Vol. XLII No. 14 April 08, 2018

Modi Govt’s False, Misleading Statements on Job Creation

J S Majumdar

IN the Union Budget for 2018-19, Finance Minister Arun Jaitley made one false and one misleading statement in respect of employment generation. In point number 78 of the written copy of his speech, he stated, “An independent study conducted recently has shown that 70 lakh formal jobs will be created this year.”

Jaitley’s statement of “independent study” was false. The study was initiated, designed, guided and approved by the Prime Minister’s Office (PMO). Bitten by the government’s own data bug showing low employment and rising unemployment, the Modi dispensation was desperate to come out of the depressing picture and needed an “independent” study to counter Labour Bureau data. According to the Labour Bureau, in nine months till December 2016, only 2.31 lakh new jobs were created across eight labour-intensive sectors and the unemployment rate rose to 5 per cent. The Economic Survey 2016-17, quoting the Labour Bureau, stated, “Employment growth has been sluggish.” Union Statistics Minister D V Sadananda Gowda in written reply to a question in Lok Sabha on August 3, 2016 said, “Employment growth has shown signs of slowdown in key labour-intensive and export-oriented sectors, despite GDP growth of up to 7.6 per cent in the last three years.”

Accordingly, Jaitley’s budget speech on employment generation did not rely on the Labour Bureau data, but on this “independent study”. He said that “during last three years, we have taken a number of steps to boost employment generation in the country” and that “these measures have started showing results”, followed by the claim of “70 lakh formal jobs” creation in FY-18.

How far this study was “independent” as claimed by the finance minister? The Business Standard broke the story on February 16 stating that on October 29, 2017 the PMO directed NITI Aayog to give ‘“quick indicators for direct or indirect reflections on employment data” to be able to arrive at “desired trends in employment at the earliest”.

As directed by the PMO to prepare the report for the period FY-18 on the basis of Employees’ Provident Fund (EPF) subscribers’ data, NITI Aayog asked the Employees Provident Fund Organisation (EPFO) to provide EPF subscribers’ data for the specific period of April-October 2017. Accordingly, EPFO provided 8.7 crore of encrypted data of EPF subscribers from its national data centre at Hyderabad to NITI Aayog. NITI Aayog then provided these data to Pulak Ghosh of Indian Institute of Management (IIM), Bangalore and State Bank of India (SBI) Chief Economist Soumya Kanti Ghosh for preparing the report, as desired by the PMO, sitting in the office of NITI Aayog in New Delhi.

Even the time table was prepared by the PMO for this so-called independent study. The PMO directed NITI Aayog on October 29, 2017 to prepare this “independent study” mainly based on EPFO data; NITI Aayog, accordingly, wrote to EPFO on November 2; EPFO provided the data to NITI Aayog on November 4 and 27. Pulak Ghosh and Soumya Kanti Ghosh were brought to Delhi and were seated in the office of NITI Aayog in New Delhi to prepare their “independent study” report. They then made their presentation to the PMO on January 12, 2018 and the report was approved by the PMO; the report was then published on January 16. The prime minister quoted the study report on January 20 in a specially televised interview and finally, the finance minister made his budget speech on 1 February, 2018 claiming creation of 70 lakh formal jobs in FY-18.  

This “independent study” was published as “A Study by Indian Institute of Management, Bangalore & State Bank of India”. As desired by the PMO, the report’s authors said “surveys to measure employment in india is mostly misleading” and that Labour Bureau “survey has many limitations”.

Jaitley’s Misleading Statement

This report concluded, “Based on all estimates, payroll of 5.9 lakh (ie, 7 million annual) generated every month in India in current fiscal”. As per this report, in FY-18, total 70.4 lakh payroll enrolment include 55.2 lakh EPF subscribers in 190 industries employing 20 plus persons in an establishment; 8.8 lakh presumed non-EPF ESIC IPs (insured persons) in 65 industries employing 10 plus persons in an establishment; and 6.4 lakh NPS subscribers of central and state governments together joining 2004 onward. For ESIC category, Ghosh and Ghosh made 50 per cent ‘haircut’ (in their own language in the report) to exclude those who are covered by both EPF and ESIC in establishments employing 20 plus persons. They admitted that it could be further high or low. The report categorised this EPF-ESIC-NPS section as ‘organised’ or ‘formal’ sector. This ‘formal’ sector includes both permanent and vast number of contract employees.

The finance minister, in his budget speech, used this “independent study” conveniently replacing ‘formal sector’ by ‘formal jobs’ (permanent jobs) and ‘payroll generation’ by ‘job creation’.

The report is misleading in its conclusion. They ignored the fact that overwhelming majority of ‘payroll enrolment’ was of ‘replacement employment’ due to high attrition rate in organised sector including IT and ITES industries and ‘natural wastage’ of employment.  However, the authors never claimed ‘generation of employment’. What they concluded was the ‘generation of payroll’ as reflected in EPF, NPS and ESIC data.

Unauthorised Decoding of Personal Data

Amidst a raging debate over decoding and misuse of encrypted data of Aadhaar, Facebook, etc., the question arises as to how the personal data of EPF subscribers was handed over to unauthorised persons. It was not by hacking, but by willful act of the holders of the data.

Even EPFO was kept in the dark by NITI Aayog about the purpose of asking for the huge volume of encrypted data of 8.7 crore EPS subscribers including the employees’ names, dates of birth, permanent account numbers, PF and industry names etc. EPFO placed the entire database on a file server and provided a URL that could be accessed from anywhere by anyone who had the link to the server. After, Ghose and Ghose used the EPF subscribers’ data; the URL however, was removed.

The EPFO was established by a special Act of the Parliament. EPFO has tripartite Central Board of Trustees (CBT) as its core. When CITU representative in the CBT and its national vice president A K Padmanabhan in the CBT meeting held on 21 February, 2018, asked as to how EPFO data was released to private researchers, the chairman of CBT and the union labour minister had no answer. He only said that it could be discussed later.