Further, if the report is to be believed, out of total of 11 business regulatory reforms in the past two editions of Doing Business, India made 14 sizeable improvements during 2017-18, while Djibouti improved on 11 counts; and overall, it was important that two economies with “the largest populations, China and India, demonstrated impressive reform agendas.”

So far so good. But after reading through the report today, I decided to read another report, also by the World Bank, which I had meticulously downloaded and kept in my computer for a closer perusal on some other day, at leisure. The report is called “South Asia Economic Focus/ Fall 2019: Making Decentralization Work.” I read the 88-page report today.

I wondered as to how, while one World Bank report, released today, and the other, released just a fortnight ago – on October 7, to be precise – are talking in such contrasting terms. Maybe while the new one only focuses only on Delhi and Mumbai (!), the earlier one talks about “severe” cyclic crisis in India, reasons behind drop in the overall drop in growth rate to 5%, and its possible impact.

The October 7 World Bank report “South Asia Economic Focus” section, “What is going on in India?”, starts with a whimper, that “India’s cyclical slowdown is severe”, adding, “Quarterly GDP growth slowed for 5 quarters in a row, declining from a peak of 8.1 percent in the first quarter of 2018 to only 5.0 percent in the second quarter of this year.”
 

 

Pointing out that the “growth decelerated by 3 percentage points in the last year and growth in the second quarter of this year was the lowest in over six years”, the South Asia report says, “Manufacturing growth fell from over 10 percent a year ago to below 1 percent in the second quarter of 2019.” It adds, while this drop “follows the global trend”, it is “more pronounced.”

Thus, “Services and construction also started decelerating over the last quarters, suggesting that the slowdown is not related to idiosyncratic factors related to a specific sector. Export growth recently declined – in line with slowing world growth and weak external demand – but cannot alone explain India’s sharp downturn.”

The report underlines, “The slowdown is mostly due to a deceleration in domestic demand. After years of contributing to high growth rates, domestic demand slipped and contributed the most to the disappointing performance in the last quarter. Private consumption and investment both grew slower than overall GDP in the second quarter of this year. Investment grew 4.0 percent (y-o-y) in the second quarter, compared to 13.3 percent a year ago, while private consumption grew 3.1 percent, compared to 7.3 percent a year ago.”
 

 

The report believes, “One reason for slowing private consumption is the strong contraction of car sales that started in mid-2018, driven in part by higher insurance premia, new emission norms, uncertainty about GST cuts, and the squeeze in the non-bank financial companies (NBFC) sector.”

“Together”, the report says, “Consumption and investment grew 6.0 percentage points slower than a year ago. In line with weakening domestic demand, import growth fell from 11.0 percent a year ago to only 4.2 percent in the second quarter of this year. With a growth rate of 8.6 percent, government consumption has become the fastest growing expenditure component.”

“In such a weak economic environment”, the report thinks, “Structural issues surface and the weak financial sector is becoming a drag on growth. Despite high economic growth in the last decade, India’s banking system still has a significant level of non-performing assets of close to 10 percent of total assets.”

Insisting that government steps have been inadequate, the report notes, “The introduction of the 2016 bankruptcy code and re-capitalizations of state-owned banks were necessary steps, but not enough to resolve the weakness.”

The report says, though “new regulatory and supervisory efforts from the Reserve Bank of India (RBI) that resulted in greater market discipline, and overall credit growth in the economy picked up again in July”, it warns, “Conditions could deteriorate further if the recent slowdown is not properly addressed and contained”, insisting, “This critical situation demands decisive policy actions.”
 

 

A separate India country brief in the same report says that, recently, while poverty did “decline”, implementation challenges remain high. Pointing towards “weaknesses in the rural economy and a high youth unemployment rate in urban areas may”, it says, these may “have moderated the pace of poverty reduction.”

It particularly underlines, “Disruptions brought about by the introduction of goods and services tax (GST) and demonetization, combined with stress in the rural economy and a high youth unemployment rate in urban areas, may have heightened the risks for the poorest households.”

The report believes, apart from other issues, “Broad-based poverty reduction remains a major challenge, in particular with respect to (i) presently excluded groups (such as women and scheduled tribes), and (ii) extending gains to a broader range of human development outcomes related to health, nutrition, education and gender.”

It adds, “The persistently low female labour force participation rate and high youth unemployment present risks to sustaining the current rate of poverty reduction. Furthermore, outdated information on indicators of poverty and employment limit the scope of reliably correlating growth forecasts with projected rates of poverty reduction.”

