Strategies for Full Employment in India Uncommon Opportunities: Roadmap for Employment, Food & Global Security November 21, 2004 International Center for Peace & Development, USA The Mother’s Service Society, Pondicherry

Unemployment 1993-94 20M 1999-00 27M Twice as high for lower consumption classes On daily basis 35M Youth Unemployment 13% Kerala 35%

Natural Employment Generation New entrants to labour force ` 7-8M/yr Urban migration 1M/yr Agriculture employment is flat Less growth in unemployment -1M/yr Natural job generation 7-8M/yr The absence of social unrest and the fact that urban migration continues and urban unemployment does not rise enormously indicate the surpluses are being absorbed. This is unorganized, unconscious process akin to education without schools Make the unconscious process CONSCIOUS 200 M * .07/20 =

How society stimulates employment New products New services Growth in demand Technological innovation Higher quality &/or productivity Organizational innovation Higher skills Better access to information Increased speed Legislation & law enforcement Administrative responsiveness Environment/health consciousness Change of attitudes

Three Approaches to Employment Generation Expand existing activities Nursery schools, tutorial institutes, English teaching Borrow from other countries Credit rating & collection agencies Trade shows & network marketing Health clinics Promote culturally compatible activities STD & chit funds Marriage halls Mini-power plants Rural information centres Contract farming agencies

Available Modes of Action Increase access to credit Provide incentives for new initiatives Strengthen or enforce legislation Impart training Use insurance as a stimulus Publicize opportunities in the media

Where are the untapped potentials Raise farm productivity Renewable energy Agro-industrial linkages Service sector Employable skills Application of IT

Prosperity 2000 Strategy Agriculture as engine for industrialization & employment growth Shift focus from meeting minimum production needs to maximumizing profit per unit land & water Projecting market growth based on nutritional requirements Raise productivity of soil & water Shift to commercial crops which absorb more labour Develop industry linkages with industries Create 4.5 million direct & 5.5 million indirect employment opportunities per annum

India’s Crop Productivity Gap (kg/ha) USA China India Maize 8900 4900 2100 Paddy 7500 6000 3000 Soy beans 2250 1740 1050 Seed Cotton 2060 3500 750 Tomato 6250 2400 1430

Low farm productivity results in High unit cost of production High priced food Low farm incomes & purchasing power Low labour absorption High water consumption/unit of produce Limited export potential & threat from imports (e.g. cotton)

Technology Strategies Raise crop yields Raise water productivity Improve post-harvest storage & transport Expand & upgrade processing industries Raising productivity can create millions of on-farm and off-farm employment opportunities.

Horticulture Labour content 6 times cereals Generates 10-30 times earning / unit area Filling India’s nutritional gap requires 40% growth Add 4M ha horticulture to raise production 40% Generate 8 million jobs P2000 -- Raising horticulture production by 14MT fruit and 49MT veg requires 2M ha Actually India raised fruit by 17MT (total 46MT) and veg 32 MT (total 82MT) by adding 3M ha (total 10M ha) Market potential NABARD is for 100 MT fruit (=+55MT) and 220 MT veg (+138MT) by 2020 Raising production to meet min nutritional requirement, i.e. 40% would require 4M ha

Food Processing Improve storage & processing to reduce Rs 70,000 crores in crop losses Global share of processed food exports is rising India processes only 2% fruits & vegetables vs. Thailand 30%, Brazil 70%, Philippines & Malaysia 78-80%) India projected to process 10% fruit & veg by 2010 Industry directly employs 1.6M

Power Demand to Triple by 2020

Oil Demand to Triple by 2020

Cotton & Textile Industry India is 3rd largest producer of cotton Domestic demand projected to grow 70% by 2010 Export demand projected to triple by 2010 Double productivity of cotton Double area under irrigated cotton 12 million additional jobs in textile industry

Forestry, Herbs, Medicinal Plants 100 M rely on forests for main source of livelihood, including half of India’s 70M tribals Objective to raise forest cover 50% in 10 ys Introduce corporate contract farming with bonded performance guarantees & assured employment for local population

