|
| Subir Gokarn: Life-cycle inclusion | | Demographics will compel new govt to take a multi-dimensional view of inclusive growth |
| Subir Gokarn / New Delhi Jun 01, 2009, 02:36 IST |
|
Emerging demographics will compel the new government to take a multi-dimensional view of inclusive growth, says SUBIR GOKARN
According to the UN Population Projections made in 2006, India will have a total population of 1.22 billion in 2010. Of this, 748 million will be in the age group of 15-59, which reflects the size of the labour force. Within the labour force, 338 million people, or about 45 per cent, will be in the age group of 15-29. By 2015, the population will have grown to 1.3 billion, the working age group to 811 million and, within this, the 15-29 segment will increase to 356 million, which will make it a slightly smaller 44 per cent of the overall labour force. In short, over the next five years, the economy will add about 63 million more workers, out of which 18 million will be in the age group of 15-29.
One important characteristic in the recently concluded general elections was the significance of first-time voters, those in the age group of 18-22. It was estimated to be about 34 million, not a very large proportion of the overall electorate, but certainly an influence on outcomes as well as a portent of things to come. It is not the size of this narrow age group per se that will determine the outcome of, certainly, the 2014 elections and very likely the two or three to follow. The constituency that is emerging and whose priorities and aspirations will have to be addressed by a ruling coalition seeking re-election as well as an opposition seeking to displace it is perhaps better reflected by the number of adults below the age of 30.
I would like to propose a set of broad hypotheses about the factors that will influence the voting behaviour of this group, which are of course subject to verification. First, they will be increasingly motivated by life-cycle considerations — earning and saving opportunities over their working life as well as issues like educational opportunities for their children and so on. Second, tangible and broad-based economic gains will be a unifying political force, offsetting to an extent the many drivers of division and fragmentation, which of course will never quite disappear. Third, the collective memory of this cohort is extremely short; voting patterns will be predominantly determined by the success or failure of the incumbent on tangible life-cycle indicators and, importantly, the credibility of the opposition in terms of doing better.
From this perspective and assuming for the moment that the hypotheses are valid, the new government begins with some significant advantages but also has to deal with some heightened risks. The most important advantage comes from the fact that its “inclusive growth” agenda already resonates with this emerging constituency without in any way causing conflicts with any other. The most significant threat comes from the fact that “inclusiveness” itself will be perceived and evaluated in terms of the life-cycle framework. A government that succeeds on one dimension of the life-cycle objectives may neutralise the benefits of this by failure to deliver on other dimensions.
The first priority in a strategy for life-cycle inclusiveness is, of course, massive increases in employment. And, this cannot be employment that simply ensures day-to-day subsistence. It must offer, over a reasonable time horizon, the prospects for steady increases in incomes and the accumulation of surpluses. A critical question that arises here is whether the rapid growth phase during 2003-08 did succeed in significantly accelerating the generation of jobs that meet these criteria. Official data would suggest that it did not, but these are too dated (the last large sample household employment survey was done in 2004-05) to provide a reliable picture.
Anecdotal evidence is much more sanguine; the range and variety of new occupations that have sprung up as the economy has diversified during this period is quite astounding. That these have apparently become accessible to an increasingly wider set of young people, whether from smaller towns or rural areas, is also re-assuring. The question is: do the numbers add up? Or, notwithstanding the benefits, is there simply too much of a backlog of inadequately employed and, therefore, excluded people? If this is indeed the case, the government must find ways to sharply accelerate the creation of jobs that satisfy the life-cycle conditions. Business as usual will simply not do.
Another dimension of inclusiveness is enablement, both now and in the future. This is one area in which the record of the past decade and more has been abysmal. The capacity of the educational system, whether public or private, subsidised or commercial, regulated or unregulated, has just not kept pace with the requirement. On top of this are the issues of appropriateness and quality — “value for money” — of the education that is being provided. For 18- or 20-year-olds entering the workforce, considerations based on their own level of enablement as well as the opportunities available to their children will be equally important in evaluating the performance of the government.
A third dimension of this approach is risk mitigation. One reason for the UPA’s re-election appears to have been the appeal of the National Rural Employment Guarantee Scheme. Despite limited coverage and inefficient implementation, the emergence of a reliable safety net that could mean the difference between, literally, life and death constituted a huge leap forward for inclusion. The message from this is both to streamline it and expand its coverage, so that even people who are on an upward income trajectory can protect themselves from the impact of economic instability. One very concrete intersection between enablement and risk mitigation is reflected in the many reported instances of parents who had to take their kids out of private schools because they could not afford to pay the fees. The impact of recession is clearly not limited to the current generation alone.
The basic message is that inclusive growth is an agenda that potentially aligns an economic development strategy with political success. But in India’s current demographic context, the strategy has to go beyond narrow definitions of inclusion and show balanced progress across a number of complementary dimensions, which reflect the forward-looking, life-cycle perspective of the increasing number of young voters. Even if the time horizons for success on some of the dimensions are long, concrete, pragmatic efforts and signs of progress must become visible over the electoral cycle. For this government, the next five years will be like an exam with many subjects in which it will have to achieve a passing grade in all.
The author is Chief Economist, Standard & Poor’s Asia-Pacific. Views are personal.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
