Economic Highlights
New Delhi, 2 January 2009
Of Job Losses &
Food Prices
HOW ABOUT A PACKAGE
FOR THE POOR?
By Shivaji Sarkar
When the going gets tough, it’s toughest for the
weaker sections of society. Not considered creditworthy, the poor remain the
worst sufferers as economic growth slows down. After all, they are the most
vulnerable in terms of unemployment, homelessness and malnutrition. Worse, the present
crisis has accentuated their troubles.
It is thus imperative to evolve a protection package
for them this New Year. If not turned into an asset in the growth mechanism, the
poor have the capacity to affect the overall well-being of the country. This
crisis is seeing more poor losing their jobs. In the textile sector alone, Commerce
minister Kamal Nath says that 65,000 jobs have been lost. The Chairman of the Parliamentary
Standing Committee on Finance, Sudhakar Reddy, says “our information is that
five lakh workers lost their jobs in the last two to three months. The
situation is alarming”.
The job cuts are in both private and public sectors.
In the latter, those on daily wages or contract are being denied extension.
However, no unemployment figure is final. According to AITUC General Secretary
Gurudas Dasgupta ten lakh workers have become jobless in the past two months.
The parliamentary committee has asked the Government to come out with a report.
Fewer the jobs mean less consumption and more malnutrition.
The recent Mid Year Review (MYR) projected lower GDP growth. Industrial and
manufacturing production declined. It has also reduced the growth rate to 7 per
cent from last year’s 9 per cent.
Clearly, this would have a more serious impact on the economy rather than
just lower income. It is bound to affect the living standard of people and
their consumption pattern.
As per statistics, inflation based on wholesale price index
(WPI) is stated to be coming down. It is not being reflected in food prices,
which remain at a very high and unaffordable level. And, when people spend more
on food, it affects their spending on other necessities. This is further being
reflected in the manufacturing and industrial sectors. But for the poor it is
more serious. With food at unaffordable prices, the poor cut down their consumption
which leads to malnutrition.
According to the Global Hunger Index of the International
Food Policy Research Institute, India is home to the world’s largest
food-insecure population with 20 crore people facing hunger out of 88
countries. Both the World Bank and the Asian Development Bank have estimated
that 41 to 58 per cent people live below the poverty line in India. This only
indicates that the high growth rate has not benefited the poor. In addition, it
also means that the market reforms have not considered the poor as its integral
part and though they remain out of the market, they are not insulated from its
ills.
Even the projected 7 per cent growth seems a dream for who
it matters. Since it does not address the twin problems of growth and equity,
it is unlikely to save the country from the morass that has set in. The
Planning Commission, in its own assessment, has found the going to be tougher
and may further slowdown the growth process. Would it come down to 4 per cent?
Nobody says a no either.
Regrettably, the fiscal packages announced since October are
not addressed to the workers but are specific to just the industry and banking
sectors. The packages are supposedly expected to boost demand in 2009. But the poor
again aren’t the target, at least as direct beneficiaries. This apart, the National
Rural Employment Guarantee Scheme (NREGS) is learnt to have not given even
seven days of wages to the rural poor in some cases.
Clearly, the Government needs to prioritize empowerment of
the rural poor so that they could partake with some benefits of the market
economy. The WPI has dropped to below 7 per cent, but food inflation is yet to
be controlled. It has gone up to 10.43 per cent from 8.4 per cent in August
2008 when inflation was at 13 per cent. Important food items such as cereals,
vegetables, fruits, eggs and meat have become more expensive.
Though the market may not feel the necessity to give a
thought to the plight of the poor, it must realize that less disposable income,
particularly in the rural areas, means it would sell fewer goods to them. An
average poor family spends almost 70 per cent of its income on food items and higher
prices have seen direct fallout on purchases of goods such as textiles and
cloth. Besides, job loss in the textile sector has a bearing on higher food
prices.
In sum, the situation calls for a revision in policy. The
present scenario is an offshoot of neglecting food self-sufficiency and
creating a policy of food imports. This apart, the Government needs to rethink
its policy of doing away with the public distribution system (PDS). All through
the 70s and 80s, the PDS had indirectly aided the manufacturing and industrial
growth. It had acted as an interventionist system to protect the poor from
profiteering of the private cartels and kept the food prices under check.
The present meltdown world-over has put governments under pressure
to ensure its control to protect its people. In India too, the Government needs to not
only revive the system but maintain it too. Most fiscal initiatives so far
announced are for large enterprises. But the poor are mostly employed in small
and medium enterprises (SME) that include construction, handicraft, gems,
jewellery, handloom and small textile units. The slowdown has led to closure of
most of these units and the poor have lost their jobs.
A policy for helping the SMEs is yet not in place. It is so
because, in an era of multi-nationals, the SMEs are not considered good bait
for investment. Thus, a policy focus and change is required not only to revive
the jobs but also as a futuristic tool as the SMEs provide employment to the
uneducated and less skilled people, i.e. bulk of the poor. Besides, SMEs work
in backward areas. Properly utilised they could become the engine of growth in
the backwaters. As a result, it would raise rural income and a proper food
policy could keep the prices in check to save the poor from sliding into the
trap of hunger and malnutrition.--INFA
(Copyright,
India News and Feature Alliance)
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