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Over 1.1 crore jobs were lost in 2018, while investments in new projects in the bygone year fell to the lowest level in the last fourteen years, say media reports citing data from the Centre For Monitoring Indian Economy (CMIE), a think tank that tracks business and economic data.

Reflecting a dismal ground reality, these critical reports – ‘unflattering’ would be a mild term – knock the bottom out of the bluster of Narendra Modi government’s campaign claiming to take India and Indians to new heights and blaming Congress and other parties for all that is wrong in the country.

On job scenario, the CMIE analysis report, according to Business Today, showed that the number of unemployed has been steadily increasing in the country. The number of employed recorded in December 2018 was at 397 million, which is 10.9 million less than the figure of 407.9 million seen a year ago at the end of December 2017.

While people in both rural and urban India have been hit, most of the jobs losses were reported from former region. “An estimated 9.1 million jobs were lost in rural India while the loss in urban India was 1.8 million jobs. Rural India accounts for two-thirds of India’s population, but it accounted for 84 per cent of the job losses,” the report stated.

People in the 40-59 years age groups kept their jobs, while all other age groups saw jobs shrinking, the report said.

Around 3.7 million salaried employees lost jobs in 2018.

It also showed that individuals belonging to vulnerable groups were the worst hit by job losses in 2018.

Job losses were concentrated among the uneducated, as well as wage labourers, agricultural labourers and small traders. The latter three were also the worst affected in terms of employment during the aftermath of demonetisation.

Women were significantly impacted by job losses during 2018, where out of the 11 million jobs lost, women accounted for 8.8 million jobs whereas men lost only 2.2 million jobs. Around 6.5 million rural women lost their jobs, whereas the figure for urban women was at 2.3 million. Men on the other hand were not as affected by the job losses. Urban men gained 5,00,000 jobs, whereas rural men lost 2.3 million jobs, the CMIE report said.

“So, the break-down of employment statistics by the various attributes of respondents discussed above tells us that a person who lost the job in 2018 mostly fits a profile like – is a woman, particularly a woman in rural India, is uneducated and is engaged as a wage labourer or a farm labourer or is a small-scale trader and is aged either less than 40 years or more than 60 years,” the report said.

“India’s unemployment rate shot up to 7.4 percent in December 2018. This is the highest unemployment rate we’ve seen in 15 months. The rate has increased sharply from the 6.6 per cent clocked in November,” the report said.

While employment estimates have been volatile between September and December, when month-over-month employment estimates have increased or declined by 5-7 million, the overall trend has shown a steep decline. The marginal decline seen in November was possibly an aberration in a trend that indicates towards a steady decline in jobs.

The report stated that this analysis, however, is only a preliminary insight into the job scenario during the months of September to December, and are bound to have a margin for error which will be eliminated in further studies over next couple of months.

Another CMIE analysis said investments in the just-ended December quarter fell to a 14-year-low. Indian companies announced new projects worth Rs 1 trillion in the December quarter, 53% lower than what was announced in September quarter, and 55% lower than the year-ago period.

Project additions, measured by total private and public investments in the country, fell in the quarter to Rs1.15 lakh crore (around $16.5 billion), compared to over Rs 2.23 lakh crore in the same period last year.

Though this is a 14-year low, the CMIE said since some of the data comes with a lag, it is likely to be revised upwards slightly next month to possibly around Rs1.40 lakh crore – still the lowest in over a decade, reported Quartz.

Tepid demand, a gradual decline in investments, and a changing macroeconomic environment have drawn down fresh investments. “Capacity utilisation has been below 75%, lower than what is required to spur new investments. Overall, there had been a steady decline in the past three years which ends up adding up to be a lot,” Mahesh Vyas, CEO of CMIE, told Quartz.

Moreover, while Modi’s electoral promise in 2014 included kick-starting stalled projects, there has been little respite on that front. In the quarter ended Dec. 31, 2018, the value of stalled projects shot up to Rs 3.07 lakh crore, the second highest in the current government’s tenure.