Courtesy: Counter View

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Not long after Union Minister of IT & Communications (and Law & Justice), Ravi Shankar’s declaration that India is a sound economy because of three movies making Rs. 120 crore in a single day, the World Bank on Sunday slashed the country’s growth forecast for India’s current fiscal year to 6 percent. It warned that the ‘severe slowdown’ could further weaken the country’s already unsteady financial sector.

Yet, top Indian leaders seem to float in their own world of magical realism. Prasad not only made flippant statements about the economy being “sound” due to high movie ticket collections, but also junked his own government’s report about India’s 45-year high unemployment rate, calling it incomprehensive.

In a similar vein, not too long ago, Finance Minister Nirmala Sitharaman had blamed the “mindset of millennials” for the declining car sales saying they preferred hailing private taxis or use the metro to commute to work instead of committing to Easy Monthly Installments (EMIs) for buying their own vehicle.

This could be an article of a long list of similar goof-ups! Minister for Railways, Piyush Goyal, a trained chartered accountant himself, said that the people shouldn’t “do maths” about the economic slowdown as maths never helped Einstein discover gravity. After an uproar on Twitter, with erudite users of the social media micro blogging site reminding him that it was Newton, not Einstein who made that discovery, he apologized.

The cherry on the cake came by Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat who said that if people simply stopped talking about the slowdown, the economic activity would pick up.

What the World Bank Said
In 2018-19, the growth rate stood at 6.9 percent.  However, in its latest edition of the South Asia Economic Focus, the bank said that the country was expected to gradually recover to 6.9 percent in 2021 and 7.2 percent in 2022.

Findings of the report show that strong domestic demand, which propped high growth in the past, has weakened, driving a slowdown across the region. With private consumption growing 3.1 percent in the last quarter from 7.3 percent a year ago, while manufacturing growth plummeted to below 1 percent in the second quarter of 2019 compared to over 10 percent a year ago domestic demand in India has slipped.

Private consumption though growing, had slowed down in the second quarter, one reason being the contraction of car sales due to high insurance premiums, new emission norms and uncertainty in GST cuts among other issues. The contraction of NBFC funding which financed 40 percent of car sales, has also contributed to the consumption slowdown.

The World Bank also noted that the widening of the current account deficit to 2.1 percent in 2018-19 from 1.8 percent last year reflected a deteriorating trade balance.

According to the report, the deceleration in growth demands decisive policy actions, and officials say that the initial government steps – easing cycle and stimulus package, point out in the right direction.

Poverty has continued to decline, although at a slower pace than earlier, mentioned the World Bank. Disruptions brought on by implementation of GST and demonetization, combined with a high youth unemployment rate and stress on the rural economy, may have increased the risk for the poorest households said the report.

The report said that India will have to restore the health of the financial sector through reforms in the governance of public sector banks and strengthening of the regulatory framework for NBFCs, while containing fiscal slippages.

The World Bank, from its estimates, expects the South Asian economy to grow lower by 1.1 percent at 5.9 percent this year. In its study, it has also cut growth forecasts for Maldives, Sri Lanka and Bhutan, while raising those for Bangladesh and Nepal.
 
Related
Core sector Growth declines to 45-month low of 0.5% in August: Coal, Crude oil, Cement worst hit
How the Indian Economy should be revived
Economic Slump: Modi Govt Re-Arranging Furniture When House is on Fire
 

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Image Courtesy: Indian Express

It was confirmed by the report– dated March 24, 2019 – released by the Panel on July 23, 2019. An investigation into the project would have brought to the fore the monumental violations of Bank’s policies vis-à-vis social and environmental, as was in the case of SardarSarovar (Narmada) dam and Tata Mundra projects in the past. This confirms that Government of India is aware of and want to hide the violations due to the irresponsible execution of the project, allege activists.

In its final report, which was published on July 24, 2019, Inspection Panel, while noticing multiple violations and lapses in the World Bank-funded project, had stressed for the need to have detailed investigation. 

WGonIFIS, a collective of over 90 people’s movements and civil society organisations from across India, demand that the Government of India and the Government of Andhra Pradesh immediately conduct an independent review of the Amaravati Capital City project to look into the socio-economic damage, land transactions and psychological trauma witnessed by agricultural, coastal, and pastoral labourers, tenants, landless families, and the most vulnerable communities due to the land acquisition and displacement process.

