Vulnerability in jobs in India

India has been infamous for the magnitude of informal jobs in the country. Though a significant issue, informality is just a part of the bigger issue, i.e, the increase in the number of highly vulnerable jobs. Vulnerable jobs usually include own-account workers and family members working informally. Basically anyone who does not have a stable contract or flow of income, and are open to exploitation. All informal workers are vulnerable to an extent since they aren’t on any payroll or have a formal contract.

This long standing problem has become significant as the number of vulnerable employees has been increasing in the past few years. As per International Labour Organisation (ILO), 77 per cent of workers in India will have vulnerable employment by 2019. In a country where 92 per cent of the employed population is in informal sector, it is a concern if the ratio of vulnerable jobs increase.

 

Source: World Employment Social Outlook2018, International Labour Organisation

The ILO report also pointed out that

“a significant portion of the jobs created (in India) in the services sector over the past couple of decades have been in traditional low value added services, where informality and vulnerable forms of employment are often dominant.

It is no solace that the problem is global in nature,

Globally, the significant progress achieved in the past in reducing vulnerable employment has essentially stalled since 2012. In 2017, around 42 per cent of workers (or 1.4 billion) worldwide are estimated to be in vulnerable forms of employment, while this share is expected to remain particularly high in developing and emerging countries, at above 76 per cent and 46 per cent, respectively. Worryingly, the current projection suggests that the trend is set to reverse, with the number of people in vulnerable employment projected to increase by 17 million per year in 2018 and 2019.

This is not a surprise as 80 per cent of the casual workers and 31 per cent of the regular/salaried workers in 2016 earned less than the national minimum wage of Rs 66 / day. If looked at on the basis of gender, 95 per cent of women working as casual labour got less than the minimal wage as against 74 per cent men. Lower wages make workers more susceptible to being caught in the low income trap. With income not enough to save and invest, people earning low wages are unable to earn or multiply their money and get stuck at living at basic sustenance levels. The only way to move from the equilibrium is by earning a higher amount and saving it.

With low income levels in the country and substantial number of informal workers, India needs to look at vulnerability within jobs as a criterion in itself while assessing jobs problem. In order improve the conditions, the jobs created in the country need to assure a certain level of stability and redressal mechanisms. More than skilling, the government needs to create avenues for job creation. A good starting point would be to modify the labour laws and reduce the cost of doing business in the country.

No Sympathy for Exam Stress

As Indian high schoolers received board examination marks last week, their Chinese counterparts are appearing for their annual gaokao exams this week. The gaokao system, like the Indian board exams, receives a lot of flak for its many flaws. The gaokao examination in China usually determines where these students can pursue their college-level education. However, the main problem is that colleges require high gaokao scores for students who do not originate from that province. This is linked to the hukou system or the household registration scheme (almost an internal passport) which determines where you can work depending on your parent’s origin. As this Atlantic Times article puts it,

China’s prestigious Peking University and Tsinghua University, both based in Beijing, will collectively take about 84 students out of every 10,000 Beijingers who took the gaokao this June; 14 students from every 10,000 who took the gaokao in nearby Tianjin, 10 out of every 10,000 test-takers from Shanghai, and only about three per 10,000 candidates from Anhui,  and a mere two from every 10,000 taking the test in Guangdong.

This has led to a wave of ‘gaokao migrants’- people who move to other provinces or purchase land there so that their children will be able to take the exam in a province that has better universities. So authorities in provinces are now cracking down on those who are hoping to circumvent this system. According to this article in Sixth Tone, the province of Fujian, which has been seeing an increase in such gaokao migration, has cracked down on it:

To stem gaokao migration, Fujian education and police departments issued a joint notice on Monday clarifying the policies for students from elsewhere: Students must have had Fujian household registration for at least one year, and studied at a high school in the province for at least one year, before they qualify to take the exam in Fujian. In addition, their parents must have residency, stable employment, and records of social security payments in the province for at least one year.

Going forward, regulations will become even stricter: For students sitting the gaokao in 2019, the requirements will increase to two years, and three years for those taking the exams in 2020.

What this will mean is that migrants and people from low-income household will lose out either way. This is particularly disheartening, for a system that prides itself on its being a meritocracy.

