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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