An independent enquiry and prompt action on the findings will deliver justice to people who otherwise, with the Bank management, central and state governments and the investigating agency Inspection Panel have conveniently washed off their hands, the affected communities are yet to receive justice and strong response to their call for accountability.

Summary of the Panel’s report:

The Inspection Panel, which visited the Amaravati Capital City site to “carry out an investigation into the alleged issues of harm and related potential non‐compliance with livelihood restoration requirements of the Bank’s Involuntary Resettlement Policy,” had submitted its ‘Third Reportand  Recommendation  on India:  Amaravati Sustainable  Infrastructure  and Institutional  Development Project’  to the Board of Executive Directors of the World Bank on March 29, 2019.

The Panel in its report pointed economic displacement; uncertainties regarding livelihood restoration of both landless labourers and landowners; lack of specificity of Project documents; strong assertions of the complainants and Bank Management; timeliness of implementation of Master plan; immediate assistance to the most vulnerable families; and lack of cohesive data and methodology of independent assessment and third party monitoring report.

The Panel observed, “It is important that people not only have access to temporary jobs but obtain more long-term income-generating opportunities to ensure livelihood restoration, which is the ultimate objective of the Bank’s involuntary resettlement policy”. The Panel also expressed concerns about the delay in addressing the needs of 21,374 landless labourer households, who lost their source of income about four years ago.

Recognising that the Land Pooling Scheme at this scale has never been implemented anywhere in the world and that this may be established as a model for similar initiatives in future, the Panel emphasised the need to investigate the harms. Though the Management asserted that LPS farmers have received adequate compensation, the Panel questioned whether it is possible to establish with certainty that the compensation meets replacement value and noted that the affected landowners will bear the ultimate financial risk.

The documents of Bank’s Management on the exact implementation of the livelihood restoration lacked specificity. The Panel also noted that the Project documents do not refer to a labour market analysis assessing future jobs that will be created in the new city and the skills necessary to match these jobs. The Panel observed “about 45 per cent of Project Affected Persons within the footprint of the Bank-financed roads are illiterate, and many have farmed their whole lives. Therefore, they may lack financial literacy, as well as business and investment know-how, to successfully avail themselves of this alternative.” Moreover, the Panel stressed that the larger concern of drastic ‘imposed’ social change during the lifestyle transition from rural, farm-based livelihoods to urban non-farming livelihood inherently involves a high risk of impoverishment.

While the Panel acknowledged that the implementation of the Bank Project has not yet started, the Panel remarked that the design of the Project is based on government activities and the welfare schemes that are already under implementation and have encountered certain challenges. And, these challenges may continue under Bank Project implementation.

Though the complainants, activists, peoples’ groups and CSOs had always raised other larger issues of this flawed project – namely lack of consultation and participation of affected people, multi-crop fertile lands getting converted to urban concrete jungles, food security issues, and most importantly coercion and intimidation by the previous government and the police, and at many instances by landlords too – all of these are shelved aside in the Panel’s report explaining the rectifying actions and project design by the Bank Management.

As the World Bank is no longer financing the project, the Panel updated its report and withdrew its recommendation to investigate the project. However, it is noteworthy that the Panel’s reports majorly relies on three reports: World Bank’s Independent Assessment on Land Pooling; Crisil’s note on Land Pooling Scheme for Development of Amaravati; and the Third-Party monitoring report of VasavyaMahilaMandal, an NGO which deals with the grievance redressal mechanism of Andhra Pradesh Capital Region Development Authority (APCRDA). Despite multiple requests for accessing the reports, these reports have not been made public.

About the Project: 

After bifurcation of the erstwhile Indian state of Andhra Pradesh in June 2014, both the new states of Telangana and Andhra Pradesh decided to share Hyderabad as capital for ten years. In September 2014, N Chandrababu Naidu, the former Chief Minister of Andhra Pradesh announced Amaravati as the proposed capital city, to be developed over many years. The World Bank and AIIB were under consideration to finance the USD 715 million project.

Even in its risk assessment, World Bank had assigned this Project category A, signifying the social and environmental impacts. The project was criticised for building the city on the floodplains of river Krishna, diverting fertile farmlands and forests, displacing around 20,000 families, forcefully acquiring lands, and favouring contractors for the construction of the city. A complaint with the Inspection panel (Independent accountability mechanism) of the World Bank has been filed by the affected community in 2017 to investigate the project for violation of the World Bank’s safeguard policies. This complaint was under process, and the Board of the Bank was waiting for the recommendation on the eligibility of investigation from the Inspection Panel.
 

