Political Challenge: Vacancies and Unemployment
Of course, the pandemic has made the situation worse, but the economy is already struggling to generate jobs. Despite thousands of people fighting for employment, the central and state governments stick to the policy of keeping posts vacant at various levels. Vacancies for government posts are regularly communicated in the Parliament.
India stands at a crossroads where the political challenge is also an economic imperative. The consequences stemming from weak job growth are rarely hidden. If they come across as discontent in politics, their impact on the economy is seen as reducing potential growth. A strange paradox is increasing the economic and political conditions of India. Vacant posts and unemployment in the central and especially the state governments.
Political Challenge: Vacancies and Unemployment
The fundamental force of economic growth was better outlined in the 1960s by economist Arthur Okun. Okun showed that a fall in unemployment leads to an increase in output and an increase in unemployment leads to a fall in real domestic output. India is a country with a youth population.
Although the theory of economics states that demographics (essentially an increase in the number of the workforce) is a driver of economic growth, it will not necessarily lead to desired benefits without the policies needed to increase employment.
In the last fortnight, a familiar story was heard from Madhya Pradesh. The state government had sought applications for 15 posts of peon, gardener, driver and sweeper in the Gwalior district court, but more than 11,000 people applied for the available posts.
The desired qualification for these posts was class VIII and for the driver was class X passed. But the applicants were graduates and postgraduates, some of them were also studying to qualify for the vacancies of civil judges in the same court.
Competition for government jobs in Madhya Pradesh is not a unique thing. Not long ago, more than 90,000 candidates had applied for 62 posts of peons in Uttar Pradesh.
More than 3,500 applicants had doctorates and others had postgraduate degrees, while the desired basic qualification was the fifth pass. 2.5 lakh applicants registered for the MPSC exam for 290 posts in Maharashtra – One applicant, who cleared the preliminary exam, died while waiting for the interview.
Of course, the pandemic has made the situation worse, but the economy is already struggling to generate jobs. Despite thousands of people fighting for employment, the central and state governments stick to the policy of keeping posts vacant at various levels.
Vacancies for government posts are regularly communicated in the Parliament. Just consider the vacancies in Central Govt. In July 2021, the government informed Parliament that over 8.72 lakh posts were vacant at various levels in the central government, of which over 2.79 lakh posts were vacant in the Railways alone.
The condition of the state governments is also not good. The irony is that while graduates and postgraduates are applying for the posts of peons, there are vacancies in schools and universities.
These figures are astonishing. There are more than one million government schools, in which the sanctioned strength of teachers is 61.84 lakh. Of these, one in six, or more than 10.6 lakh posts, are vacant – Bihar has over 2.75 lakh, Uttar Pradesh has 2.17 lakh and Madhya Pradesh has over 91,000 vacancies.
Now consider the ability to ensure law and order. One in five police posts in the country is vacant.
The total sanctioned posts of police in all the states are 26.23 lakhs, whereas the actual strength of police is only 20.91 lakhs and more than 5.32 lakhs posts are vacant. The worst performer in this regard is Uttar Pradesh, where 1.11 lakh posts are vacant, West Bengal has 55,000 and Bihar has more than 47,000 vacancies.
The pandemic, especially the second wave, exposed the inadequacy of public healthcare in rural areas. Now that India is ready to face the Omicron wave, a key question is how the healthcare system is in the states.
In December 2021, the government informed Parliament that more than 47,000 critical positions (of which over 24,000 are doctors and specialists), as well as over 10,000 posts of support staff in primary health centres in rural India, are vacant.
As I write in my book The Gated Republic, failure to invest in the critical sectors of education, health and security have consequences for the larger political economy.
It has been argued that the state governments are short of funds to provide employment to the people and to fill the vacancies.
But it is equally true that the hierarchies of priorities and discretion are not reflected at all in the budgets of state governments. No economy has entered the developed countries club without spending on human infrastructure and that includes China.
The essential formula for growth is C+G+I+NX- Consumption+Government spending+Investment+Net exports. Consumption can only increase on the back of new and rising income. This means that job creation drives higher consumption and growth.
India’s start-up enterprises have created jobs. It is also true that the government has allocated funds to promote investment and development in infrastructure.
It is recognized that as the government increases investment, the private sector will follow in the expectation of profit.
But the assumption that one will result in the other, that government spending and investment will spur private investment, is subject to conditions, which will require restructuring of legislative and regulatory conditions.
As research by Aventis RegTech shows, entrepreneurs are obliged to comply with over 1,500 laws and over 69,000 compliances. Okun’s fundamental proposition that growth grows with employment demands that the government create an ecosystem that fosters job creation.