The private sector stalling rate is hovering near its record high at 24%, data shows. The overall stalling rate is lower at 11%, partly because of the recent improvement in stalling rates in public sector projects, said LiveMint about the CMIE report.

The power and manufacturing sectors remained the worst affected by stalling. The power sector accounted for 35.4% of all stalled projects, while manufacturing accounted for 29.2%. The biggest reasons for stalling are lack of funds, problems with fuel and raw material, and unfavourable market conditions. Among the major reasons for stalling, ‘lack of funds’ has emerged as the biggest reason in recent quarters, suggesting that under-financed banks and stressed corporations are finding it increasingly difficult to finance their projects.

An unfavourable business environment, low economic demand, and delay in getting clearances, usually end up delaying a project. And this is likely to continue this year. “Capex (capital expenditure) utilisation is still low, demand is weak, and price of farm products are low. Even the government has very little fiscal space to fill in the gap. Moreover, there is uncertainty in the political climate ahead of the 2019 elections which usually does not help in boosting investments,” said Vyas.

The sequential decline in capex announcements was led by a sharp decline in new project announcements by the private sector. New private sector projects fell 62% in the just-ended December quarter compared with the September quarter, and 64% compared with the December quarter of FY18.

New public sector projects also declined compared with the September quarter of FY19. Fresh investment announcements in the public sector fell 37% on quarter and 41% on year to Rs 50,604 crore—the lowest level since December 2004.

The decline in fresh investments was across the board, with all major sectors witnessing a fall.

Yet, there are some pockets of activity in the economy, said the report. Investments in the transportation and aviation sectors, for instance, have been pouring in. “These are counter-cyclical in nature and government-driven investments into roads have been happening. Investments have also been happening into airlines which has given a boost to the entire segment,” added Vyas.[/vc_column_text][/vc_column][/vc_row]

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According to the CMIE report, only 39.5% of the Indian adult population or 397 million people were employed in Oct 2018, 2.4% lower than the 407 million in Oct 2017.

Against Prime Minister Narendra Modi’s promise of creating 10 million jobs a year, India’s unemployment rate jumped to a high of 6.9% in October 2018, according to a report by the Centre for Monitoring Indian Economy (CMIE).

This is the highest in two years since January 2016 “when we began measuring labour statistics systematically,” according to Mahesh Vyas, CEO of CMIE.

The study comes at the second anniversary of India’s demonetisation exercise which, according to several reports, dealt a body blow to the country’s small and medium businesses as they struggled to sustain operations amid an acute cash crunch and resulted in massive layoffs.

According to the CMIE report, only 39.5% of the Indian adult population was employed as of October, the lowest employment percentage. An estimated 397 million people were employed in October 2018, 2.4 per cent lower than the 407 million persons employed in October 2017. This is a sharp year-on-year fall in employment.

In the months following demonetisation, over 1.5 million jobs were lost, according to CMIE.

The situation remains grim even now. There was zero growth in the job market in financial year 2018, the unemployment rate rising to a two-year high of 6.9% in October 2018, the CMIE report said.

Another worrying sign is the labour participation rate (LPR), which, in October, stood at a dismal 42.4%, the lowest level since January 2016. LPR, deemed a better indicator of employment, is the share of the population above 15 years of age that is employed or seeking jobs.

“Labour participation rate (LPR) was of the order of 47%-48% before demonetisation. But, it fell sharply after demonetisation and has still not recovered,” Mahesh Vyas said in the report.

Further, a sharp recovery in the situation is unlikely as private-sector investments have remained subdued.

While employment has been falling, the number of people unemployed who are actively looking for a job has been rising. As of October 2018, there were 29.5 million unemployed persons actively looking for jobs. This is much larger than the 21.6 million unemployed persons looking for jobs in October 2017.