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Sri Lanka entered the lower-middle-income group in FY 1999, from the low-income category and continued for over two decades, before moving to the upper-middle-income group this year, the data show. India became a  lower-middle-income nation from low-income in FY 2009.

The World Bank classifies economies based on gross national income (GNI) per capita (current US$) calculated using what is called the Atlas method. The Bank uses four income groups: low ($1,025 or less; Rs 70,069 or less), lower-middle ($1,026 to $3,995; Rs 70,137 to Rs 2,73,098), upper-middle ($3,996 to $12,375; Rs 2,73,167 to Rs 8,45,955) and high ($12,376 or more; Rs 8,46,023 or more).

Of 218 economies, 80 are in the high-income group, 60 in the upper-middle, 47 in the lower-middle and 31 in the low-income group. The classification is updated on the first day of July every year. The GNI per capita used for this year’s classification is based on 2018 data.

Besides Sri Lanka, in 2019 six other countries–Argentina, Comoros, Georgia, Kosovo, Senegal and Zimbabwe–have seen classification changes based on income levels. Argentina is the only country that slipped from the high-income to upper-middle-income group. The rest moved up.

Source: World Bank, 2019

Here is how classifications are determined:
 

• A country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population. Revisions to national accounts methods and data can also influence GNI per capita.
• Classification thresholds, which are adjusted for inflation annually using the Special Drawing Rights (SDR) deflator.

There is an increase in thresholds from last year due to SDR inflation. The new thresholds, as of July 1, 2019, are:

Source: World Bank, 2019

The high-income threshold is also a deciding factor for lending rates since 2018-19, before which income classifications did not influence lending terms. “Surcharges are applied for lending rates of countries which have been categorized as high income for two consecutive years,” a World Bank release said.

India, its neighbours and BRICS

Maldives ($9,310 or Rs 6,36,432) and Sri Lanka ($4,060 or Rs 2,77,542) are the only two countries in South Asia in the upper-middle-income group.

India ($2,020 or Rs 1,38,087) along with Bangladesh ($1,750 or Rs 1,19,630), Bhutan ($3,080 or Rs 2,10,549) and Pakistan ($1,580 or Rs 1,08,009) fall in the lower-middle-income group, while Afghanistan ($550 or Rs 37,598) and Nepal ($960 or Rs 65,626) are among the low income group economies.

Source: World Bank, 2019

Among fellow developing economies—BRICS—India is the only country in the lower-middle-income group. The others–Brazil ($9,140 or Rs 6,24,810), Russia ($10,230 or Rs 6,99,323), China ($9,470 or Rs 6,47,369) and South Africa ($5,720 or Rs 3,91,019)–are in the upper-middle-income group.

Source: World Bank

(Mallapur is a senior policy analyst at IndiaSpend.)

Courtesy: India Spend

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In its Global Economic Prospects report issued last week, entitled “Darkening Skies,” it stated that “storm clouds are brewing for the global economy” and contrasted the situation with that of a year ago.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier ahead,” the World Bank chief executive Kristalina Georgieva said.

Pointing to the main reasons for the slowdown, the bank said international trade and investment had softened, trade tensions remain elevated and several large emerging markets experienced “substantial financial pressures last year.” Growth in emerging markets and developing economies is expected to remain flat, the pickup in economies that rely heavily on commodity exports is likely to be much slower than hoped for and “growth in many other economies is anticipated to be decelerate.”

The bank cut its June forecast for global growth of 3 percent this year to 2.9 percent and warned that “the risks are growing that growth could be even weaker than anticipated.” It predicted that growth in world trade will slow to 3.6 percent this year, down from 3.8 percent in 2018 and 5.7 percent in 2017.

After downgrading its forecasts for global growth last November, saying “global expansion has peaked,” the Organisation for Economic Cooperation and Development (OECD) issued a series of leading indicators yesterday pointing in the same direction.

“In the United States and Germany, the tentative signs of easing growth momentum, that were flagged in last month’s assessment, have been confirmed,” it stated. For the third consecutive month, the OECD’s index for the US was below the 100 mark, which points to steady growth, and the index for Germany was below 100 for the fourth straight month.

