Debate on Employment Data in India

Employment in India has been a contentious issue, with recent claims by Prime Minister Narendra Modi suggesting that the country created "eight crore new jobs" in the last few years. This claim is based on data from the India-KLEMS database, which shows a rise in the number of workers from 56.6 crore in 2020-21 to 64.3 crore in 2023-24. This increase of 7.8 crore workers has sparked debate, especially given the stagnation or decline in employment-to-population ratios observed in other regions.

What is India-KLEMS?

• The India-KLEMS project, initiated in 2009 and now hosted by the Reserve Bank of India (RBI), measures industry-level "total factor productivity" (TFP).
• TFP gauges the efficiency of combining capital, labor, energy, materials, and services to produce output.
• Employment Data: Employment figures are used as inputs for TFP modeling but are not the primary focus of the database. These figures are sourced from official surveys, not directly collected by the RBI.
• Data Sources:
  • India-KLEMS uses the Worker Population Ratio (WPR) from the Periodic Labour Force Surveys (PLFS) and multiplies it by population projections. However, recent population figures are not officially available due to delays in the decadal Census.
  • Projection Methods: For years up to 2019-20, India-KLEMS relied on population projections from the Economic Survey (ES) of 2021-22, which assumed constant growth rates from 2001-2011. For subsequent years, it used projections from the Ministry of Health & Family Welfare (MoHFW), which are based different demographic models.

Criticisms and Concerns

• Methodological Issues: The projections used by India-KLEMS do not account for recent declines in fertility rates or varying growth rates between rural and urban areas. This likely leads to overestimates of the rural population and, consequently, the number of workers.Using outdated or inaccurate population projections contributes to questionable employment figures.
• Employment Structure and Quality:
  • Worker Population Ratio Trends: PLFS data indicate that the WPR fell from 38.6% in 2011-12 to 34.7% in 2017-18 but rose to 41.1% in 2022-23, largely due to an increase in unpaid self-employment among rural women.
  • Unpaid Work: The rise in rural female WPR is attributed to increased unpaid family labor in agriculture, rather than meaningful paid employment.

SBI Report and Comparison with ASUSE

• The State Bank of India (SBI) reported that the number of workers in the India-KLEMS database aligns with figures from the NSSO’s Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2022-23.
• However, ASUSE only covers unincorporated non-agricultural establishments, excluding sectors like agriculture and government.
• The SBI report’s total of 56.8 crore workers includes estimates from sectors not covered by ASUSE, leading to inflated numbers without solid methodological backing.