The Issue Is Not About India’s GDP, But Its JDP

GS Paper III Indian Economy

Context:

The recent discourse among India’s political leaders primarily centers around GDP growth rates.

However, it’s crucial to question whether high GDP figures truly translate into economic prosperity for all.

Concerning Points:

According to an analysis based on data from the Reserve Bank of India (RBI):

In the 1980s, each percentage point of GDP growth in India created 200,000 formal jobs.
However, this figure halved to 100,000 jobs per percentage point of GDP growth in the 1990s.
This trend of declining job creation continued in subsequent decades.
Factors contributing to this decline: Poor quality of GDP growth, rapid productivity growth, and extensive automation.

Job Demand vs. GDP Growth: Despite India’s impressive GDP growth, there’s a concerning rise in the demand for minimum wage work under schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
- India’s real GDP has grown 5.3% (annualised), but demand for MGNREGA work also grew at 5.4% every year.
- This paradox suggests a disconnect between GDP growth and job creation.
Quality of Jobs and Social Divides: Approximately 75% of the formal service sector jobs resulting from GDP growth are held by individuals from higher castes. In contrast, 80% of MGNREGA workers belong to oppressed castes, including Dalits, tribals, and backward castes.
Semiconductor Manufacturing Hype: Focus on job creation rather than chasing high GDP growth. For instance, India’s semiconductor manufacturing venture, while strategically important, offers limited job prospects due to automation.
- Traditional industries like automobile, steel, and cement also create fewer low-skilled jobs due to automation, despite contributing to GDP.

India’s New Mines and Minerals Bill – A Potential Economic Boost:

India’s new Mines and Minerals (Development and Regulation) Amendment Bill, 2023 (MMA Bill), if well-implemented, can significantly benefit India’s economy.
Key to Electric Mobility Transition: Minerals like lithium, cobalt, and rare earths are crucial for electric mobility.
- China’s dominance in this supply chain poses challenges due to its aggressive geo-economic strategies.
Untapped Mineral Potential: India’s topography offers similar mineral deposits as Afghanistan and Western Australia.
- However, India has explored only a fraction of its mineral potential.
- India’s exploration of untapped mining potential offers a path to inclusive economic development and strategic global influence, but careful evaluation is crucial.
The MMA Bill’s Potential: It seeks to involve the private sector in exploring strategic minerals, including lithium.
- Mining can generate local, low-skilled jobs and promote social inclusivity, benefiting marginalized castes.

Conclusion

While GDP growth remains a convenient measure for economists, political leaders must ensure that economic growth translates into tangible benefits for the people.
Shifting the narrative from GDP to JDP (Jobs Data Product) can lead to more inclusive and socially beneficial economic development.

News Source: The Hindu