Public Sector Banks by reducing the Gross Non-Performing Assets stock significantly.
The fact remains that while cumulative NPA reduction under the NDA rule through all recovery channels, including the Insolvency and
Bankruptcy Code was around ₹10.8 lakh crore (till March 2023), NPA write-offs have amounted to over ₹14.8 lakh crore in the same period.
The PSBs, which accounted for over ₹10.65 lakh crore of these NPA write offs had to absorb substantial losses because of NPA provisioning, making net losses between 2017-18 and 2019-20.
Simultaneously, since 2017-18 massive doses of capital was infused into PSBs and financial institutions like the EXIM Bank,IDBI and IIFCL.
As disclosed in the Receipt Budgets, the Centre’s total debt burden on account of these recapitalisation bonds have increased to ₹2.90 lakh crore by 2023-24.
Their annual interest expense of over ₹19,000 crore is being met through the central government’s revenue expenditure since 2019-20.
Bank recapitalisation under the UPA rule, which was of a much smaller magnitude, was audited by the CAG, covering the period between 2008-09 to 2016-17.
However, bank recapitalisation executed under the NDA rule has not been audited by the CAG so far.
Such an audit is necessary to evaluate the massive NPA write offs by the PSBs and conclude whether private sector debt defaults have been subsidised through the public exchequer.
Income and employment
The efficacy of Union Budgets needs to be judged in terms of their impact on the lives of ordinary people.
The Finance Minister has claimed in the Budget speech that under NDA rule “people are living
better and earning better, with even greater aspirations for the future.
Official data shows that real per capita income in India, estimated by the inflation-adjusted Net National Income, registered a growth of 50.3% during the ten years of UPA rule.
During NDA’s ten year rule, real per capita income grew by 43.6%, reflecting a slowdown in inflation adjusted income growth across India.
The NDA government often cites the annual Periodic Labour Force Survey findings to claim a reduction in the unemployment rate between 2017-18 and 2022-23.
However, comparable estimates from the NSS 68th round on Employment and Unemployment Situation in India, shows that unemployment rates, estimated by both current weekly status and adjusted usual status, grew very sharply between 2011-12 to 2017-18.
Moreover, while the unemployment rates declined between 2017-18 and 2022-23.
The open unemployment rates of 2022-2023 were still higher, not only vis-a-vis the NSS 68th round of 2011-12.
But compared to all the eight previous NSS rounds conducted since 1972-73.
The open unemployment rates have never been so high in India in the last 50 years.
Unemployment was particularly high among the urban youth aged 15 to 29 years and among those with an educational level of secondary and above.
Within those employed, the share of casual workers show a declining trend both in rural and urban areas, while the proportion of self-employed have increased progressively.
In 2022-23, self-employed workers and helpers in own account enterprises made up 63% of the rural labour force and almost 40% of the urban labour force.
The share of regular wage/salaried workers has declined in rural areas and increased in urban areas between 2017-18 and 2022-23.
However, the share of those without any social security benefit has increased within the salaried workers category.
Even as agriculture’s share in Gross Value Added (GVA) has declined to 14.4% in 2023-24, there has been an increase in the share of workers engaged in agriculture between 2017-18 and 2022-23.
The share of workers engaged in informal non-agricultural enterprises has also increased since 2011-12.
These trends in employment status from the PLFS data point towards growing informalisation of the labour force, contrary to official claims of increased formalisation.
Skill India Mission
The Finance Minister had claimed in the Budget speech that the government’s “Skill India Mission” has trained 1.4 crore youth and 54 lakh youth have been up-skilled and reskilled.
The dashboard in the official site of the PM Kaushal Vikas Yojana shows that out of 1.10 crore certified candidates.
Only 24.51 lakh, that is around 22%, have been “Reported Placed”.
Such excess supply of skilled workers in the economy and growing informalisation is working as a dampener on wage and earnings growth.
PLFS data further show that the average earnings of casual labour in non-public work to be ₹8,547 in 2022-23.
That of self-employed workers to be ₹13,347 and that of regular wage/salaried workers to be ₹20,039.
While casual labourers’ average earnings has grown by around 49% in five years since 2017-18, and regular wage/salaried workers by 19%, average earnings of self-employed workers rose by 8.5% only in five years.
With annual retail inflation rate averaging 6% during NDA-II’s tenure, less than 2% annual growth in average earnings for the self-employed clearly indicate a decline in their real earnings.
57% of India’s labour force engaged in self-employment, are certainly not “living better and earning better”, as the Finance Minister would want us to believe.
Kaushal Vikas Yojana
Skill India Mission was launched by the government in 2015 under which the flagship scheme Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is run.
It aims to train over 40 crore people in India in different skills by 2022.
It aims at vocational training and certification of Indian youth for a better livelihood and respect in the society.
PMKVY is implemented by the National Skills Development Corporation (NSDC) under the guidance of the Ministry of Skill Development and Entrepreneurship (MSDE).
Launch: India’s largest Skill Certification Scheme - Pradhan Mantri Kaushal Vikas Yojana (PMKVY) - was launched on 15th July, 2015 (World Youth Skills Day).
Aim: To encourage and promote skill development in the country by providing free short duration skill training and incentivizing this by providing monetary rewards to youth for skill certification.
Key Components: Short Term Training, Special Projects, Recognition of Prior Learning, Kaushal & Rozgar Mela, etc.
Outcome: In 2015-16, 19.85 lakh candidates were trained.
Employment of skilled Indans
The 2015 Report on National Policy on Skill Development and Entrepreneurship estimated that only 4.7% of the total workforce in India had undergone formal skill training compared with 52% in the US, 80% in Japan, and 96% in South Korea.
A skill gap study conducted by the National Skill Development Corporation (NSDC) over 2010-2014 indicated an additional net incremental requirement of 10.97 crores of skilled manpower in 24 key sectors by 2022.
The 29.82 crore farm and nonfarm sector workforce needed to be skilled, reskilled, and upskilled.
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