Women: The Unpaid Workers

“With an increase of 22.3 million in the male workforce between 2004-05 and 2009-10 being virtually cancelled out by a fall of more than 21 million in the female workforce, the need to understand the gender dimensions of employment trends in India has acquired a new urgency.”

Let the statistic sink in. The paper on ‘Gender Dimensions: Employment Trends in India, 1993-94 to 2009-10’ by Indrani Mazumdar, Neetha N, drives home the magnitude of the problem in front of us. The authors highlight that “the most striking revelation of the National Sample Survey Office’s (NSSO) 66th round survey is a significant fall in the Female Labour Force Participation Rate (FWPR )between 2004-05 and 2009-10.” The paper expands on how the liberalisation, unlike the popular opinion, did not lead to an increase in the female labour force participation.

One of the key insights of the paper is the drastic increase in the number of unpaid women helpers. As per the NSSO, the employment activity categories have been segregated as self-employed, regular salaried and casual labour. Out of all the three segments, the highest proportion of female workforce is in the self-employed group. However within the self-employed group, the largest proportion of women are employed as unpaid women helpers. From 2004-2009, the total number of employed women rose from 61 to 72.5 per cent, while the regular salaried women only accounted for 9 per cent of the total number. These numbers clearly show that the increase in the FLFPR was mostly due to the increase in the unpaid job rather than the formal jobs.

The paper also shows how the characteristics of the unpaid jobs also varied between rural and urban regions. In rural regions, unpaid workers vary from peasant to supervisors. The jobs are also significantly dependent on the economic background of the household. For instances, the women are usually supervisors only if the land is owned by either their husbands or in-laws or fathers or parents. In urban spaces, the nature of the job is largely different as 43 per cent of the women are engaged in community and personal services which includes domestic workers, teachers, launderers, beauticians, and so on. The second biggest sector that hires unpaid women in urban region is the manufacturing sector (primarily home-based, piece-rated work). 

This disparity in the type of jobs and the variety of them is an indicator of how most of the women work at minimal wages and how vulnerable their jobs are. While in rural regions the family income defines their jobs, in the urban spaces they are mostly engaged in low wage and high risk jobs. With the large segment of women working in the informal spaces like domestic help and agriculture, one of the keys solutions to look at can be to formalise these sectors. A good example would be the increase in the number of online platforms like BookMyBai.

Government should divest 100%, not 51% of bank shares

The government plans to merge four state run banks and then sell 51% of its stake in the new merged bank.  Why not sell 100% stake and divest all bank shares? The banks are a drain on government funds, and the government does not need to be present in the banking sector except as a regulator. Even the PM’s Jan Dhan Yojana does not require you to open an account with a state run bank. A private bank will do the job nicely.

The four banks in question are bleeding money. Their combined net losses were over Rs. 21,000 crore (> US $3 Billion) in the year ending March 31, 2018. If the losses keep piling up and divestment is not done quickly, we will end up in with a situation similar to what’s happening with the Air India sale – no buyers!

India Needs an Aggressive China Insurance Policy

What should India’s conduct with China look like? This question is on the minds of a lot of people in India’s foreign policy circles. I currently have a two-part answer to this question:

Part 1: Assuming that yogakshema for all Indians is defined as the national interest, India’s asks from China would be: peace on the borders and investments in the Indian economy. From a Chinese perspective, these asks are extremely beneficial too. Peace on the Indian border allows them to concentrate their efforts towards challenging the US in the South China Sea. And India is perhaps the only market with the scale and the stability to promise returns on Chinese capital currently flowing to weaker economies.

Part 2: Part 1 is insufficient because China’s recent movements – in Maldives, Nepal, and Doklam – are indicative of its tendency to eschew a mutually beneficial path and pick an openly hostile front instead. To prevent this switch, India needs to invest in I call an Aggressive China Insurance Policy. The motive of this policy is simple: should Xi Jinping’s China get aggressive with India, India should have readily available capacity to inflict significant pain to China in return. The insurance “premium” for this policy includes a variety of measures:

  1. Establish contacts with the key members of World Uyghur Congress and other such organisations.
  2. Shift the focus of “Act East/Look East” to one country — Vietnam.
  3. Offer Trump deals that can deepen the US-India engagement.
  4. Sponsor studies that puncture the “Chinese Leaders Do No Wrong” narrative.

