Something is better than Nothing

That could be said about the following news :

Jobs data accounting for small businesses soon     [ Hindustan Times / 22 Sept 2019 ]

This set of data will also count proprietary shops or self-owned, self-operated businesses which may have no hired labour, such as a roadside vendor.

The establishment-based survey by the labour bureau

Highlights :

#   The country’s first periodic labour force survey (PLFS) for July 2017-June 2018 released

     by the government in June showed an unemployment rate of 6.1%, the highest in about

    four decades.

#  The last “unemployment-employment survey” was carried out in July 2011-June 2012,

     according to which the all-India unemployment rate was 2.7%.

#   In 2018, when at least 28 million people applied for about 90,000 vacancies announced

     by India Railways, the country’s biggest employer

#   In any jobs survey, people with jobs are categorised as employed.

     People without jobs but looking for work are considered unemployed

     

#  The labour force participation rate is sum of :

    [ people who are employed + people who are not employed ]

     

    In a rough-and-ready sense, the unemployment rate then is simply :

    { number of unemployed / the labour force } x  100

    

Above findings must be read in conjunction with the following report prepared by Labour Bureau  :

Mudra loan reality check: Each job costs Rs 5.1 lakh; only 20 percent borrowers started new business     [  Financial Express / 04 Sept 2019 ]

Highlights :

#  The draft report has found that as many as 1.12 crore additional jobs were created

    during the first 33 months (April 2015-December 2017) of the implementation of the

    scheme

#  Break-up of these 1.2 cr “ additional jobs “ :

Ø   self-employed or working owners, including unpaid family members…...................... 51.06 Lakh

Ø  employees or hired workers ………… 60.94 Lakh

Ø  only one of five beneficiaries (20.6 per cent) availed the Mudra loan for starting a new business while the remaining applicants used the Mudra money for expanding their existing business.

 

Ø  The report also said that the number of additional jobs created in 33 months was less than 10 per cent of the total number of loans

Ø  During the first three years, Rs 5.71 lakh crore of loans was sanctioned

Ø  The loans provided under Shishu category led to the creation of 66 per cent new jobs. The new job creation percentage for loans under Kishor and Tarun categories were 18.85 per cent and 15.51 per cent respectively.

Ø  Dividing the total amount of loan disbursed by the number of additional job created, one comes to the conclusion that around Rs 5.1 lakh in Mudra loan was extended for creation of each additional job

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Above findings must be read in conjunction with my following earlier Email to the Cabinet Ministers  :

 

    How much Capital to create One job ?             [  22 June 2017  ]

  Extract from above-mentioned Email :

 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

======================================================

Conclusions :

#  “ Mudra Loan Impact Report “ findings confirm the estimates in the above mentioned

       blog / E Mail  [  Rs 5.01 lakh to create each “ Self Employment “- on an average  ]

#    Even if motivated by yesterday’s announcement of drastically reduced Corporate

     Taxes , if NEW MANUFACTURING factories were to come up, there is no way these

     can create ONE MILLION new jobs ( hires ), per month !

At an estimated investment of Re 1 CRORE per hire ( in a Light Engineering Factory ), we would need investment of Rs 1 MILLION*CRORE per month !

#   It is high time our Economists / Political Leaders / TV Panel Experts etc., admit this

     fact and focus on creating SELF EMPLOYMENT

#   In the meantime , to generate a huge CONSUMER DEMAND ( the Prime Motivator for

     new investments ) , Govt  should drastically reduce the Personal Income Tax , as

    suggested in my following E Mail yesterday to the Cabinet Ministers :

 

         Better late than Never 

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22  Sept  2019

Rsvp :  hcp@RecruitGuru.com