Fisheries World seafood market doubled in the 1990s India’s marine & inland fisheries employ 6M 1/3rd of India’s marine fishery potential untapped China full-time employment in rural aquaculture 1989 – 1.5M 1997 – 3.3M Shrimp farming -- 4 direct & 4 indirect jobs per ha 1999 – 161,000 ha generates employment for 1.3M Additional 120,000 ha would create 1M jobs

Dairy Rs 100,000 crores by 2005 India is largest and lowest cost producer 70M dairy farmers Cooperatives provide employment for 11M families Potential for 42M jobs

Employment Potential -- summary Crop productivity growth 5,000,000 Horticulure 8,000,000 Biomass power & bio-fuels 21,000,000 Agro-forestry 6,000,000 Cotton & Textiles 12,000,000 Dairy, animal husbandry, fisheries Total 60,000,000

Organization for Rural Prosperity Self Help Groups Contract Farming Rural Information Centers Farm Schools

Self Help Groups 1 million created in 3 years 15 million members benefit 90%+ repayment of loans Mostly for non-farm activities Commodity-wise SHGs for agriculture Appachi Foundation & ICICI – 60 SHGs for cotton growers in Tamil Nadu

Contract Farming Successful Indian model -- sugar mills Organize SHGs of farmers Role of the Contractor Provide quality inputs Arrange credit with banks Arrange crop insurance Deliver extension services Tie-up market with industry Operate farm schools

Farm Schools cum Extension Objective: double farm yields in 3 years Lead farmers act as paid field training & extension staff for the contractor Lead farmers run Farm Schools on village lands Demonstrate methods on farmers’ lands Train farmers & disseminates information Operate or link to Village Information Centre Link to soil test labs Link to agro-service centres

Rural IT Knowledge Centres Mission 2007 – 500,000 village centres Can create 5 jobs per centre Can charge for services Soil analysis -- expert system for advice Multi-media farm training Input supply information Market information Educational information Health information E-government services Other vocational training

Ag Enterprises -- Policy Issues On-farm training system Enforce sanctity of contracts Expand access to credit through SHGs with group guarantees & post-dated checks, including present defaulters. Extend powers of Revenue Recovery Act to ensure repayment by SHGs. Tax credits for contractors who raise farm productivity Strengthen crop insurance program Penalties for false documentation by officials Penalties for adulteration of ag inputs Railways to provide refrigerated storage & transport

Service Sector USA: provides 80% of jobs India: High potential fields Grew by 60M jobs in 18 yrs Rose from 25% to 32% of total employment High potential fields Tourism Transport, storage, communication Education Health care Financial services Internet-based activities

Internet-based Self-Employment Desktop publishing Web design Web research E-books Translation Technical writing Engineering & technical services Opportunities from Rs 5000 to 1 lakh per month

Vocational Skills 50% of firms in developing and industrialized countries report severe shortage of skilled workers. India’s problem is not lack of employment opportunities but lack of employable skills. Skills create employment and self-employment opportunities.

Vocational Skills Gap Only 5% of India’s workforce (20-24 years) have vocational training compared with 28% in Mexico and 96% in Korea. By 2010 major labour shortages will emerge in the industrialized nations forcing movement of both manufacturing & service jobs to wherever the skills are best. Upgrading skills essential to tap global markets

Vocational Training in India 4200 ITIs 1,654 government run 2,620 private Courses offered 43 engineering & 24 non-engineering trades Capacity – 6.3 lakhs State enterprise programmes – 1.7 lakh Including agriculture & other – 20 lakh

Vocational Training Deficit Students completing 8th-9th standard 300 lakhs Students entering 10th-11th 150 lakhs New entrants to workforce (per year) 70 lakhs Vocational training in engineering, agriculture & other fields 20 lakhs New entrants to workforce w/o training 50 lakhs Existing unemployed youth (15-29) of which 80% are educated up to 10th Existing workers to be trained to raise non-ag skilled portion to 25% 350 lakhs

Three Models Farm Schools in every revenue village Vocational Schools Computerized & Televised Vocational Training