One of the clearest indications of economic weakening comes from Europe. Data published last week showing that eurozone labour productivity had stopped growing for the first time in almost a decade. Since the financial crisis of 2008, eurozone productivity growth has been around half its previous levels. But in the third quarter of last year it dropped to zero compared to the same period in 2017. In Germany, Europe’s leading economy, it contracted at an annual rate of 0.3 percent, the first decline since 2009.

Industrial production is falling in the main eurozone economies, bringing warnings that Germany and Italy could record a technical recession with a second consecutive contraction in gross domestic production in the final quarter of last year.

In an editorial comment on Saturday, the Financial Times warned that after a “staggered” economic expansion, “a bout of nerves is now gripping the major economies in an unhelpfully synchronised wave” with “signs of trouble” in China and the US, “accompanied by an ever-extending period of weakness in the eurozone.”

Having “chugged along” for the past five years, the eurozone economy seemed to hit some turbulence in the summer months but “more recently, data seem to suggest the blip is at risk of turning into a sustained downturn” and “eurozone growth ended the year very weakly.”
The slowdown is centred in Germany. Economic problems that started to emerge six months ago were initially attributed to the effect of new emissions regulations in the car industry.

“The longer the weakness has continued, however, the more the slowdown has appeared more fundamental,” the editorial noted, with the most recent data showing German industrial production falling sharply, and imports and exports contracting in November.

Another key area of concern is China. The stock market fell by 25 percent last year and there are indications that growth rate of 6.5 percent could move down to 6 percent over the next year.

The China slowdown made a major impact earlier this month. For the first time in 16 years, Apple was forced to cut its sales forecasts for the coming year, citing the contracting Chinese market and rising trade tensions with the US. It led a 660-point fall in Wall Street’s Dow index.

The fall in the sales of iPhones is only one indicator of the slowdown in Chinese consumption spending which is impacting on all global brands. When the final data for last year are issued they are expected to show that car sales in China fell in 2018 for the first time in 28 years.
The car sector represents about 5 percent of the country’s GDP and around 30 percent of the global car market but the significance of China extends far beyond the auto market.

China accounted for around 16 percent of global GDP last year and over the decade since the global financial crisis has contributed around 30 percent of global growth. This has been largely the result of the vast stimulus package initiated by the Chinese government and financial authorities in the wake of the 2008-09 global financial crisis. But now the government is seeking to rein in credit expansion in order to lower debt levels in the economy.

At the same time, the economic problems to which this gives rise are being compounded by the trade war measures of the US. Anti-China hawks in the Trump administration are actively seeking to weaken the Chinese economy in order to extract greater concessions in negotiations.
Evidence of the impact of the US trade war measures emerged yesterday when government data revealed that exports had fallen 4.4 percent in December, far below the predictions of a 3 percent increase from a poll of economists. Imports also shrank 7.6 percent against expectations of a 5 percent rise.

In the US, the turbulence in financial markets is giving rise to concerns that a recession is in the making as the prospect of a yield inversion in bond markets draws closer. An inversion, which occurs when the yield on long-term bonds fall below that on shorter term bonds, is regarded as an indicator of recession as investors seek a safe haven. Inversion has not yet occurred but the gap between the yield on two-year Treasury bonds and of ten-year bonds has been narrowing.

While growth in the rest of the world slowed in 2018, the US continued to advance largely because of the stimulus effect of the corporate tax cuts enacted by the Trump administration at the end of the 2017. While Trump promised this would boost investment and jobs, most of the money went towards share buybacks in an effort to boost equity values and its effect will now start to wear off.

At least one major investor has countered claims by Trump that he is presiding over a strong economy. According to Jeffrey Gundlach, the head of DoubleLine Capital LP, the US economy is floating on an “ocean of debt.”

“I’m not looking for a terrible economy, but an artificially strong one, due to stimulus spending,” he told a forum organised by the investment and financial news service Barron’s. “We have floated incremental debt when we should be doing the opposite if the economy is so strong.”

Short-term economic data are not the only cause for concern. A major issue is whether the long-term increase in debt, which has continued since the global financial crisis, and rising geo-political tensions, will exacerbate the impact of any significant global slowdown.

