On the economic front, things in India are not looking right. The GDP decline to 5.7 per cent in the erstwhile 'fastest growing economy in the world' is just one of the things that seem to be going wrong. Demonetisation was definitely a game spoiler because it caught the poor and even the middle classes unawares. Those who live from hand to mouth with their meagre cash earnings on a daily basis suddenly found no cash in hand. The poor, engaged in petty trading, had to wind up their business and return to their villages. The shock waves to the economy are now being reflected in the lower GDP growth. Even if we do not want to consider the state of the economy only in terms of GDP growth and take general wellbeing as an indicator, something is missing today which one may call the 'feel good factor.' There is a sense of insecurity among college graduates getting jobs and those with jobs about losing them in a shrinking business environment. The pink slip is becoming more common in India today.

One of the motives behind demonetisation was Modi's dream of Digital India. Just because India's service sector has made a mark globally does not mean that ICT has become a household word. When our literacy rate is lower than all the members of the BRICS and the quality of education has been proclaimed by experts to be very low, how can one expect the ordinary Indian to be familiar with digitalised transactions? The internet penetration is much lower than in China and ASEAN. Thus it will take a long time for poorer small scale business operators especially in the handloom and handicraft or small scale retail sector to master the GST and do all the paperwork needed. In the meantime, this will be reflected in the output which will show a decline.

When our literacy rate is lower than all the members of the BRICS and the quality of education has been proclaimed by experts to be very low, how can one expect the ordinary Indian to be familiar with digitalised transactions?

Modi's dream of converting informal sector jobs into formal sector jobs will also take a long time simply because there are not many jobs being created in the formal or organised sector. It is easier for a factory worker who has lost his job or an unemployed youth to start a small business but it will, from now on, be harder to enter and run small businesses because of all the digitalised paper work involved in the GST.

So, first look after the education and skill training of the people so that they can move on in their career path. Recently, there was an article in The New York Times contrasting the lives of two janitors in two time periods, 35 years apart. One who worked in Kodak in the 1980s in Rochester and the other working as a janitor in Apple, Silicon Valley in present times. The story is alarming because today there is little chance of progress in the job whereas in the past, the janitor could get skill training and moved on to be a chief technology officer.  She had more free time and holidays also. Today, jobs are through contracts just like in India and a third party to whom jobs are outsourced pays the employees. Jobs are lost with little notice being given and no welfare benefits are credited to the employee as the idea is to minimise the company's costs. It is continuous technology upgrade to keep costs lean which is leading to job losses in the US. In India also, technology upgrade is important to remain competitive and most companies are undertaking it and employing less people. Instead, machines and computers are doing their job. Diversifying skills is important in such a scenario.

Hence jobs will remain the crux of the problem in the Modi government and the dreams of many youth even after investing heavily in higher education may be shattered. Manufacturing growth holds the key but as is well known, there is stagnation in new investment and entrepreneurs are not able to cope with excess capacity and are waiting for demand to pick up. Unfortunately, demand is unlikely to pick up when there are so many problems facing the economy.

Jobs will remain the crux of the problem in the Modi government and the dreams of many youth even after investing heavily in higher education may be shattered.

Manufacturing growth is related to export growth. After a period of slack export growth, there was a spurt in its growth rate in April 2017, but again in July and August, export growth has slumped to 3.9 per cent. It may not pick up smoothly in the near future partly because of the way the world is moving towards protectionism and because India is facing competition in foreign markets from China and the ASEAN countries. Also due to change in the pattern of global demand, India's important export of diamonds is suffering. There is pile up of cut and polished diamonds simply because Millennials (born in 2000 or later) have different tastes and are not into diamonds. Regarding merchandise exports, India's top export destinations — US and EU — have become protectionists with many nontariff barriers.

Indian goods have to be in the 'global value chain', according to experts, in order to survive competition, but there is a major problem in India because of the nature of production. Many goods in India are produced in the medium and small enterprises and have poor quality control because the labour involved in production is often irregular due to ill health, is less well trained, or less educated and disciplined than in India's competitor countries. It is thus very difficult for India to enter the global value chain though it has done so in automotive parts and in few other items. It basically requires quality checks at every production stage which could be lacking in India.

Export-led growth requires excellent infrastructure and a smooth flow of goods. Unable to enter global value chain in a big way, we are selling to China, Korea, Japan and ASEAN mostly raw materials, comprising animal feed, aluminium, iron, slag ash etc., which are bulky but low value products. We have to improve the quality of products of exports in order to become reliable sources of imports to sustain high export growth and create jobs.

• Indian Economy
• Economic Reforms
• India
• Digital India
• JOBS

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