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    India’s Economy Is Growing Quickly. Why Can’t It Produce Enough Jobs?

    The disconnect is a result of India’s uneven growth, powered and enjoyed by the country’s upper strata.NEW DELHI — On paper, India’s economy has had a banner year. Exports are at record highs. Profits of publicly traded companies have doubled. A vibrant middle class, built over the past few decades, is now shelling out so much on movie tickets, cars, real estate and vacations that economists call it post-pandemic “revenge spending.”Yet even as India is projected to have the fastest growth of any major economy this year, the rosy headline figures do not reflect reality for hundreds of millions of Indians. The growth is still not translating into enough jobs for the waves of educated young people who enter the labor force each year. A far larger number of Indians eke out a living in the informal sector, and they have been battered in recent months by high inflation, especially in food prices.The disconnect is a result of India’s uneven growth, which is powered by the voracious consumption of the country’s upper strata but whose benefits often do not extend beyond the urban middle class. The pandemic has magnified the divide, throwing tens of millions of Indians into extreme poverty while the number of Indian billionaires has surged, according to Oxfam.The concentration of wealth is in part a product of the growth-at-all-costs ambitions of Prime Minister Narendra Modi, who promised when he was re-elected in 2019 to double the size of India’s economy by 2024, lifting the country into the $5 trillion-or-more club alongside the United States, China and Japan.The government reported late last month that the economy had expanded 8.7 percent in the last year, to $3.3 trillion. But with domestic investment lackluster, and government hiring slowing, India has turned to subsidized fuel, food and housing for the poorest to address the widespread joblessness. Free grains now reach two-thirds of the country’s more than 1.3 billion people.Those handouts, by some calculations, have pushed inequality in India to its lowest level in decades. Still, critics of the Indian government say that subsidies cannot be used forever to paper over inadequate job creation. This is especially true as tens of millions of Indians — new college graduates, farmers looking to leave the fields and women taking on work — are expected to seek to flood the nonfarm work force in the coming years.A job fair in Chennai last month.Idrees Mohammed/EPA, via Shutterstock“There is a historical disconnect in the Indian growth story, where growth essentially happens without a corresponding increase in employment,” said Mahesh Vyas, the chief executive of the Center for Monitoring Indian Economy, a data research firm.Among the job seekers despairing over the lack of opportunities is Sweety Sinha, who lives in Haryana, a northern state where unemployment was a staggering 34.5 percent in April.As a child, Ms. Sinha liked to pretend to be a teacher, standing in front of her village classroom with fake eyeglasses and a wooden baton, to fellow students’ great amusement.Her ambition came true years later when she got a job teaching math at a private school. But the coronavirus upended her dreams, as the Indian economy contracted 7.3 percent in the 2020-21 fiscal year. Within months of starting, she and several other teachers were laid off because so many students had dropped out.Ms. Sinha, 30, is again in the market for a job. In November, she joined thousands of applicants vying for much-coveted work in the government. She has also traveled across Haryana seeking jobs, but turned them down because of the meager pay — less than $400 a month.“Sometimes, during nights, I really get scared: What if I am not able to get anything?” she said. “All of my friends are suffering because of unemployment.”But for Indian politicians, a high unemployment rate “is not a showstopper,” said Mr. Vyas, the economist, adding that they were far more concerned with inflation, which affects all voters.India’s reserve bank and finance ministry have tried to tackle inflation, which is battering many countries because of pandemic-related supply chain problems and the war in Ukraine, by restricting exports of wheat and sugar, raising interest rates and cutting taxes on fuel.The bank, after raising borrowing rates in May for the first time in two years, increased them again on Wednesday, to 4.9 percent. As it did so, it forecast that inflation would reach 6.7 percent over the next three quarters.Reserve bank officials have also employed an array of fiscal and monetary tactics to continue supporting growth, which cooled in the first quarter of 2022, falling to 4.1 percent. Household consumption, a major driver of India’s economy, has dropped in the last few months.