Strategies for Full Employment

in India
Uncommon Opportunities:
Roadmap for Employment, Food & Global Security

November 21, 2004

International Center for Peace & Development, USA

The Mother’s Service Society, Pondicherry

1
Unemployment
 1993-94 20M
 1999-00 27M
 Twice as high for lower consumption classes
 On daily basis 35M
 Youth Unemployment 13%
 Kerala 35%

2
Natural Employment Generation
 New entrants to labour force ` 7-8M/yr
 Urban migration 1M/yr
 Agriculture employment is flat
 Less growth in unemployment -1M/yr
 Natural job generation 7-8M/yr

 The absence of social unrest and the fact that urban migration continues and
urban unemployment does not rise enormously indicate the surpluses are
being absorbed.
 This is unorganized, unconscious process akin to education without schools

Make the unconscious process CONSCIOUS

3
 How society stimulates employment

 New products
 New services
 Growth in demand
 Technological innovation
 Higher quality &/or productivity
 Organizational innovation
 Higher skills
 Better access to information
 Increased speed
 Legislation & law enforcement
 Administrative responsiveness
 Environment/health consciousness 4

 Change of attitudes
 Three Approaches to Employment Generation

 Expand existing activities

 Nursery schools, tutorial institutes, English teaching

 Borrow from other countries

 Credit rating & collection agencies
 Trade shows & network marketing
 Health clinics

 Promote culturally compatible activities

 STD & chit funds
 Marriage halls
 Mini-power plants
 Rural information centres
 Contract farming agencies
5
Available Modes of Action
 Increase access to credit
 Provide incentives for new initiatives
 Strengthen or enforce legislation
 Impart training
 Use insurance as a stimulus
 Publicize opportunities in the media

6
Where are the untapped potentials
 Raise farm productivity
 Renewable energy
 Agro-industrial linkages
 Service sector
 Employable skills
 Application of IT

7
 Prosperity 2000 Strategy

 Agriculture as engine for industrialization & employment growth

 Shift focus from meeting minimum production needs to maximumizing profit
per unit land & water
 Projecting market growth based on nutritional requirements
 Raise productivity of soil & water
 Shift to commercial crops which absorb more labour
 Develop industry linkages with industries
 Create 4.5 million direct & 5.5 million indirect employment opportunities per
annum
8
 India’s Crop Productivity Gap
(kg/ha)

Crop USA China India

Maize 8900 4900 2100

Paddy 7500 6000 3000

Soy beans 2250 1740 1050

Seed Cotton 2060 3500 750

Tomato 6250 2400 1430

9
Low farm productivity results in
 High unit cost of production
 High priced food
 Low farm incomes & purchasing power
 Low labour absorption
 High water consumption/unit of produce
 Limited export potential & threat from imports
(e.g. cotton)

10
Technology Strategies
 Raise crop yields
 Raise water productivity
 Improve post-harvest storage & transport
 Expand & upgrade processing industries

Raising productivity can create millions of on-farm and

off-farm employment opportunities.

11
 Horticulture

 Labour content 6 times cereals

 Generates 10-30 times earning / unit area

 Filling India’s nutritional gap requires 40% growth

 Add 4M ha horticulture to raise production 40%

 Generate 8 million jobs

12
 Food Processing
 Improve storage & processing to reduce Rs 70,000 crores in
crop losses
 Global share of processed food exports is rising

 India processes only 2% fruits & vegetables vs. Thailand 30%,

Brazil 70%, Philippines & Malaysia 78-80%)
 India projected to process 10% fruit & veg by 2010

 Industry directly employs 1.6M

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 Power Demand to Triple by 2020
1997 BAU 2020 BCS 2020
1400

1200

1000

800

600

400

200

14
0
Industry Transport Agriculture Commercial Residential Total
 Oil Demand to Triple by 2020
1997 BAU 2020 BCS 2020

