Growth, Employment and Labour through a Budget Lens

The annual budget presentation in Parliament is a big occasion in India to discuss not only the state of the economy, but also to gauge the government’s, and thereby the ruling party’s, intention in what direction it is trying to steer the economy. The budget presentation is preceded by laying on the table of Parliament the Economic Survey for the preceding year that also gives a long term view of the important trends in the macroeconomy. This year both the Economic Survey as well as union budget were disappointing, to put it modestly.

Two important developments have gone unanswered, given the stakes involved in terms of credibility of statistics both domestically and internationally. One is the controversy over the estimation of the gross domestic product (GDP), a number that the government is so much dependent on to project its economic achievements and power, especially to convince the international players. The recent paper by former chief economic adviser (CEA), Arvind Subramaniam (2019), has cast a shadow over the government’s claim of India being the fastest-growing economy despite a somewhat timid performance than during the United Progressive Alliance (UPA) regime. The basic question that informed analysts are asking relates to the high rate of growth of GDP at around 7% per annum despite a declining trend in a number of crucial macroeconomic variables such as savings, investment, exports and imports, and so on. The second question is the lack of any studied response to the findings of the employment and unemployment survey (now called the Periodic Labour Force Survey 2017–18). Initially, the report and statistics were withheld for about six months, but subsequently released after the re-election of the National Democratic Alliance (NDA) regime. To be fair, the Economic Survey does not reject the findings but only pleads for comparing the results with the earlier survey in context and then, goes on to give the comparative figures, albeit as an aside in the last chapter of Volume 2 of the Economic Survey.¹ Despite the rhetoric of inclusion and creation of jobs arising out of high growth in the budget speech of the finance minister, the findings of the employment survey gives further credence to the scepticism on the official growth figures for the economy that the government continues to hold on without a convincing explanation to justify the changes in the methodology of the GDP estimation. There is no attempt to discuss the dismal findings of the employment survey in the light of the continuing success story in growth as claimed by the government.