This two-part policy can help India modulate its relationship with China.

Farm Loan Waiver in Karnataka – A Crisis and an Opportunity?

The Karnataka Chief Minister made a statement on May 30th that the newly elected government will come up with a policy to waive farmer loans worth ₹53,000 crores within 15 days. Given this policy context where some form of a waiver looks imminent, the question that confronts us is this: can this waiver be used as an opportunity to bring in structural reforms?

I spoke on this topic to Anusha Ravi of The New Indian Express. The newspaper report is here. These are the questions and my responses to them:

Are politicians compromising on the economic health of Karnataka with the commitment of such a waiver? 

Helping distressed farmers is a political imperative that finds resonance across the board. Especially so because Karnataka has been facing drought over three successive 3 years. At the same time, this immediate crisis gives a golden opportunity for the state to take up structural reforms that will help raise revenues.

Can a state with budget outlay of Rs 2,09,181 crore afford a farm loan waiver of Rs 53,000 crore? 

The total expenditure budget estimated for 2018-19 is 1,98,095 crores. Given that the total loan waiver amounts to nearly one-fourth of the budget size, the government will have to spread its liabilities over multiple years. At the same time, the government will have to mobilise additional sources of revenue to be able to pay off these liabilities.

Where can the state raise revenue to implement such a waiver?

The government has the opportunity to use this crisis as an opportunity for structural reforms. There are several opportunities available. Reforming the electricity sector by making consumers pay the actual cost of power is one such move. Power subsidies currently amount to a whopping 9250 cr per year. The Karnataka government also runs a total of 93 PSUs. 12 are in a non-working state and government must speeded up the divestment of such firms. Better land use, monetising parking in city areas, and improving property tax collections are some other areas the government can think of. States such as Kerala, Punjab, and Sikkim allow lottery schemes to function to raise revenues – this should also be considered.

Would such an implementation mean cutting back allocation for other sectors? 

If this policy announcement of assisting distressed farmers is not simultaneously backed by structural reforms  to raise revenues, the government will be left with no other option but to cut down expenditure in other areas.

Political Will To Solve Jobs Problem

The recent 12th grade results declared by the Central Board of Secondary Education were a pleasant surprise for the Delhi government where the government schools took a 9 per cent lead in performance over private institutions. Although it is comforting to see that appropriate steps are being taken to improve the education system at school levels, we are yet to look at the larger problem facing us in the next few years- the problem of jobs.

One of the key features for the change was the political will and upfront commitment to bring about the change. Rohan Joshi, who has a vast experience of working in Education and Skill Development sectors, attributed the success to systematic engagement with the external stakeholders. He also mentioned that the political will translating into driving bureaucracy to focus on education quality among other factors have led to the remarkable achievement of Delhi Government Schools. He did, however, flag that while celebrating the achievement, we must also continue tracking progress in the coming years. Typically, 3 years is too short a time to reform an entire education system of a state. Overall, Delhi government has certainly taken the steps in the right direction, the point now is to build further upon this great start.

It is this political will that is required to solve other pressing issues like the jobs problem. With 12 million new people joining the workforce every year in the country for next few years and 29 million labour lying redundant in rural areas, it is the evident that India needs to create around 20 million jobs annually for next few years to satisfy the demand. This problem currently faces two broad issues- lack of political will to create systematic solutions and limited attention given to the quality of the solutions.

The lack of political will can be seen in the redundant attempts being made to redefine the level of unemployment rather than having discussions on increasing the number of jobs. One of the key learnings from the success of the Delhi government is that external stakeholders can have huge impact, if they are given proper targets and feedback. Hence, if there are NGOs incentivised to skill the labour or reduce the labour employee mismanagement, it would go a long way. This, of course, does not take the burden away from the government to create policies that ease up the labour laws and helps promote large manufacturers.