The count of the unemployed persons actively looking for jobs has risen steadily since its low of 14 million in July 2017. In a little over a year, the number unemployed has more than doubled. This partly reflects the return of labour to the labour markets after their exodus post demonetisation.

The return of labour to the labour markets indicates possibly a return of hope, the CMIE report said, although there still isn’t any sign of a significant pick up in jobs on offer.

Given that investments continue to remain subdued, the economy does not seem to have the capacity to absorb much more labour.

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The claims of Modi government and the calls for more projects and investments and promotion of ‘self-employment’ instead of providing jobs, seem to have come a cropper, the much touted ‘unprecedented’ rise in India’s Ease of Doing Business (EOB) rank notwithstanding: The number of stalled projects in the country has reached a record level, according to a new report.

Citing a report by Centre for Monitoring Indian Economy (CMIE), Quartz India said, “India Inc is mothballing projects at a record pace.”

In the 12 months ending March 2018, India saw an unprecedented number of projects being shelved by companies, said the report.

In financial year 2017-2018, investments worth Rs7.63 lakh crore ($117.35 billion) were scrapped.

Over 40% (worth Rs3.3 lakh crore) of which were dropped from January-March, the last three months alone, the report said.

Whereas earlier the projects usually got delayed due to hurdles in getting regulatory approvals, now the reason was subdued economic growth leading to lack of demand, said the Quartz report quoting, chief economist at India Ratings & Research Devendra Kumar Pant.

Most companies were using only 71.8% of their existing capacities, according to a Reserve Bank of India (RBI) survey conducted towards the end of the July-September 2017 quarter. In such a scenario, adding more factories and manufacturing units may not be viable.

“In the power sector, for instance, there is surplus supply. This has affected the distribution companies’ financial position. Similarly, rising input costs and falling demand have taken the wind out of the steel sector. Therefore, companies in the power and steel sector are unlikely to take up any new projects in the coming months,” the report said.

It said that overall, with output and new orders declining, manufacturing activity in March grew at the slowest pace in the last five months, the Nikkei India manufacturing Purchasing Managers’ Index (PMI), compiled by IHS Markit, showed.

Mounting debt and languid demand have also resulted in subdued growth in corporate earnings in the last few years. Things worsened in financial year 2018 due to the lingering effect of demonetisation and the introduction of the goods and services tax.

There was more bad news. Quarterly profit growth for listed Indian firms fell from 16.4% in the January to March quarter last year to a negative 13.9% in the October to December quarter, according to the CMIE data.

Tepid demand and slow sales have, in turn, added to the massive debt pile. At the end of March 2017, India’s corporate debt inched up to a seven-year high, underlining their stress levels.

With investments on hold, there is little generation of employment and demand. The economy is already staring at a job crisis with unemployment rising steadily.

The problem is not new. Exactly a year ago, it was reported that the number of stalled projects had reached the highest level since Narendra Modi assumed office as the prime minister in May 2014.

How was the government taking it? ‘Change the label’ was the recommendation of the Prime Minister’s Office (PMO), to ‘shelved’ or ‘dropped’ or ‘abandoned’ if the promoters have no further intention to start implementation instead of calling it ‘stalled’, said a report in The Indian Express in February this year. The IE report quoted the communique to ministries from the PMO’s Project Monitoring Group (PMG): “Wherever the project proponents have decided not to pursue the projects, the same should be explicitly stated on the (e-suvidha) portal to help Private Economic Databases (PEDs) to appropriately reclassify the project.”

“Continued classification of mere project ideas as ‘implementation stalled’ projects in public domain has been reflecting the investment scenario in poor light even though the promoters themselves have not taken any concrete/firm step towards the project implementation for a variety of reasons,” the report said, quoting the note.

The PMG believed that these projects in reports released by PEDs were “negatively impacting the sentiments about the ongoing investments in the economy and portraying an unduly gloomy scenario of increase in ‘implementation stalled’ projects”.

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