Employment and the government

by Mahesh Vyas

The union budget for 2022-23 will be presented on February 1 under the shadow of the most serious demonstration against the lack of jobs in a very long time. Three years ago, the then finance minister, the late Arun Jaitley had stated that the absence of social agitations for jobs over the preceding five years was evidence that jobs were being created. If there is no job creation, there will be discontent. Where is that visible? he is quoted to have said in February 2019. The discontent is visible now in its worst form. There was violence. A train coach was set ablaze in Gaya in Bihar by agitating job seekers and there was related violence in Prayagraj (Allahabad) in Uttar Pradesh as well.

Agitations for jobs have been around in India. They were mostly for caste-based reservation of government jobs. The Marathas brought their agitation for jobs reservations in focus in August 2017 when half a million of them marched silently into Mumbai. The Gujjars have been agitating for reservations in government jobs since at least 2008. Their most recent agitations were in 2015 and 2020 in Rajasthan. The Jats were agitating for jobs in Haryana in 2016, the Patels agitated in Gujarat for jobs reservations from 2016 through 2019 and Kappus were similarly agitating in Andhra Pradesh in 2016.

The agitation in Uttar Pradesh and Bihar in January 2022 was different. There was no caste-based politics involved here. It was not organised by pressure groups to gain favourable job allocations from the government. The agitations were not even linked to the elections in Uttar Pradesh and other states. The immediate reason for violence in the current case was of anger against a change in the number of examinations to qualify for particular railway jobs and complications in the qualifying cut-offs. But, this may be an over-simplification of the problem. The underlying frustration is lack of adequate good quality jobs, the desperation to get one from the few that are on offer and the inordinate delay on the part of the government in implementing promises it made to provide jobs.

Agitations for job reservations by pressure groups reflect the lack of adequate good quality jobs as much as the violence for jobs India witnessed in January 2021. Politicians seem to have recognised this desperate demand for jobs. This is evident in their pronouncements during elections. Almost every political party promises jobs during elections. But, governments do not seem to recognise the problem of employment adequately. While the government does spend increasing amounts on direct employment support schemes like Mahatma Gandhi National Rural Employment Guarantee Scheme, it fails to provide regular jobs directly.

In 2020-21, the central government employed 3.31 million people. This was lower than the 3.33 million employed in 2013-14 or the 3.32 million employed in 2012-13. Central government employment had fallen to 3.28 million in 2017-18. It has improved a bit since then but, it is still lower than it was seven years ago.

Employment in Railways, that faced the wrath of the agitating job seekers earlier in January, has stalled over the past four years after having declined sharply before that. Employment in 2021-22 and in each of the years since 2017-18 was 1.27 million. Earlier, it was higher at 1.31 million and before that, even higher. This decline in employment in Railways and its recent stagnation can be a strong reason for the current agitation in Uttar Pradesh and Bihar.

In February 2019, while the finance minister denied that there was an employment problem in India, the then Railway Minister, Piyush Goyal had announced that the Railways would employ over 400,000 people by 2021. This implies a massive 31.5 per cent increase in employment in Railways after years of stagnating jobs. This was a pre-election promise. But, agitations ensured that the government issued notifications for about 138,000 jobs by early 2020 and then held examinations. But, employment has not happened. And, the government appears to be dragging its feet in completing the process to employ.

Aspirations were raised when the minister made the announcement in 2019 and when the notifications were issued in 2020. Over 24 million young aspirants applied for the 0.138 million jobs on offer. The delays in completing the processes, the confusion in cut-offs and the changes in processes as also the insensitivity towards protests has led to the violent agitation in January.

It is possible that after some more delays and no further violence, employment in Railways will increase. It is unclear if the central government intends to increase employment in its departments. It is not clear whether the government’s intentions are to downsize on headcount or to expand and how does this strategy relate to its commitment to deliver services.

The government seems less inclined to spend than it can. During April-November 2021, while tax collections rose by 65 per cent y-o-y and non-tax collections increased 80 per cent y-o-y, central government expenses increased by only 9 per cent. Evidently, the government is unwilling to spend at a rate that matches its revenues growth rate. Spending on schemes is not enough. Spending on more toilets, for example, is pointless if the government cannot assure sanitation services.

There is also a huge gap between the government’s ability to serve the people compared to expectations on government services. The large multiple of applicants compared to vacancies indicate the huge mismatch between the demand for government jobs and its supply. How would the budget respond to this?

Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.8 +0.5
Consumer Sentiments Index
Base September-December 2015
81.4 0.0
Consumer Expectations Index
Base September-December 2015
81.0 0.0
Current Economic Conditions Index
Base September-December 2015
81.9 0.0
Quarterly CapEx Aggregates
(Rs.trillion) Dec 21 Mar 22 Jun 22 Sep 22
New projects 4.04 8.56 4.87 3.52
Completed projects 2.86 1.32 1.18 1.32
Stalled projects 0.08 0.43 0.53 0.06
Revived projects 1.98 0.33 0.29 0.08
Implementation stalled projects 0.66 0.09 0.29 0.26
Updated on: 28 Nov 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Dec 21 Mar 22 Jun 22 Sep 22
All listed Companies
 Income 23.4 20.8 40.3 24.7
 Expenses 21.3 19.8 41.5 26.2
 Net profit 35.4 31.3 21.1 -0.7
 PAT margin (%) 9.0 8.8 7.2 7.3
 Count of Cos. 4,755 4,668 4,672 4,451
Non-financial Companies
 Income 29.3 24.8 50.3 27.4
 Expenses 28.8 25.7 53.1 30.5
 Net profit 19.2 9.8 8.3 -21.9
 PAT margin (%) 7.5 7.6 5.7 5.1
 Net fixed assets 2.0 6.7
 Current assets 15.0 18.3
 Current liabilities 11.7 11.3
 Borrowings 3.6 10.5
 Reserves & surplus 11.3 7.3
 Count of Cos. 3,439 3,386 3,408 3,302
Numbers are net of P&E
Updated on: 28 Nov 2022 8:28PM
Annual Financials of All Companies
(% change) FY20 FY21 FY22
All Companies
 Income 0.6 -0.9 25.8
 Expenses 0.4 -3.2 24.7
 Net profit -3.8 75.3 61.3
 PAT margin (%) 2.0 4.4 8.0
 Assets 9.0 9.9 9.9
 Net worth 4.7 12.0 14.0
 RONW (%) 3.4 6.8 11.8
 Count of Cos. 33,286 32,160 8,832
Non-financial Companies
 Income -1.1 -1.9 31.7
 Expenses -0.9 -3.9 31.5
 Net profit -20.4 62.3 59.8
 PAT margin (%) 2.2 3.9 6.9
 Net fixed assets 11.3 2.2 2.1
 Net worth 2.0 10.5 14.5
 RONW (%) 4.6 7.5 13.3
 Debt / Equity (times) 1.2 1.0 0.7
 Interest cover (times) 1.9 2.4 4.3
 Net working capital cycle (days) 82 88 55
 Count of Cos. 26,274 25,220 6,566
Numbers are net of P&E
Updated on: 27 Nov 2022 6:02PM