Multiple reports have found India's unemployment problem is deepening.
Highlights
- Report by industry body CII found surge in small business job creation
- Report extrapolates findings from just one sector, survey in few states
- Report contradicts others which claim high unemployment, shrinking sector
Amid a swirling debate over unemployment in India ahead of general elections next month, a recently released survey by top industry body, the Confederation of Indian Industry (CII), which reported a surge in job creation in India's small businesses, found favour with the government.
A number of ministers - from Railways Minister Piyush Goyal to Information Minister Rajyavardhan Singh Rathore tweeted the findings of the report, which found that job creation in the micro, small and medium enterprises (MSME) sector had grown by 14 per cent from 2014-18, the first 4 years of the Modi government.
The finding startled observers, given the mass of data, official and private, which suggested a deepening of India's unemployment problem, as well as a slowdown of the small businesses sector.
An analysis of the CII report throws up a number of questions over its findings and methodology.
The CII admits that its sample for the survey, of one lakh firms, is heavily skewed towards India's more advanced states like Maharashtra, Gujarat and Karnataka. The number of firms polled in these states amount, respectively, to 25 per cent, 12 per cent and 8 per cent of the total survey. The basis for greater 'bias' to these states, according to the survey, is because of higher employee provident fund enrolments in these states.
But government data shows that the share of MSME's in these three states is far less, at 8 per cent, 6 per cent and 5 per cent respectively, much lower than states such as Uttar Pradesh and West Bengal.
The CII report found that between 2014 and 2018, job creation grew at 3.3 per cent annually in the MSME sector.
However the government's own data from the ministry of MSME, shows that between 2006 and 2016, the annual growth rate of employment in the MSME sector was 3.6 per cent, a touch higher than the CII's number.
Eight of those 10 years predate the Modi government.
The survey has also invited criticism for projecting the total job growth in the country using its study of the MSME sector.
According to the CII study, the total workforce in the country is 450 million. "A simple extrapolation of the findings from the survey (of 3.3 per cent job growth in MSMEs) on macro-level data indicates that 13.5 - 14.9 million (1.3 -1.5 crore) jobs were created per annum," the survey states.
This is flawed reasoning, argue experts, given that every sector grows at a different pace. For instance, the annual job growth in the manufacturing sector was 1 per cent while, in the construction sector was -3 per cent between October 2016 and 2017.
The correct method would have been to project job creation on the basis of the size of the workforce employed by the MSME sector alone, which is 110 million (according to government data), not 450 million.
Attempts to seek a response from CII were unsuccessful.
"CII is a pretty well established organisation and I think it is important that its credibility is not damaged too much. Anyone who does a survey would very easily indicate that there are many problems in this," Mahesh Vyas, MD and CEO of the Centre for Monitoring Indian Economy told NDTV.