“We are committed to containing inflation,” said the bank’s governor, Shaktikanta Das. “At the same time, we have to keep in mind the requirements of growth. It can’t be a situation where the operation is successful and the patient is dead.”While the Bank of England and the Federal Reserve in the United States have said their countries need to accept lower growth rates because of high commodity prices, India’s reserve bank is not in that camp, said Priyanka Kishore, an analyst at Oxford Economics. “Growth matters a lot for India,” she said. “There’s a political agenda.”Working at a brick factory in Bangalore.Manjunath Kiran/Agence France-Presse — Getty ImagesThe ban on food exports is a sharp turnabout for Mr. Modi. In response to Russia’s blockade on Ukrainian ports, which has led to a global shortage of grains, he had said in April that Indian farmers could help feed the world. Instead, with the global wheat shortfalls driving up prices, the Indian government imposed an export ban to keep domestic prices low.Temporary interventions like these are easier than addressing the fundamental problem of large-scale unemployment.“You have wheat in your godowns and you can ship it out to households and get instant gratification,” Mr. Vyas said, referring to storage facilities, “whereas trying certain policies for employment is far more protracted and intangible.”Those policies, analysts say, could include greater efforts to build up India’s underdeveloped manufacturing sector. They also say that India should ease regulations that often make it difficult to do business, as well as reducing tariffs so manufacturers have an easier time securing components not made in India.Exports have been a source of strength for the Indian economy, and the rupee has depreciated by about 4 percent against the U.S. dollar since the beginning of the year, which would normally boost exports.But inflation in the United States and war in Europe have started to affect sales for Indian-made clothes, said Raja M. Shanmugam, the president of a trade association in Tiruppur, a textile hub in the state of Tamil Nadu.“All the input cost is increasing. Even earlier this industry worked on wafer-thin margins, but now we are working on loss,” he said. “So a situation which is normally a happy situation for the exporters is not so anymore.”The struggles of working-class Indians, and the millions of unemployed, may eventually cause a drag on growth, economists say.Zia Ullah, who drives an auto-rickshaw in Tumakuru, an industrial city in the southern Indian state of Karnataka, said his income was still only about a quarter of what it was before the pandemic.The $20 he used to earn daily was enough to cover household expenses for his family of five, and school fees for his three children.“Customers are preferring to walk,” he said. “No one seems to have money these days to take an auto.”Mr. Ullah, 55, said the cost of food had climbed so much that he had to cut down on meals and take two of his children out of school.“Only one, the elder daughter, goes to school now,” Mr. Ullah said. “The rest look around for work in the area.”Hari Kumar contributed reporting. 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    India’s Economic Figures Belie Covid-19’s Toll

    Strong results compared with last year’s performance mask lingering weaknesses that could hold back needed job creation.NEW DELHI — The coronavirus continues to batter India’s damaged economy, putting growing pressure on Prime Minister Narendra Modi to nurture a nascent recovery and get the country back to work.The coronavirus, which has struck in two waves, has killed hundreds of thousands of people and at times has brought cities to a halt. Infections and deaths have eased, and the country is returning to work. Economists predict that growth could surge in the second half of the year on paper.Still, the damage could take years to undo. Economic output was 9.2 percent lower for the April-through-June period this year than what it was for the same period in 2019, according to India Ratings, a credit ratings agency.The coronavirus has essentially robbed India of much of the momentum it needed to provide jobs for its young and fast-growing work force. It has also exacerbated longer-term problems that were already dragging down growth, such as high debt, a lack of competitiveness with other countries and policy missteps.Economists are particularly concerned about the slow rate of vaccinations and the possibility of a third wave of the coronavirus, which could prove to be disastrous for any economic recovery.