In a comment published last week, Financial Times economics correspondent Martin Wolf wrote that the economy appeared to be heading into what he called a “mild cyclical downturn.” However, this was taking place amid profound structural changes, characterised by the growth of debt and major political shifts. These included the rise of nationalism, Brexit, the election of Trump as well as “a trade war between the world’s two most important economies and an erosion of the liberal global economic order.”
The “worry” was not over the short-term cycle, he wrote, but rather “the context in which such a slowdown might occur.”

“It is the political and policy instability, combined with the exhaustion of safe options for credit expansion, that would make handling even a limited and natural short-term slowdown potentially so tricky.”

But, he concluded, there were “no simple mechanisms” for reducing these “deeply ingrained” developments which were more likely to get worse than better.

Originally published by WSWS.org
 

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India’s employment rate has been declining due to women leaving the job market, according to a World Bank report, ‘Jobless Growth?’, published on April 15, 2018.
 
While the male employment rate in India between 2005 and 2015 declined “very little”, the female employment rate declined by nearly 5% per year, data show.
 
India’s employment rate was 52% in 2015, below Nepal (81%), Maldives (66%), Bhutan (65%) and Bangladesh (60%) but above Pakistan (51%), Sri Lanka (49%) and Afghanistan (48%).
 

Source: World Bank
Note: Data sourced from Bangladesh 2015/16 LFS; Bhutan 2012 LSS; India 2011/12 NSS-Thick; Pakistan 2015/16 HIICS; Nepal 2011 LSS; and Sri Lanka 2015 LFS. World Development Indicator data are based on modeled ILO estimates. Employment rate in (%).
 
The working age population, aged 15 and above, across South Asia is expected to increase between 8% and 41% by 2025.
 
“To reap the benefits of ‘demographic dividend’, sufficient new jobs need to be created,” the report said.
 
South Asia re-emerged as the world’s fastest growing economy with growth of 6.3% in the last quarter of 2017 and 7.2% in the first quarter of 2018. The region’s growth is attributed to India’s economic resurgence, post the slow down due to demonetisation and implementation of goods and services tax to 7.3% in 2018 (based on forecast). About 80% of South Asia’s gross domestic product is generated in India, the report said.
 
Growth, however, is not the only factor to achieve higher employment rates enjoyed by other developing nations, particularly among women, the report argued.
 
“More than 1.8 million young people will reach working age every month in South Asia through 2025, and the good news is that economic growth is creating jobs in the region,” Martin Rama, World Bank South Asia Region Chief Economist said.
 
“But providing opportunities to these young entrants while attracting more women into the labor market will require generating even more jobs for every point of economic growth.”
 
The battle for jobs continue
 
As many as 18.3 million Indians were unemployed in 2017, and unemployment is projected to increase to 18.9 million by 2019, according to The World Employment and Social Outlook–Trends 2018 report by the International Labour Organization, released on January 22, 2018.
 
There is widespread resentment among youth with lack of employment opportunities in the country.
 
The situation seems to be grim, considering the number of people applying for government jobs. Over 28 million applicants are expected to appear for 90,000 jobs offered by the Indian Railways this year, The Times of India reported on March 31, 2018.
 
More than 200,000 candidates were competing for 1,137 police constable vacancies in Mumbai, many of whom were over-qualified: 423 had degrees in engineering, 167 were Masters in Business Administration and 543 were post-graduates while the basic qualification required for the post was pass in 12th standard.
 
As many as 590,000 jobs every month–or 7 million annually–were likely to be generated in 2017-18, according to a report, Towards A Payroll Reporting in India, published on January 15, 2018.
 
Prime Minister Narendra Modi had claimed that lies were being spread about lack of jobs quoting new but contested data, FactChecker reported on January 29, 2018.
 
Over 100,000 jobs in second quarter of 2017-18, double that in first quarter
 
About 136,000 jobs were added in the July-September quarter of 2017, more than double the number added (64,000 jobs) in the previous (April-June) quarter, Santosh Kumar Gangwar, minister of state (independent charge) for labour and employment, informed the Lok Sabha (lower house of Parliament) in his reply on April 2, 2018 based on the seventh round of quarterly employment survey (QES) report released on March 12, 2018.
 
The April-June quarter had seen a 65% decline in addition of jobs over January-March 2017 quarter (185,000 jobs).
 
The QES measures employment across eight major sectors–manufacturing, construction, trade, transport, education, health, accommodation/restaurants and information technology/business process outsourcing. The eight sectors account for 81% of total employment units having 10 or more workers. The report covers 11,000 units across 36 states and union territories.

