Powder keg: Jobless youth can spell trouble for both the economy and society

It all started as a fairly routine event: 50 young Bihari students show up at Maligaon, Assam, for a Northeast Frontier Railway exam that would have fetched them Group D (that is, gangmen's) job. A local mob not just stops them from taking the exam, but beats them up black and blue. Their grouse was straightforward: In a state that's creating few jobs, the Biharis were interlopers, stealing precious railway jobs, even as the Assamese were denied similar opportunities in Bihar.

The reaction back in Bihar to the beating up of job aspirants was swift and severe. On November 12, three days after the incident in Assam, a group of armed men stopped the 4024 down Mahananda Express and the 4055 down Brahmaputra Mail at Jamalpur and Munger stations, and attacked Assamese passengers. In fact, even Nagas, Mizos, Khasis, and Bengalis of Assam on other trains passing through Bihar were not spared. And when Maharashtra's Shiv Sainiks joined the local-jobs-for-local-people movement by chasing away railway candidates, mostly Biharis, that arrived by the train-loads, the Railway Ministry was forced to postpone the recruitment for Group D Posts.

Fortunately, the violence did not spread. But that's no guarantee against a future flare up. In a poor and overpopulated country like India, jobs have always been a sensitive issue (remember the Mandal agitation of 1990?). But things may be coming to a head. For example, a staggering 55 lakh people-many of them graduates and post-graduates-had applied for a mere 20,000 group D jobs, which involve working as gangmen (people who monitor the track), gatemen and khalasis (people who shove coal into the engine) for a paltry Rs 5,000 a month. Many believe that this is symptomatic of a much deeper malaise that afflicts the Indian economy-the bane of jobless growth.

It is hard to disagree with them. With the government disengaging itself from business, jobs in the public sector have been drying up year after year. From 195.59 lakh in 1997, the figure has dropped to 191.38 lakh. That puts the onus of creating new jobs on the private sector, which, however, after four years of employment growth between 1995 and 1998, has either slashed jobs or frozen recruitment in its bid to improve productivity and efficiency. As a result, private sector employment figures were down to 86.5 lakh in 2001 (the latest year for which Economic Survey figures are available) from 87.5 lakh in 1998.

Queuing up: All for a job—any job

Ominously, the Ninth Plan document of the Planning Commission points out that a steady 7 per cent growth in GDP would be required to accommodate the 53 million people who entered the job market between 1997 and 2002. In any case, only 9 per cent of the workforce is in the organised sectors. The rest must make their own opportunities in a variety of odd-jobs.

So what explains the lack of job creation in the face of a growing economy? Arvind Virmani, an economist at (Indian Council for Research on International Economic Relations (ICRIER) believes the reason is the virtual halt in industrial investment post-1997, until when liberalisation triggered a capacity boom in a range of industries. "From 1996-97, there has been a virtual famine in the country as far as industrialisation is concerned," says Virmani.

Industrialists like Onkar S. Kanwar of Apollo Tyres blame the government for not incentivising greenfield investment. In particular, he blames high taxation, reservation of industries for small-scale units, inflexible labour policies, bureaucratic red tape, nebulous guidelines on foreign direct investment, and inadequate promotion of infrastructure. "Unless new, large projects come up, there is little chance of the unemployment rate coming down," says Kanwar. And there were 18.7 million registered unemployed people in 2001.

What has compounded the problem is the lack of any retraining programme for displaced workers. Besides creating a peculiar situation where industries are scrambling to fill skilled jobs even as joblessness grows, it has kept a large part of the population from taking advantage of the services boom, which has spawned a lot of white-collar jobs, mainly in urban India. For example, the BPO industry alone has created 2 lakh jobs and could create 300 lakh more by 2020.

Fortunately, manufacturing is picking up thanks to both the domestic and export markets. But agriculture and related industries, which have the potential to employ millions more, continue to perform well below capacity. And to keep the services engine humming, the country will have to churn out skilled workers in ever larger numbers. However, jobs will not happen by accident, but by design.