The other problem lies in how little attention is being paid to a problem of such magnitude. The atmosphere created over the years by the Delhi government focused on quality rather than quantity. Hence, the solutions went beyond just throwing money at the issue. With respect to jobs problem, the conversation hasn’t come to a point where the quality of jobs are being discussed. For instance, Prime Minister Modi in his infamous remark claimed that jobs like that of street-food vendor should also be included in the employment numbers. The conversation went back and forth on this paradigm but there is yet to be a substantial remark on the quality of jobs that need to be created for a country with the poverty and demographic levels as ours.

We have to take the conversation beyond just jobs or occupations and talk about sustainable work environment and employment options in the country. For instance, the policymakers should look at creating incentives to increase jobs that provide sustainable wages and decent work environment.

It is evident that enough work needs to be put in to sustain outcomes that the Delhi government saw in this year’s exam results. This one successful attempt has enough learning on how a motivated policy move can show positive results.

The Nipah Outbreak and Kerala’s Public Health Systems

On May 25, the Ministry for Health & Family Welfare announced that the Nipah outbreak in Kerala had been contained. This came as a relief as the highly contagious virus had already claimed 18 lives.

The Indian Express has a good report that applauds Kerala’s public health systems for containing the spread:

By the time the NiV virus was confirmed, the health infrastructure in the district had been promptly spruced up by setting up isolation wards at the Medical College and the local hospitals. In the days that followed, people who had been in direct contact with the infected were immediately transferred to the isolation wards as they began showing symptoms thus breaking any further chance of spread of infection. Family members of the infected were put on home quarantine, their samples taken and their daily health parameters routinely checked by local officials. “We didn’t allow the virus to proceed in its natural cycle. Otherwise, there would have been a lot more fatalities. We were able to intervene at the right time,” said Dr Arun Kumar. [The Indian Express, May 26]

While the report appreciates the co-ordinated response of the Kerala and Union governments in dealing with this outbreak, it fails to highlight another important point: the highly decentralised nature of Kerala’s public health systems. In fact, in a study we completed last year on Public Health Expenditure in India (2005 – 2015), Kerala stood out in devolution of implementation functions in healthcare to its urban and rural local governments.

The differentiating feature is:

Unlike most other states, Kerala also does not provide much by the way of specific purpose transfers to panchayats and Municipal Councils in health. Instead, Kerala gives large amounts of general purpose transfers to local bodies (nearly 25 percent of the plan expenditures), some of which can be used for health and other expenditures. The local governments then decide how these funds should be allocated. Kerala also has an “Information Knowledge Mission” dedicated to running a system of accounts and payments for all local bodies in Kerala. They maintain a database that can disaggregate local body expenditures in health, water & sanitation and other sectors [Public Expenditure on Health in India: 2005-06 to 2014-15, Pavan Srinath et al].

My hypothesis is that this well-settled decentralised form of health administration had a big role to play in containing the outbreak. The empowered local governments were able to move quickly, without having to wait for explicit directives from the higher levels of government.

This claim needs more investigation but it is worth studying because it can help shape the self-governance debate in India.

 

Making flying viable for everyone

To successfully provide affordable air travel, government needs to ensure economic viability of its policies.

This year the Indian government decided to connect 56 unserved airports, under the Ude Desh ka Aam Naagrik (UDAN) scheme. The aim of the entire scheme is to make air travel affordable. Although the intentions of the scheme are noble, the steps taken have limited the scope of implementation. One of the key failures lies with the inability to understand the repercussions on the economic viability of airlines.

While the capital invested in buying and maintaining even a single airplane is already high, fuel cost and hiring the crew to keep an airline going add to the expensive affair. To give a ball park figure, domestic airlines in the U.S. spends a combined $2 to $5 billion on just jet fuel every month. Keeping the costs in in mind, it is important for the airline industries to ensure that the flight routes are economically viable. One of the ways this is ensured is by connecting less frequented routes with the major stops in order to cross subsidise the cost. In India, we follow a hub and spoke model where the major cities are the hub or the centre of the wheel and the all the traffic is connected to the centre and passes around the spokes. This helps increasing connectivity while keeping the flight routes viable. This heavy traffic is the the primary reason why most major cities in the world have two airports. The traffic going to and fro from these metropolis does not only keep the city running, but the airlines too.