Total

Domestic

Commercial

Agriculture

Transport

Industry

Power

0 50 100 150 200 250

16
Projected demand for oil in million tonnes
 Cotton & Textile Industry

 India is 3rd largest producer of cotton

 Domestic demand projected to grow 70% by 2010

 Export demand projected to triple by 2010

 Double productivity of cotton

 Double area under irrigated cotton

 12 million additional jobs in textile industry

21
Forestry, Herbs, Medicinal Plants

 100 M rely on forests for main source of

livelihood, including half of India’s 70M tribals

 Objective to raise forest cover 50% in 10 ys

 Introduce corporate contract farming with bonded

performance guarantees & assured employment

for local population
22
Fisheries
 World seafood market doubled in the 1990s

 India’s marine & inland fisheries employ 6M

 1/3rd of India’s marine fishery potential untapped

 China full-time employment in rural aquaculture

 1989 – 1.5M

 1997 – 3.3M

 Shrimp farming -- 4 direct & 4 indirect jobs per ha

 1999 – 161,000 ha generates employment for 1.3M

 Additional 120,000 ha would create 1M jobs 23

Dairy
 Rs 100,000 crores by 2005

 India is largest and lowest cost producer

 70M dairy farmers

 Cooperatives provide employment for 11M

families
 Potential for 42M jobs

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Employment Potential -- summary
Crop productivity growth 5,000,000
Horticulure 8,000,000
Biomass power & bio-fuels 21,000,000
Agro-forestry 6,000,000
Cotton & Textiles 12,000,000
Dairy, animal husbandry, fisheries 8,000,000
Total 60,000,000

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Organization for Rural Prosperity
 Self Help Groups

 Contract Farming

 Rural Information Centers

 Farm Schools

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Self Help Groups
 1 million created in 3 years
 15 million members benefit
 90%+ repayment of loans
 Mostly for non-farm activities
 Commodity-wise SHGs for agriculture
 Appachi Foundation & ICICI – 60 SHGs for cotton
growers in Tamil Nadu

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Contract Farming
 Successful Indian model -- sugar mills

 Organize SHGs of farmers

 Role of the Contractor

 Provide quality inputs
 Arrange credit with banks
 Arrange crop insurance
 Deliver extension services
 Tie-up market with industry
 Operate farm schools
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Farm Schools cum Extension
Objective: double farm yields in 3 years
 Lead farmers act as paid field training &
extension staff for the contractor
 Lead farmers run Farm Schools on village lands
 Demonstrate methods on farmers’ lands
 Train farmers & disseminates information
 Operate or link to Village Information Centre
 Link to soil test labs
 Link to agro-service centres

30
Rural IT Knowledge Centres
 Mission 2007 – 500,000 village centres
 Can create 5 jobs per centre
 Can charge for services
 Soil analysis -- expert system for advice
 Multi-media farm training
 Input supply information
 Market information
 Educational information
 Health information
 E-government services
 Other vocational training
31
 Ag Enterprises -- Policy Issues
 On-farm training system
 Enforce sanctity of contracts
 Expand access to credit through SHGs with group guarantees & post-
dated checks, including present defaulters.
 Extend powers of Revenue Recovery Act to ensure repayment by SHGs.
 Tax credits for contractors who raise farm productivity
 Strengthen crop insurance program
 Penalties for false documentation by officials
 Penalties for adulteration of ag inputs
 Railways to provide refrigerated storage & transport
32
Service Sector
 USA: provides 80% of jobs

 India:
 Grew by 60M jobs in 18 yrs
 Rose from 25% to 32% of total employment
 High potential fields
 Tourism
 Transport, storage, communication
 Education
 Health care
 Financial services
 Internet-based activities

33
Internet-based Self-Employment
 Desktop publishing
 Web design
 Web research
 E-books
 Translation
 Technical writing
 Engineering & technical services

Opportunities from Rs 5000 to 1 lakh per month

34
Vocational Skills
 50% of firms in developing and industrialized
countries report severe shortage of skilled workers.
 India’s problem is not lack of employment
opportunities but lack of employable skills.
 Skills create employment and self-employment
opportunities.

35
 Vocational Skills Gap
 Only 5% of India’s workforce (20-24 years) have
vocational training compared with 28% in Mexico
and 96% in Korea.
 By 2010 major labour shortages will emerge in the
industrialized nations forcing movement of both
manufacturing & service jobs to wherever the skills
are best.
 Upgrading skills essential to tap global markets
36
Vocational Training in India
 4200 ITIs
 1,654 government run
 2,620 private

 Courses offered
 43 engineering & 24 non-engineering trades

 Capacity – 6.3 lakhs

 State enterprise programmes – 1.7 lakh
 Including agriculture & other – 20 lakh

37
Vocational Training Deficit
Students completing 8th-9th standard 300 lakhs

Students entering 10th-11th 150 lakhs

New entrants to workforce (per year) 70 lakhs

Vocational training in engineering, agriculture & 20 lakhs

other fields

New entrants to workforce w/o training 50 lakhs

Existing unemployed youth (15-29) of which 80% 150 lakhs

are educated up to 10th

Existing workers to be trained to raise non-ag 350 lakhs

skilled portion to 25% 38
Three Models

 Farm Schools in every revenue village

 Vocational Schools

 Computerized & Televised Vocational Training

39
Vocational Schools
 Promote vocational institutes at block and district level
 5000 govt
 50,000 private

 Conduct exams for every skill as for drivers licenses

 Certify approved training centres, e.g. BPO
 Provide scholarships & incentives for trainees