-Ashish Gupta

"Bilateralism Isn't Best"

Christopher Patten has never failed to speak his mind; be it as Hong Kong's last Governor-General, or now as External Relations Commissioner of the European Union. In India to attend the fourth India-EU Business Summit, Patten, 59, spoke to BT's Ashish Gupta on international trade. Excerpts:

Given the repeated failure of WTO talks, what do you think is the future of the multilateral trade system?

Let's get one thing very clear. Cancun was a failure for everybody-both for the developed and the developing countries. But the failure means greater loss for the poorer nations since they had more to lose from the failure of multilateralism than the richer ones. Many people told us to discard multilateralism for bilateralism and regional trade associations, but we believe that bilateralism is not the best system. We are committed to making multilateralism a success.

But how fair is the multilateralism system given that agriculture is still hugely subsidised in most European countries?

I believe that it is quite fair. We had mutually decided to substantially reduce our subsidies on agricultural products and also make some concessions on the Singapore issues. After all, negotiations are all about making compromises-about give and take. All that we need to do is to build on our relationship because there is a huge potential there.

You've been a China watcher for many years now. How do you rate India versus China?

Currently, China may be the favourite of global investors and many of them tend to overlook India's many positive achievements. India has a flourishing democracy, rule of law, well-educated people, etc. It is only a matter of time before India's potential is recognised. But we must all recognise the fact that the next decade will be that of India and China.

Booting Up Software Quality
QAI is turning its tech quality consulting into a big export.

N. Mohnot: Tapping into a rich vein

If you can't get Indian software rivals to part with their success secret, who do you turn to? For an increasing number of wannabe software powerhouses like China, Singapore, and Russia, the answer is turning out to be the Quality Assurance of India, a Delhi-based outfit, reputed for its CMM (Capability Maturity Model) consulting. In China, for instance, a clutch of software and telecom companies has signed up QAI; in Russia, leading software firms such as Auriga and Star PB are its clients; the Singapore government recently awarded a global tender for improving quality of e-governance and transaction excellence in all its 28 departments to QAI; and Taiwan's nodal Institute for Information Technology recently bought QAI's proprietary customised framework method to implement CMMI (based on CMM) in a bid to accelerate the country's it industry

That's not all. In February this year, the 30-consultant-strong firm signed a deal with Deloitte Consulting to provide complete CMM services across 22 centres worldwide. CMM is a measure of a software company's process capabilities, with a grade of 1 representing "chaos" and 5, "excellence". India has the most number of CMM5 companies: 48 at last count. Says Navyug Mohnot, Executive Director, QAI: "We help companies attain operational excellence by helping them in a number of areas, including production, people, knowledge, process and change management."

Apparently in a market where hundreds of companies are trying to catch up with the TCS', Infosys' and Wipros of India, CMM consulting is as lucrative as writing software.

-Supriya Shrinate

Murky Mutual Funds
Is an America-like mutual funds scam possible in this country?

For ages, mutual funds have been touted as the safest form of investment for the retail investor. But today millions of Americans are waking up to find that their fund managers have been stiffing them on the sly. Given that mutual funds are pretty popular in India too, is your money at risk? First, a lowdown of what really happened in the American mutual funds business. The biggest fraud perpetrated on the small investors by the funds was "after market hour" deals. The funds allowed a few big customers to buy and sell units after the stockmarkets had closed. Why does it matter? Because it allowed the big customers to act immediately on news that came after the markets closed. The others had to wait until the next day to act. Is something similar happening in India? Yes, but at a smaller level. The industry association has asked its members to put an end to it. "In addition to that we are trying to evolve a uniform cut-off time for all categories of funds," says A.P. Kurian, Chairman, Association of Mutual Funds in India. Take a look at the chart to figure out what went wrong in the US and how much of it is happening in India.

-Narendra Nathan