The manufacturing sector added the most (65%) jobs between July and September 2017, followed by education (15%). Construction was the only sector that saw job losses.
 
Jobs added during demonetisation period
 
As many as 122,000 jobs were added during the October-December 2016 quarter that witnessed demonetisation, an increase of over three times (281%) compared to its previous quarter that added 32,000 jobs.
 
Further, 185,000 jobs were added in the following January-March 2017 quarter, which sustained the demonetisation impact and slowed down the economy, an increase of nearly 52% over the October-December 2016 quarter.
 
“Human capital is now the fastest-growing component of India’s wealth,” Ejaz Ghani, lead economist at the World Bank wrote in Mint on April 20, 2018.
 
“Investing in people through healthcare, quality education, jobs and skills helps build human capital, which is key to supporting economic growth, ending extreme poverty, and creating more inclusive societies.”
 
(Mallapur is an analyst with IndiaSpend.)

Courtesy: India Spend
 

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Let the state provide incomes and social protection, freeing up capital to exploit labour at will says working draft of new flagship report.

 
The recently released ‘working draft ’ of the World Bank’s flagship World Development Report (WDR) for this year neatly summarises what the world capitalist class is thinking – or should be thinking – about labour. Calling for a new social contract, the draft suggests that while income and social insurance can be provided by the state employers should be freed of this onus and allowed to abandon such ‘outdated’ concepts as minimum wage, long term job security, protection from hire and fire, severance pay, doing away with ‘colonial era’ labour laws, and linking of wages to productivity. These suggestions are under a section sub titled ‘Protecting Workers’, in chapter six.

Replacing these fetters on the technology driven, flexible work based new economy will be some form of Universal Basic Income (UBI) and social insurance (not social security). One important factor that will help this system to work better will be detailed data bases used to identify targeted populations for, say, electronic cash transfers.

Are you getting an eerie sense of déjà vu? Haven’t we Indians heard some of these things before? Yes we have. Some of these elements were initiated by the previous Congress led government, others have been energetically initiated by the current Modi govt.

Aadhaar is a massive databases of people, linked to electronic cash transfers. It was a brainchild of the UPA burnished and expanded by Modi sarkar. UPA tinkered around with labour law reforms but then Modi has moved in with a whole new set of Labour Codes (still pending clearance), fixed term employment with in-built hire-and-fire and replacement of social security benefits with insurance based systems. State govts. (Rajasthan, Maharashtra, Jharkhand) run by Modi’s party have gone further amending several labour laws to ease firing of workers.

Although India still officially subscribes to the minimum wage concept – and has laws to back it up – in practice, it is all but abandoned. Trade unions have been fighting for years to increase minimum wages to Rs.18,000 but the govt. is not even willing to talk. The machinery to implement minimum wage and other laws has been gutted country-wide leaving wage fixation to the complete mercy of employers. Working hours and other service conditions too are no longer governed by any laws in practice though on paper such laws exist.

So there it is: the World Bank is nudging govts. of the whole world, especially from developing countries, to move forward in this direction and drawing upon experiences – quoted extensively in the draft report – from countries like India and scores of others for validating its assumptions. On the flip side, Modi’s advisors in the labour and finance ministries will heartily welcome the new guidelines from Washington and hold them up to justify their policies.

The World Bank’s draft report suggests that the state can think about providing a Universal Basic Income to all persons, or preferably in a tapering mode so that the poorer get more and the richer less (or none). It gives patchy data to indicate that such a provision could entail a cost of anything between 2-14% of the country’s GDP. Who will give this UIB? Obviously, the state, from its tax kitty.

So, while the state gives income sustenance to people, and provides social insurance (maybe subsidized for the poor), the need of people to get benefits from labour laws goes down, argues the Report. Why have minimum wage when UIB is there? Why have job security when social insurance is there?

Note that financial liability of UIB and social insurance will be borne by the state while benefits of destroying labour protection laws will go to the capitalist class. This in essence is the new formula of neo-liberalism that the World Bank is trotting out.

The final report will come out this autumn. Meanwhile, capitalists and govts. world over can chew on this delicious concoction served up by their favourite chef, the World Bank.

Courtesy: Newsclick.in

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Twenty four groups working on environmental, labour and human rights have written to the Executive Directors of World Bank not to dilute the environmental and social safeguards in place to protect natural resources even as the President of the World Bank visits India to explore new financing opportunities. 

