The dramatic downturn in job creation in the IT sector is probably just an indication of the major problem that India is likely to face in the coming years — the problem of jobless economic growth. It is a growth where corporate bottom lines and government revenue will grow, but the rate of growth in jobs, both for the skilled and unskilled labour, will be far lower as compared to previous years. This change will not be due to an economic slowdown but due to the replacement of humans by robots in the manufacturing sector and bots in the services sector and adding to them would be an increase in the use of artificial intelligence. This is already visible in some of the sectors which, till know, were considered immune to such developments. For instance, in some private banks, there are robots or humanoids which assist in meeting regular banking queries of walking customers. Some banks are on record to say that once these humanoids are tested in some branches, they would not only be used for more regular banking operations but also for expansion of banking operations in rural areas. Which means that new branches of banks, the opening of which is likely to be impacted by the rise in digital transactions, will face a new threat. In the last eight years, banking is one area which has absorbed a large number of people. If it is under stress, imagine the job prospects for the manufacturing sector where automation has a proven track record. In the US, some of the new automobile factories, human labour takes care of just 19 per cent of the work, everything else is being done by machines. Sooner rather than later this will happen in India and impact sectors like textile and garments manufacture, which are today job providers in large numbers. Our policymakers need to take a fresh look at the emerging trends and make them relevant taking into account technological changes, otherwise the very demographic dividend, which is often referred to as India’s big strength, will fritter away. Of course, the government cannot have policies which discourage improvement and higher productivity, so, in a way, it will be beyond the government to stop this disruption. Solutions could lie in looking at the complex issue from two angles. First, the government will need to create a projection of the kind of disruption in term of numbers the job market might see due to technological changes. The government will have to think on how to boost consumption. When consumption is boosted, companies will have to increase capacity, when they increase capacity, more jobs will be created and that will lead to a further rise in demand. So, a cycle which starts the other way round, will have to be set in motion. In many countries this model has been tried and given reasonably good results. The question is: how to boost consumption when jobs are under threat. The answer to this lies in bringing down the prices of goods and services and keeping them down for a longer period of time to boost consumption. Some sectors in India have probably the highest margins when compared with their global peers. Auto, cement and banking top the list. Net margins and return on investment of the majority of Indian companies belonging to these sectors are higher by anywhere between 50 to 75 per cent when compared to their global peers. These high margins are partially due to the fact that these companies do not have to face much competition. So, there is scope for increase in competition which would force them to bring down prices. Look at what happened in the FMCG sector. Huge competition and prices have remained lower and stable for a long period of time and have today reached every corner of country. The second part of the solution would be making resources available for making manufacturing attractive enough for both national and international companies to expand. This means that the cost of land, which today comprises the major part of setting up a manufacturing unit, should be on the lower side. The solution would be to build new industrial townships and sell land at reasonable prices so that large global companies are able to shift their manufacturing hubs and create job opportunities.
The government has to bend backwards to tackle the growing jobless menace