“Vaccination progress remains slow,” with just 11 percent of the population fully inoculated so far, Priyanka Kishore, the head of India and Southeast Asia at Oxford Economics, said in a research briefing last week. The firm lowered its growth rate for 2021 to 8.8 percent, from 9.1 percent.Even growth of 8.8 percent would be a strong number in better times. Compared with the prior year, India’s economy grew 20.1 percent April through June, according to estimates released Tuesday evening by the Ministry of Statistics and Program Implementation.But those comparisons benefit from comparison with India’s dismal performance last year. The economy shrank 7.3 percent last year, when the government shut down the economy to stop a first wave of the coronavirus. That led to big job losses, now among the biggest hurdles holding back growth, experts say.The coronavirus continues to batter India’s damaged economy, putting growing pressure on Prime Minister Narendra Modi.Money Sharma/Agence France-Presse — Getty ImagesReal household incomes have fallen further this year, said Mahesh Vyas, the chief executive of the Center for Monitoring Indian Economy. “Till this is not repaired,” he said, “the Indian economy can’t bounce back.”At least 3.2 million Indians lost stable, well-paying salaried jobs in July alone, Mr. Vyas estimated. Small traders and daily wage laborers suffered bigger job losses during the lockdowns than others, though they were able to go back to work once the restrictions were lifted, Mr. Vyas said in a report this month.“Salaried jobs are not similarly elastic,” he said. “It is difficult to retrieve a lost salaried job.”About 10 million people have lost such jobs since the beginning of the pandemic, Mr. Vyas said.Mr. Modi’s government moved this month to rekindle the economy by selling stakes worth close to $81 billion in state-owned assets like airports, railway stations and stadiums. But economists largely see the policy as a move to generate cash in the short term. It remains to be seen if it will lead to more investment, they say.“The whole idea is that the government will borrow this money from the domestic market,” said Devendra Kumar Pant, the chief economist at India Ratings. “But what happens if this project goes to a domestic player and he is having to borrow in the domestic market? Your credit demand domestically won’t change.”Dr. Pant added that questions remained about how willing private players would be to maintain those assets long term and how the monetization policy would ultimately affect prices for consumers..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“In India, things will decay for the worse rather than improve,” he said, adding that the costs to users of highways and other infrastructure could go up.During the second wave in May, Mr. Modi resisted calls by many epidemiologists, including Dr. Anthony Fauci, the director of the U.S. National Institute of Allergy and Infectious Diseases, to reinstitute a nationwide lockdown.At a vaccination site in India in June. Economists are particularly concerned about the slow rate of vaccinations and the possibility of a third wave of the coronavirus.Saumya Khandelwal for The New York TimesThe lockdowns in 2021 were nowhere near as severe as the nationwide curbs last year, which pushed millions of people out of cities and into rural areas, often on foot because rail and other transportation had been suspended.Throughout the second wave, core infrastructure projects across the country, which employ millions of domestic migrant workers, were exempted from restrictions. More than 15,000 miles of Indian highway projects, along with rail and city metro improvements, continued.On Tuesday, Dr. Pant said India’s growth estimates of 20.1 percent for the April-through-June period were nothing but an “illusion.” Growth contracted so sharply around the same period last year, by a record 24 percent, that even double-digit gains this year would leave the economy behind where it was two years ago.Economists say India needs to spend, even splurge, to unlock the full potential of its huge low-skilled work force. “There is a need for very simple primary health facilities, primary services to deliver nutrition to children,” Mr. Vyas said. “All these are highly labor intensive jobs, and these are government services largely.”One of the reasons Indian governments typically have not spent in those areas, Mr. Vyas said, is that it has been considered “not a sexy thing to do.” Another is the governments’ “dogmatic fixation” with keeping fiscal deficits in control, he said. The government simply can’t rely on private sector alone for creating jobs, Mr. Vyas said.The “only solution,” he said, is for the government to spend and spur private investment. “You have a de-motivated private sector because there isn’t enough demand. That’s what’s holding India back.” More

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    Why India's Farmers Are Protesting

