Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Thursday, 22 June 2017

How much Capital to create One job ?


   
Some ONE MILLION  ( ten lakh ) youngsters enter the job market , EACH MONTH



How much CAPITAL ( fixed + working ) would be required to give jobs to all of them ?



Following are my guesses to create just ONE JOB in :


·         Pan Beedi shop ( self-employed )………….Rs   1   lakh


·         Tiny grocery shop ( owner operated )…. Rs   3   lakh


·         Barber shop …………………………………………..Rs   5   lakh


·         Pharmacy shop……………………………………… Rs   10  lakh


·         Auto Repair Garage………………………………. Rs   20  lakh


·         Small Factory ( 50 people )………………..   Rs   50  lakh


·         Medium Factory ( 100 people )……………. Rs   75  lakh


·         Large light engineering factory………………Rs  100  lakh ( Rs 1 cr  )


{ Just proposed SAMSUNG factory in UP will invest Rs 5,000 cr and , at full capacity , employ 5,000 people }



·         Machine Tool Manufacturing factory………………….   Rs  2  crore


·         Heavy Engineering factory ( Pressure Vessels )…. Rs  5  crore


·         Service Industry ( based on IT / internet )…………. Rs  50 lakh






It is not difficult to see WHY jobs are not getting created , despite the fact that we have a huge DOMESTIC MARKET to serve 1.3 BILLION people !



It would require a huge amount of CAPITAL to create jobs for 12 million people, each year



On top of that , labour costs ( in organized sector ) are rising very rapidly , prompting the businessmen / industrialists to resort to “ mechanization / automation “



A report in Times of India ( 09 June ) , titled ,

“ India Inc deploys more capital than labour “ ,


provides following information ( source / Annual Survey of Industries / CSO ) :



·         Employment Growth ( 1980-2015 )………………. 1.9 % per annum


·         Capital Growth – CAGR ( 1980-2015 )…………… 14 %



·         No of Employees / factory :

Early 1980s……………  80


2014-15………………..  60





·         Total Capital Employed / Factory :

Early 1980s…………..  Rs 5 lakh


2014 – 15…………….   Rs 10 Crore




·         Unit of Labour :

Early 1980s…………  Rs 10,000 per year

2014 – 15 …………   Rs 157,000 per year




·         In 2009 – 10 :

Cost of a Unit of Labour……………. Rs 1.47 lakh

Cost of a Unit of Capital…………..  Rs 1.32 lakh



·         In 2014 -15 :

#  Cost of a Unit of Labour…………..  Rs 2.54 lakh

Cost of a Unit of Capital……………  Rs 1.46 lakh





Since businesses / industries in large organized sector have to get ever more “ Competitive “ with arrival of Foreign Companies in India , it is not surprising that they are resorting to more and more “ mechanization / automation “ , given the above-mentioned scenario



That means less and less job opportunities !  More and more unemployment  !




IS THERE A WAY OUT ?



May be , if we set aside some “ holy cow “ beliefs and make India , a “ Low Cost Economy “


Policy Makers may want to consider following suggestions :


·         A Ticking  Time  Bomb



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·         A  Virtuous  Circle



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·         Ideas  to  create  Jobs



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·         Time  to  Rethink
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·         What  would  they  do  ?




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·         Automation is inescapable

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·         One Up on Donald  Trump



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·         Sun : Our Soul

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It is still not too late  !



22  June  2017


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