Opinion The rickshaw’s progress

Two datapoints from the GDP figures for 2011-12,released by the Central Statistics Office,stand out. The first is the growth rate of the agriculture sector,at 2.8 per cent. The other is the manufacturing sector,growing even more slowly at 2.5 per cent. An aside: the last time the growth rate of agriculture in the annual GDP outscored manufacturing was in 2003-04. So this is another record for this government.

Since the two sectors,between them,employ just a shade less than 55 per cent of the labour force — according to Labour Bureau statistics for 2010 — how the anaemic growth rates of these two sectors will hurt labour welfare can be judged easily. But there is more: it also reveals the perils of pursuing a vision that is overly prescriptive for an economy that needs growth as its primary objective at this stage.

Because of the nature of agriculture sector,it is difficult to expect it to register over 5 per cent annual growth. Since 1990-91,there have been only eight years when the annual growth rate of the agro sector crossed 5 per cent and,except for once,they have all been bounce-back years after a drought or flood. So the rate of growth it has registered in the drought-free year of 2011-12 is quite commendable.

But those rates make it impossible to employ productively 45.5 per cent of the labour force in the fields. It has to shift out. So where can these workers turn? The obvious choice is manufacturing,the second highest employer. But even as they prepare to migrate,the UPA government has turned off the employment tap,bringing the manufacturing sector closer to shrinkage than growth.

This could have been funny if the implications had not been so disturbing. It began when sections in this government railed against growth policies that supposedly did not create employment. By setting up a complex structure of safety nets,the government has pulled down both growth and employment and hit the unorganised sector the hardest. Conditions for migration to the organised sector are at their bleakest now. If that has brought protesters out on the streets,it is not surprising. The terms progressively handed out to the manufacturing sector to negotiate became impossible even for the large guys to handle.

When UPA came to power in 2004,manufacturing sector was reeling from the effects of Chinese competition,the East Asian crisis and a difficult tax environment. It had suffered eight years of less than 8 per cent growth.

But after the first flush of support that came from the promulgation of the SEZ Act and the adoption of nationwide VAT,it began to move back. It started with the land bill,but the raising of the environment bogey and the hostility towards creating a support platform for intra region migration became impossible to surmount. This hostility was visible in the surfeit of laws to prevent migration of labour,which began to starve the factories.

In addition,a combination of spiralling land prices and a vicious environment lobby has blocked the chances,especially of small enterprises,of operating in city neighbourhoods. These are,however,the largest employment generators in the manufacturing sector.

Land rates have risen within the city and outside as this government has refused to let industrial zones expand on virgin land outside the municipal limits. One of the lesser known reasons why the Noida SEZ is a runaway success is the cheaper rate at which it provides land for small units. But there are few such success stories,as the government wants to look away from such zones.

Meanwhile small enterprises were physically carted off to inhospitable industrial estates as environment groups and real estate agents made common cause against them. In those estates finding labourers was often difficult. Of every 10 enterprises relocated in Delhi,at least four have not opened shop again. The others have simply moved on to more capital-intensive methods.

Those that survived moved their manufacturing to China. Cities like Yiwu in Zhejiang province have become a paradise for Indian small entrepreneurs to source manufacturing from and sell within India.

No wonder that of the 30 million micro,small and medium enterprises in India,nearly 22 million,or 73 per cent,are now classified as service enterprises. India just has no jobs to offer its labour force. Add to it the anti-labour policies that masquerade as labour welfare.

A corollary of these policies is that as the growth rate of the economy has waned,the surplus available with the government to make workers stay in villages will also become scarce. The surplus worker from the agriculture sector then,has few options other than to consider hiring a cycle rickshaw to run the city streets.

subhomoy.bhattacharjee@expressindia.com