It is in light of this distribution between traffic that the government policy to connect underserved airports can be questioned. That said, the current scheme tries to provide Value Gap Funding to certain routes for first few years to cover for the additional cost incurred. VGF is an economic tool that includes tax redemptions and financial support provided by the government to make the project viable. For instance for UDAN, the union government contributes 80 per cent of the VGF amount, while the remaining comes from the state governments concerned and in the case of north-eastern states and union territories, the sharing ratio is 90:10.

Although, the funding does provide incentives for flight to opt for the routes till they are being subsidised, it does not create enough incentives for the routes to remain viable after. The inherent flaw in the policy move, therefore, make it unsustainable. The grimness of the possible outcome is captured best in an article in  The Economist :

“High per-passenger costs on seldom-used routes will force Mr Modi to draw the line somewhere. Inevitably, he will conclude that not every commoner deserves the gift of flight.”

To make the airports truly viable, union government needs to look at making the cities more attractive for regular travellers or tourists. Hence, to bring a ghost airport to life it is important for the government to put some life into the host city.

Delhi government bans recorded music in bars

Yet another example of the capricious nature of doing business in India is the Delhi government announcement today that all restaurants serving alcohol should stop playing “recorded music”. They are only allowed to have “live singing” or “instrumental music”. What sense does this make? Probably not much to us, but the Excise commissioner has this enlightening explanation:

When asked how live music was less noisy than recorded music, Delhi’s excise commissioner Amjad Tak said that live performances were “softer” and “controlled”, without giving reasons or data for how he had arrived at the conclusion.

Of course, this makes no sense. Music volume is easily controlled in the 21st century, and we have sound mixing technology that can reduce deep bass if that’s a problem. But the important part of this is just how difficult running a business in India can be, especially in the hospitality sector given that “without giving reasons or data” is often the standard operating procedure for government diktats.

This new rule was introduced in a circular only on 16 May 2018, so it was not even the case that anyone who acquired a liquor licence earlier knew this was going to happen. Which bar owner would have thought recorded music would be outlawed? Similarly, in 2016, the Delhi government halted issuing of fresh liquor licences, even to those who had already paid for it. Imagine being a bar owner who had invested eight figure sums to set up a bar, paid for a licence, who then got told it wasn’t forthcoming.

(If you’re interested in more such fun facts about the restaurant business, check out my podcast with Amit Varma in The Seen and the Unseen on Pragati, where we talk about the unseen effects of regulations.)

It’s possible that this could go to court and be ultimately resolved in favour of the pubs, but like most such cases, businesses suffer both in terms of lost revenue as well as the cost of litigation. How many restaurants and pubs can afford to have live bands playing every night? Would you go to a dead pub without any music?

There are better alternatives to this “hammer, not scalpel” approach to problems. The government could have involved bars in a discussion to come up with options. Or it could have implemented a rule specifying the maximum sound level in decibels for music inside a restaurant. I’m no fan of government regulation in general, but given our current situation, either of these is more reasonable than “no data for how he had arrived at the conclusion”.

If India needs to stimulate its economy, it needs to make doing business easier. And a big part of that is having a stable business environment where disruptive rules are not introduced on a whim without industry consultation. Unfortunately, that’s just daily life for most businesses in our country.

PS: Did you know that you cannot have more than 9 litres of booze in your house as per Delhi Excise law?  Most states have similar limits. Don’t believe me? It’s right there on the Delhi Excise portal. So if you have more than a few bottles of the good stuff, you should drink it all ASAP to stay legally compliant.

Delhi excise personal alcohol possession limits

Kowtowing to Chinese Maritime Power Is Not a Good Strategy

I came across an essay titled China is Not Alone in Adding to the Indian Ocean Woes in the Economic & Political Weekly’s 28th April edition.

The article makes three points regarding maritime power in the Indian Ocean region. Each of the three points deserve closer scrutiny and hence this post.