40
Computer-based learning is
twice as fast @ half the cost
 Multimedia
 Interactive
 Immediate Feedback
 Self-paced learning
 Eliminates need for trained teachers
 Responds rapidly to changing skill needs
 Uniform testing

41
 Computerized Vocational Training
 Establish 1 lakh CVT Institutes like internet cafes
 50,000 in private sector
 50,000 training centres at engineering and arts colleges,
ITIs, polytechs, high schools, NGOs, etc.
 Partnership with industry to develop multimedia training
software
 Provide training to a minumum of 4 million students per
annum
 Government certification of courses
 Generate self-employment opportunities for 50,000
entrepreneurs
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Multimedia vocational courses
RWH Child care Nutritionist
Selling skills Real estate Law clerk

Telemarketing Insurance agent Quality manager

Catering Video editing Furniture design

Farm mgmt Pharma rep Textile design

Reporter Dry cleaning Electrical repair

Travel agent Internet research Graphic design

Bookkeeper Organic farming Interior design

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CVT Job Shops

 Privately owned, self-employment

 Each centre with 1 to 10 computers

 Stocked with a library of training software

 Training material on CD-Rom format

 Fees based on an hourly rate

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CVT Job Shop: Assumptions
 Three computers per Job Shop
 20 training programmes per Job Shop
 Each computer utilized 300 hours per mo
 Operating expenses for rent, two paid
employees, phone, electricity may range from
Rs 15,000 to 20,000 per month

45
CVT Job Shop: Economics
 Capital investment Rs 1.5 lakh.
 Cost of operations per computer hour = Rs 20 / hour.
 Cost of amortising of computers and software over two
years = Rs 14 per hour
 Average cost of training = Rs 35 per hour
 Average retail price of training = Rs 50 per hour
 Net profit = Rs 15 per hour or Rs 1.5 lakhs / yr
 50 hours of computerized vocational training, equivalent to
about 250 hours of classroom training, would cost the
student only Rs 2500. 46
Training Software: Economics

 Cost Rs 50 lakhs per course

 Retail price Rs 1000 per set

 Sale of 10,000 sets generates Rs 50 lakhs profit

 Offer 50% government subsidy for development

of approved courses

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 CVT Action Plan
1. Delivery CVT through all state-owned engineering colleges, ITIs,
Polytechnics, liberal arts colleges, high schools, other institutions.
2. Provide financial assistance/ incentives under Central Government self-
employment schemes to promote private training institutes.
3. Encourage financial institutions to provide loans to entrepreneurs.
4. Negotiate with computer software companies to develop a wide range
of vocational training courses.
5. Recognized institutional authorities to certify course contents.
6. Finance bulk purchase of approved training software with 50% subsidy
to minimize the cost of training.
7. Train entrepreneurs to set up/manage private institutes.
8. Provide scholarships to low income youth to cover training fees.
48
IT Incubator Business Parks
 Computerised vocation training
 Computerised tuitions institutes
 Computerised language training
 Software training
 Video-conferencing services
 High speed data transfer services
 Web, graphic and animation design services
 Computer repair and maintenance services
 International Internet telephony
 Computer hardware parts manufacturing and assembly
 Customer and technical support call centres
 Back office processing
 Medical transcription
 Digital photography, scanning and image processing
 Internet research services
 Accounting services 49

 Computerized testing laboratories

Who creates enterprises?
 Skilled experienced workers leaving existing jobs
create enterprises
 Machinists
 taxi drivers
 hotel servers
 bus cleaners
 Printers
 tailors

 Do entrepreneurial training programmes work?

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Promoting Entrepreneurship
 Extend bank credit & seed capital to employees
with 5 years experience
 Require training & certification for new enterprises
to reduce failure rate
 Existing entrepreneur to sign as guarantor

 Insurance companies can ensure loans based on

qualifications
51
 Issues for Study
 Natural job creation
 How many jobs are being created?
 In which sectors & fields?
 By what process?
 How can the natural process be magnified and accelerated?
 How are rural migrants absorbed in the cities?
 Occupational demand
 Identify high growth occupational categories at all levels
 Measure growth in pay/income levels by category
 Emerging Activities
 Identify emerging occupations in all sectors,
 Farm managers & Soil technicians
 Servicing for cell phones, ACs, computers, VCDs, etc.
 Home delivery, floor cleaner, masseuse
 Skills for national development
 Compile a complete list of skills needed for India’s development to next higher level
 Job creation in other countries
 Study which job categories grew rapidly in US during a comparable period?
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 Efficacy of Entrepreneurial Development Programmes