Legacy of 1991 Reforms and Growth (2004-14)
Macroeconomic Success: India saw high growth (7.8% p.a. from 2004-14) driven by rising savings, investment, and strong export performance.
Investment-to-GDP ratio surged from 24% to 38%
Job Creation: Non-farm jobs grew rapidly, with sectors like construction (26 to 51 million jobs), manufacturing (8 million new jobs), and services creating employment opportunities.
Poverty Reduction: 138 million people rose above the poverty line between 2004-12, marking the first significant decrease in absolute poverty since 1950.
Rural Wage Growth: Real wages rose continuously till 2015, benefiting workers in casual wage and regular salaried jobs. This helped sustain consumption and demand.
Policy-Induced Setbacks (2015-Present)
Growth Slowdown: Growth dropped to 5.8% p.a. after 2014 due to policy shocks like demonetisation, which harmed the unorganised sector, and the poorly implemented GST.
Unemployment Surge: Unemployment increased from 2.2% in 2011-12 to 6.1% in 2017-18.
Youth unemployment reached double digits, and graduate/postgraduate joblessness became widespread.
Reverse migration occurred, with 8 crore people returning to agriculture, reversing decades of progress in rural-urban labor shifts.
Manufacturing and Export Challenges
Failure of 'Make in India': The manufacturing sector’s share in GDP declined from 17% to 13% by 2022, with limited job growth and loss of labor-intensive industries like textiles and garments.
Export Decline: Merchandise exports grew just 1.5 times from 2014-2022, lagging behind the previous decade's growth, resulting in fewer job opportunities and reduced global competitiveness.
Manufacturing Job Losses: Despite efforts, the number of workers in manufacturing grew only marginally, from 567 lakh in 2019 to 629 lakh in 2022, far below expectations.
Distress and Inequality
The share of regular salaried workers in total employment fell from 23.8% in 2019 to 20.9% in 2023, indicating a rise in insecure, unpaid work.
The number of unpaid family workers rose sharply from 6.2 crore in 2017 to 10.4 crore in 2023, reflecting distress-driven employment.
Rising Inequality: Economic distress and low-wage, insecure jobs have led to growing inequality, undermining India's potential to realize its demographic dividend.
Gold Loans and Defaults: The rise in unpaid family labor is mirrored by an increase in gold-based loans and defaults, signaling deepening economic distress among families.
COMMENTS