Vocational Schools Promote vocational institutes at block and district level 5000 govt 50,000 private Conduct exams for every skill as for drivers licenses Certify approved training centres, e.g. BPO Provide scholarships & incentives for trainees

Computer-based learning is twice as fast @ half the cost Multimedia Interactive Immediate Feedback Self-paced learning Eliminates need for trained teachers Responds rapidly to changing skill needs Uniform testing

Computerized Vocational Training Establish 1 lakh CVT Institutes like internet cafes 50,000 in private sector 50,000 training centres at engineering and arts colleges, ITIs, polytechs, high schools, NGOs, etc. Partnership with industry to develop multimedia training software Provide training to a minumum of 4 million students per annum Government certification of courses Generate self-employment opportunities for 50,000 entrepreneurs

Multimedia vocational courses RWH Child care Nutritionist Selling skills Real estate Law clerk Telemarketing Insurance agent Quality manager Catering Video editing Furniture design Farm mgmt Pharma rep Textile design Reporter Dry cleaning Electrical repair Travel agent Internet research Graphic design Bookkeeper Organic farming Interior design

CVT Job Shops Privately owned, self-employment Each centre with 1 to 10 computers Stocked with a library of training software Training material on CD-Rom format Fees based on an hourly rate

CVT Job Shop: Assumptions Three computers per Job Shop 20 training programmes per Job Shop Each computer utilized 300 hours per mo Operating expenses for rent, two paid employees, phone, electricity may range from Rs 15,000 to 20,000 per month

CVT Job Shop: Economics Capital investment Rs 1.5 lakh. Cost of operations per computer hour = Rs 20 / hour. Cost of amortising of computers and software over two years = Rs 14 per hour Average cost of training = Rs 35 per hour Average retail price of training = Rs 50 per hour Net profit = Rs 15 per hour or Rs 1.5 lakhs / yr 50 hours of computerized vocational training, equivalent to about 250 hours of classroom training, would cost the student only Rs 2500.

Training Software: Economics Cost Rs 50 lakhs per course Retail price Rs 1000 per set Sale of 10,000 sets generates Rs 50 lakhs profit Offer 50% government subsidy for development of approved courses

CVT Action Plan Delivery CVT through all state-owned engineering colleges, ITIs, Polytechnics, liberal arts colleges, high schools, other institutions. Provide financial assistance/ incentives under Central Government self-employment schemes to promote private training institutes. Encourage financial institutions to provide loans to entrepreneurs. Negotiate with computer software companies to develop a wide range of vocational training courses. Recognized institutional authorities to certify course contents. Finance bulk purchase of approved training software with 50% subsidy to minimize the cost of training. Train entrepreneurs to set up/manage private institutes. Provide scholarships to low income youth to cover training fees.

IT Incubator Business Parks Computerised vocation training Computerised tuitions institutes Computerised language training Software training Video-conferencing services High speed data transfer services Web, graphic and animation design services Computer repair and maintenance services International Internet telephony Computer hardware parts manufacturing and assembly Customer and technical support call centres Back office processing Medical transcription Digital photography, scanning and image processing Internet research services Accounting services Computerized testing laboratories

Who creates enterprises? Skilled experienced workers leaving existing jobs create enterprises Machinists taxi drivers hotel servers bus cleaners Printers tailors Do entrepreneurial training programmes work?

Promoting Entrepreneurship Extend bank credit & seed capital to employees with 5 years experience Require training & certification for new enterprises to reduce failure rate Existing entrepreneur to sign as guarantor Insurance companies can ensure loans based on qualifications

Issues for Study Natural job creation Occupational demand How many jobs are being created? In which sectors & fields? By what process? How can the natural process be magnified and accelerated? How are rural migrants absorbed in the cities? Occupational demand Identify high growth occupational categories at all levels Measure growth in pay/income levels by category Emerging Activities Identify emerging occupations in all sectors, Farm managers & Soil technicians Servicing for cell phones, ACs, computers, VCDs, etc. Home delivery, floor cleaner, masseuse Skills for national development Compile a complete list of skills needed for India’s development to next higher level Job creation in other countries Study which job categories grew rapidly in US during a comparable period? Efficacy of Entrepreneurial Development Programmes