The first point is that maritime power rests not just on managing the maximum number of ships and submarines but also on the control over maritime finance and particularly on maritime services. In the author’s words:

War vessels and merchantmen are the two most visible elements of power at sea. However, the marine service industry, the most important arm of maritime power generally remains obscured. The marine service sector regulates and organises the diverse maritime cluster. This silent force operates in the realm of marine manufacturing, marine legal services, engineering, and technology, and supports the charter, insurance, sale, and purchase of maritime assets. It also determines freight and cargo rates. It is this sector that helped Britain sustain its empire for another 75 years, after the US had become the centre of international manufacturing by the 1870s.

This is a point well made. Given that India’s current approach does not factor in the significance of maritime service industry, effectiveness of India’s exercise of maritime power will continue to be limited in the short-term.

The second point is that India should not solely be focused on China’s maritime expansion in the Indian Ocean:

We are afraid of the Chinese empire-in-the-making while being oblivious to the dangers that the existing American empire poses to the Indian Ocean region. We are so bothered about the Chinese developing a base in Djibouti, but have been oblivious of the fact that France and the US already have a base over there… We do not know how Chinese hegemony will work in the future, but we know the exploitative and heinous character of the French and the British Empires. The question is, why are we not as afraid of the West as we are of the Chinese?

From a realist perspective, this argument makes sense. Increase in power of the other states affects India’s ability to achieve its own objectives. The law of the jungle is indeed the nature of international relations but even so — and this is what the article misses — a bigger animal eats the smaller animal only when it is hungry. And as things stand, there’s only one state with the hunger for expansion in Indian Ocean. So, India must swing on this issue with the US and other powers to restrict the most imminent threat. This collaboration is also necessary to address the first point — building a maritime ecosystem (including a maritime services industry) of its own.

The third point the article makes is:

We cannot move ahead on the presumption that the Chinese empire will be bad. Who knows, it may be a little better and more peaceful than the wretched, iniquitous world that Anglo-American capital has created. The Indian navalists must be a little more judicious and not allow the Indian Navy to be used as a projectile to counter China.

Now this argument is far removed from reality. There is enough evidence to suggest that a Sinocentric world order will not align with India’s quest for yogakshema — peace and prosperity for all Indians. For a start, look at the way China has alienated — simultaneously and purposively — a new generation of peoples in all of its neighbouring countries. Then look at how the Chinese Communist Party has imposed one language on a diverse set of its own peoples. And finally, just glance at its social credit system to see the Chinese vision for the future.

Of course, the US conduct on the liberal international order that it carried forward from Europe has hardly been untainted. But the failings of the US cannot not be used to give a free pass to China.The reason is that irrespective of what the US does, India is fundamentally aligned with the norm of a liberal international order, for its own national interests. We must question the US when it deviates from this norm. But in a Sinocentric world, this norm itself will cease to exist.

This is what I wrote in Pragati a few days ago:

Legitimacy for the Chinese way of reordering the world is constrained by an essentially hierarchical Chinese worldview — one that divides the world between ‘civilisation’ and ‘non-civilisation’ depending on the extent of sinicisation a region has gone through. This makes the idea of a Pax Sinica a repulsive proposition to most states, let alone illegitimate. So, even if China were to become the most powerful state in the world, it is unlikely that it will become the most authoritative actor.

 

 

A Four-Fold Classification of Data

One of the vexing issues while talking about data protection is the various ways in which data can be classified. Public or private, identified or identifiable, data or metadata; the glut of classifications makes it difficult to achieve consistency.

In The Master Algorithm, Pedro Domingos classifies data into four types:

  • Data that is shared with the world at large. This includes blogs, tweets, reviews on websites, etc.
  • Data that is shared with a limited circle of people. The simplest example under this category would be interactions on social media platforms.
  • Data that is shared with companies. This can often happen without the individual knowing that a company has data belonging to him.
  • Data that individuals do not wish to share with anyone, which is quite self-explanatory.

This is a simple enough classification. That said, there is scope for an overlap between the four types of data. As Domingos is quick to point out, the data from the second category could well fit the third as well, since modes of communication are often controlled by a few companies.

Despite this caveat, the classification is useful. Its simplicity works in its favour by helping more people be a part of the conversation around data protection. And one can hope that more conversations will act as a springboard for developing fresh insights into how we look at our data.