Recent video clips that capture the stampede-like situations for jobs across the country continue to highlight the jobs crisis that India is facing. This is a wicked problem that involves complex trade-offs, conflict of interests, resource constraints, optics, and the persistent inequalities that make it hard for any political party to take bold political positions and make the difficult choices. Every choice requires someone to make a sacrifice or endure suffering in the short-term, and this makes it nearly impossible in a political democracy to make the hard choices. And this is what keeps the socio-economic structure fragile, with periods of progress inducing optimism and swagger that soon turn to despondency and hopelessness.

In 1978, China and India were the two most populous and youthful nations in the world. Both had identified their growing populations as the biggest drag on development and took measures to check their population growth. Sustained implementation of the one child policy in China resulted in two things: a) China grew old before they got rich; b) an increase in women’s participation in the workforce. India’s half-hearted attempt at controlling its population perpetuated its youthful demography, and to this day continues to contribute to low women participation in the workforce because of persistent high child-care needs at home.

The obvious question that follows is, what changed at the turn of the century that reversed the mood and popularised India’s narrative of ‘demographic dividend’? Clearly, the explosion of India’s outsourced IT services industry, and the prosperity it created, both directly and indirectly, led us to believe that in a world that was rapidly growing old, our youthful demographic profile was a gift of God. The truth is that India’s problems were always complex and never expected to go away so easily. To place the impact of the outsourced IT services industry on job creation in perspective, it created less than 6 million jobs in more than 25 years, and this is the number of individuals that enter employable age in India every six months!

Rising Inequality

Oscar Wilde had once remarked that Life is never fair, and perhaps it is a good thing for most of us that it is not. If not for the element of unfairness, many of us would not be privileged to be leading lives of extreme comfort when many others are going through intense suffering and torment. This probably applies to everyone reading this article, and the stark contrast between the quality of life of residents in swanky gated communities vis-à-vis those who deliver services in these communities highlights this fact.

Growing inequality is a global phenomenon, but in developing countries with low per-capita income and a high population, the consequences of growing inequality are very painful and can lead to distress and violence. For every visible ‘stampede’ for jobs or violent demonstrations, there is untold silent suffering away from the spotlight.  Covid accelerated inequality and created fractures at the core of the already fragile socio-economic structure that are not easy to repair.

There is enough evidence that inequality is cyclical. Upward trends in inequality alternate with downward trends and these reversals are an integral part of human evolution. Factors that drive an increase or decrease in inequality are many and we don’t know enough to be able to address this through affirmative actions. For instance, in the western world, there was a hundredfold increase in inequality in the nineteenth century. However, from 1920 to 1980 there was a reversal where the fortunes of the rich declined in real terms and the fortunes of the ordinary family grew fortyfold, a phenomenon, economists call the ‘great compression’. The ‘trickle-down’ effect worked reasonably well during periods of ‘compression’, but failed badly during periods of increasing inequality, and I believe that we are living in an era of growing inequality, accentuated severely by COVID.

The Double-edged Sword of Technology

It has been established beyond doubt that on a large enough timescale, technology has been the biggest job-creation engine in the history of mankind. However, in shorter timeframes, the verdict is not so clear. What is also unclear is the extent of trickle-down effect of technological advancements to those at the bottom of the pyramid in a country like India.

What this means is that choices have to be made about ‘big and efficient’ versus ‘small and equitable’, and these choices are not entirely black and white. Choices have to be made between industrialization and human development. Between the Gujarat model and the Tamil Nadu model.

The MSME sectors have been the real job creators in India, and we have never done enough to give them the support and love they deserve. Launch of a new AI tool on Google or the inauguration of Amazon’s automated warehouse draws more celebration than the setting up of an apparel company that employs a few thousand women. All attention is hogged by mega-projects, that are mostly capital intensive that tend to perpetuate ‘jobless growth’.

Difficult Trade-offs

From time to time, there is a furore over prices of onions and tomatoes. While poor consumers suffer, this isn’t necessarily a bad thing for farmers. Whose interests do you protect? Both are marginalized sections of our society.

Should you offer high MSP (minimum support price) to large farmers, who are generally prosperous and politically powerful, or keep MSP increases moderate to allow poor consumers, including the rural landless, to buy grain for two meals a day? These are not easy trade-offs, and the issues are coloured by the vociferous protests of those that are well-organised.

India at a Cusp

In the last few decades, the top 10% of the population in India has seen a tremendous enhancement in incomes and standard of living. There are serious question marks, and doubts, on whether the same solutions that were effective in creating prosperity for this thin slice at the top end of the socio-economic pyramid could be scaled to create inclusive growth for the rest of the population.

(The author is Executive Chairman, STEER World.)

Views are personal, and do not represent the stand of this publication.