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India in dire need of job-creators, faces unemployment epidemic

We should act at a national scale, now, if we were to escape a national epidemic of unemployment.

By Samir Sathe

New Delhi: India desperately needs job creators, the entrepreneurs who are hungry to scale up, prepared to adapt, willing to commit to transformations and able to employ the workforce after automation.

We should act at a national scale, now, if we were to escape a national epidemic of unemployment.


COVID Trauma 2020-22: 

India’s GDP contraction of 23.9% in Q2 2020 could be a start! What is not measured adequately in this figure, perhaps, is the damage inflicted to the unorganized sector. Would this continue? What could we expect in 2020-22?

Indicated by bold red colored spike, which may occur between late 2020 and Q1 2021, this period could be characterized by a second COVID wave resulting into another wave of unemployment while the entrepreneurs struggle to reconfigure their mind-sets and businesses.

India could have an employment contraction between 15 and 45 million non-farm jobs, assuming that the GDP% will hover between -10 and +3%.

Two broad scenarios may emerge post-2022:

1. Limping recovery and growth 2023-30: Indian economy will report a GDP of 4% should it take three years after 2022 to recover its global competitiveness and local demand shoring up to the levels of at least last quarter of 2019 when it reported a GDP of 4%+.

2. Rapid recovery and growth 2023-30: This will be characterized by a fast recovery assuming Indian economy shows signs of acceleration within a year after 2022, expediting it by about two years.

India could create 30-45 million non-farm jobs by 2030, assuming the above scenarios.

Five levers influence the emerging scenarios in 2023-30: There are five key levers that would protect the health of job creators and also give birth to more, in preventing the unemployment epidemic.

1. Portfolio of Investments: Central and state government’s prioritization of where the money should be invested judiciously will become monumentally important. Balancing the democratization of the supply of money and the need for generating demand in globally competitive large talent pool hungry areas is not an easy decision.

Bleeding businesses, newly impoverished consumers, skew in wealth distribution and default lines in debt, lent to businesses and individuals alike, may cripple the consumption demand, should the balance be tilted in favour of democratization of money supply at the cost of not investing in demand generating engines.

2. Rate of Unlocking Capital from Slow Growing Pockets: Rate at which the capital is unlocked from public sectors units, will provide a cushion to money supply constraints since the businesses are likely to go into debt trap if demand does not shore up.

3. Cluster and Trade Corridor Economics: India needs demand generating, whirring, high horsepower racing engines. The market access, sales and marketing capabilities and consistent supply of scalable, high-quality products and services are not buzz words. They are a necessity. While everyone around is crying for money, I do not see any herculean nationwide efforts in building demand infrastructure. The inter location, state, region and country trade policies need a sharp relook. The cluster economics will play a more important role than a unit-level economics.

4. Rate of re/upskilling of the existing workforce: From the talent perspective, businesses, academia, will need to be back on their drawing boards to rethink their education, vocation, and skilling/ upskilling curriculum strategies. The practicum involving new paradigms and skills are important to be imbibed, imparted and scaled up within the next two years. Should there be a delay, the workforce will remain sub-optimally utilized, risking the perception of the country’s ability to supply talent.

5. Delta between Positive and Negative Mindsets: The winning entrepreneurs have prepared well, have thought of growth as equivalent to survival (not sequential) and they have conditioned their minds not to be dwarfed by negative tendencies. It means possessing a Growth Mindset as Carol Dweck puts it. In these lonely times, this mindset is what will differentiate the winners from losers. The psychology of the entrepreneurs in these times needs to be protected and vitalized. I think this is the most important factor among all. Without the right mindset, the rest of the levers would render ineffective.

If India were to think about escaping the unemployment epidemic, we need to activate the five levers at once.

Source: Times Now News

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