India has been the largest recipient of World Bank loans in the history of the World Bank. A corollary to this has been that it is many of World Bank projects that have caused severe displacement, environmental destruction and social fragmentation. These include the much debated Sardar Sarovar Project in the Narmada river, the Mumbai Urban Transport Project and very recently the Tata Mundra MEGA power coal project. 

Commenting on the two drafts of the Safeguard Polices put forward by the WB, this collective of signatories has stated that the drafts clearly demonstrate that all the concerns expressed in their letter to the Bank – about the intentions being wrong, the process being flawed and the false propaganda around ‘participation’ have proven true. The end result remains the same – to push investments in all possible sectors, with scant regard for social and environmental impacts and without any democratic and participatory processes.

The letter also said that, “The World Bank projects are not only a contributor to the climate change situation, but the projects are also destroying the capacity of the people to adapt to changing climate.”
 Prominent among the signatories are the National Alliance of People’s Movements (NAPM), International Rivers, South Asia Network on Dams, Rivers and People, North East Peoples Alliance, All India Union of Forest Working People, National Domestic Workers Union and Narmada Bachao Andolan(NBA).

 As the World Bank clearly steps up its intentions to finance Indian projects, the Indian people would like to remind them to keep the poor and the planet at the core of development and not to dilute any existing safeguards. 

The World Bank initiated the safeguards after large scale protests financed by them including the Narmada Project.  The safeguard review was initiated by World Bank in 2012 as part of its strategic reorganisation. The earlier drafts have been criticised by a wide range of groups including UN experts, local communities, civil society organisation etc. 

Full text of letter

June 25, 2016

Dear Executive Directors,
World Bank

We are representatives of people’s movements, civil society organisations, and other concerned citizens from India, who have been engaged with, or monitoring World Bank financed projects for the past many years.

In April 2013, around 60 of us jointly issued a statement titled ‘Sham Consultations: No More’ (appended) during the first phase of the Safeguard consultations. We have detailed our opposition to the consultations, citing examples of different projects to establish that “the so-called environmental and social safeguards of the Bank are nothing more than a veneer of protection to mask the real impacts of this dangerous financial institution which works only to increase profitability of its shareholders and furthering the cause of the extractive-accumulative large capital – at any cost.”

While we stand by that, and despite many voices of opposition and concern from different parts of the globe, the Bank continued it process of consultations, without addressing the issues we collectively raised, and brought out two drafts of it. The drafts clearly demonstrated all that we said in our letter – the intentions are wrong, the process flawed and the purpose of this is to fool people, giving them a false sense of participation. The end result remains the same – to push investments in all possible sectors, with scant regard for social and environmental impacts and without any democratic and participatory processes. The World Bank projects are not only a contributor to climate change situation, the projects are also destroying the capacity of the people to adapt to changing climate.

To add insult to injury, our government has advocated for weakening of the policies claiming that these Safeguard policies are too costly and time-consuming to implement; inefficient when national systems could more quickly and easily be applied; and undermine national authority and sovereignty by putting harsh conditions on Bank lending.

We do not share this view with our government. Our opposition was on different grounds and it was not to weaken the policies.

We believe that unless there are genuine efforts to learn from past experiences, the consultations are more inclusive and participatory, and keeping people and environment in the core of any planning, these policies will only further disempower the people, rob them off their natural resources and push them to destitution.

Yours truly,
National Alliance of People’s Movements
International Rivers
South Asia Network on Dams, Rivers and People
International Rivers South Asia
North East Peoples Alliance
Bharat Jan Vigyan Jatha
All India Union of Forest Working People
National Domestic Workers Union
National Cyclists Union
All India Forum of Forest Movements
Narmada Bachao Andolan
Matu Jansangthan, Uttarakhand
Beyond Copenhagen Collective, New Delhi
Delhi Forum, Delhi
Manthan Adhyayan Kendra, Madhya Pradesh
Institute for Democracy and Sustainability, New Delhi
Machimar Adhikar Sangharsh Sangathan, Gujarat
Intercultural Resources, (ICR) New Delhi.
Urban Research Center, Karnataka
Environment Support Group, Karnataka
Khan Kaneej Aur ADHIKAR (Mines minerals & RIGHTS), Jharkhand
Delhi Solidarity Group
Srijan Lokhit Samiti, Singrauli, Madhya Pradesh
Theeradesa Mahila Vedi, Kerala

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