Strategies for Full Employment in India

1. 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

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

3. 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

4. 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 • Change of attitudes

5. 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

6. 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

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

8. 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

9. India’s Crop Productivity Gap (kg/ha)

10. 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)

11. 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.

12. 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

13. 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

14. Power Demand to Triple by 2020

15. Oil Demand to Triple by 2020

16. 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

17. 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

18. 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

19. 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

20. Employment Potential -- summary

21. Organization for Rural Prosperity • Self Help Groups • Contract Farming • Rural Information Centers • Farm Schools

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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.

30. 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

31. 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

32. Vocational Training Deficit

33. Three Models • Farm Schools in every revenue village • Vocational Schools • Computerized & Televised Vocational Training

34. 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

35. 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

36. 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

37. Multimedia vocational courses

38. 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

39. 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

40. 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.

41. 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

42. CVT Action Plan • Delivery CVT through all state-owned engineering colleges, ITIs, Polytechnics, liberal arts colleges, high schools, other institutions. • Provide financial assistance/ incentives under Central Government self-employment schemes to promote private training institutes. • Encourage financial institutions to provide loans to entrepreneurs. • Negotiate with computer software companies to develop a wide range of vocational training courses. • Recognized institutional authorities to certify course contents. • Finance bulk purchase of approved training software with 50% subsidy to minimize the cost of training. • Train entrepreneurs to set up/manage private institutes. • Provide scholarships to low income youth to cover training fees.

43. 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 • Computerized testing laboratories

44. 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?

45. 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

46. 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? • Efficacy of Entrepreneurial Development Programmes