According to estimates by International Labour Organization (ILO), India’s employment elasticity, a common measure of how employment growth responds to GDP growth, hovered around 0.3 between 1991 and 2007. Basically, 1% of overall economic growth produced 0.3% of employment growth. That number has been coming down quite alarmingly since, and now stands at only about 0.15%.
As it is, investment proposals have been coming down while the latest numbers from the Reserve Bank of India show that manufacturing contracted for the first time in seven years, from a growth rate of 12.9% in 2009-10 to -3.7% in 2015-16. So far, the focus has been on injecting fresh capital investment under the assumption that this will automatically lead to job creation. But it is increasingly clear, that correlation is tenuous.
Even in sectors where there has been fresh investment, net job creation has been negative. Thus, the $25 billion investment by Reliance Industries Ltd in its telecom operation Jio, hasn’t added to the overall number of jobs in the sector as the incumbents have been forced to restructure their operations to trim costs.