    AdvertisementContinue reading the main storySupported byContinue reading the main storyIndia’s Farmer Protests ExplainedThousands of protesters, many driving tractors, took to the streets of New Delhi on Tuesday. Who are they, and what do they want?Indian farmers taking part in a tractor rally in New Delhi on Tuesday against the central government’s new agricultural laws.Credit…Money Sharma/Agence France-Presse — Getty ImagesMujib Mashal, Emily Schmall and Jan. 27, 2021Updated 7:42 a.m. ETAt least one protester was killed and 300 police officers were injured after tens of thousands of farmers, many driving tractors, took to the streets of New Delhi on Tuesday to call for the repeal of contentious new agriculture laws.After months of sustained but peaceful demonstrations on the city’s outskirts, the farmers upstaged the city’s national Republic Day holiday, clashing with the police, destroying barricades and storming the Red Fort, a 400-year-old landmark. In addition to the police officers, many protesters were injured as well.On Wednesday, the day after the chaos, the farmers had returned to their camps on the city’s edge, pledging to continue their protest and to return to the city for a march on foot to India’s Parliament on Monday.Protesting farmers have camped outside New Delhi since November.Credit…Saumya Khandelwal for The New York TimesWho are the protesters?Many of the protesting farmers are members of the Sikh religious minority and come from the states of Punjab and Haryana. Farmers in other parts of the country have held rallies in solidarity.Since November, thousands of farmers have encamped outside New Delhi, the capital, keeping vigil in sprawling tent cities and threatening to enter if the farm laws were not repealed.The protest has laid bare the dire reality of inequality across much of the country.More than 60 percent of India’s 1.3 billion people still depend primarily on agriculture for their livelihood, though the sector accounts for only about 15 percent of the country’s economic output. Their reliance has only increased after the coronavirus pandemic badly struck the urban economy and sent millions of laborers back to their villages. For years, debts and bankruptcies have been driving farmers to high rates of suicide.The grain market in the Indian city of Khanna, the largest in Asia, last year.Credit…Karan Deep Singh/The New York TimesWhat do they want?The protesters are challenging Prime Minister Narendra Modi over his efforts to reshape farming in India.The demonstrators are demanding that Mr. Modi repeal recent farming laws that would minimize the government’s role in agriculture and open more space for private investors. The government says the new laws would unshackle farmers and private investment, bringing growth. But farmers are skeptical, fearing that the removal of state protections that they already consider insufficient would leave them at the mercy of greedy corporations.Government support for farmers, which included guaranteed minimum prices for certain essential crops, helped India move past the hunger crisis of the 1960s. But with India liberalizing its economy in recent decades, Mr. Modi — who wants the country’s economy to nearly double by 2024 — sees such a large role for the government as no longer sustainable.Farmers, however, contend that they are struggling even with the existing protections. They say that market-friendly laws will eventually eliminate regulatory support and leave them bereft, with the weakened economy offering little chance of a different livelihood.Farmers trying to dismantle barricades during the Republic Day protest on Tuesday.Credit…Anushree Fadnavis/ReutersHow did the violence erupt?Thousands of protesting farmers poured into New Delhi on Tuesday in what had been expected to be a peaceful protest during holiday celebrations and a military parade overseen by the prime minister.Some farmers broke with the main march and used tractors to dismantle police barricades. Many farmers carried long swords, tridents, sharp daggers and battle axes — functional if largely ceremonial weapons. Most protesters did not seem to be wearing masks despite the Covid-19 outbreak in India.Police commanders deployed officers carrying assault rifles. They stood in the middle of main roads, tear gas swirling around them with their rifles aimed at the crowds. In some areas, video footage showed, the police beat protesters with their batons to push them back.The farmers claim the violence was stoked by the government and outside elements in an effort to derail their months of peaceful protest.The farmers waved flags and taunted officers. They also breached the Red Fort, the iconic palace that once served as the residence of the Mughal rulers of India, and hoisted atop the ramparts a flag that is often flown on Sikh temples.Local television channels showed farmers placing the body of a protester in the middle of a road. They claimed the man had been shot, but the police said he had died when his tractor overturned.The Indian government temporarily suspended internet services across the areas that have been hubs of protest for months, an official at the Home Affairs Ministry confirmed.A farmer inside a tractor trolley amid the march into the capital on Tuesday. Credit…Altaf Qadri/Associated PressAdvertisementContinue reading the main story More