oppn parties The Mystery Behind 4 Million Jobs In 8 Months

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
The Mystery Behind 4 Million Jobs In 8 Months

By Sunil Garodia
First publised on 2018-06-27 13:44:26

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
People are not finding jobs. Several ruling party politicians have even advised the youth to sell pakoras instead, although selling tea would be a better option for then one can dream of being the prime minister one day. Jokes apart, even as the nation faces an army of unemployed, the Employees’ Provident Fund Organisation (EPFO) has reported, citing figures available with it, that more than 4 million jobs were created in the formal sector in the during September 2017 to April 2018. That translates to nearly 17000 jobs every day. So who is getting these jobs? What is the mystery behind a rush of enrolments in EPFO and the ground reality of jobless youth?

The BJP had taken to advertising this fact in a campaign (see the lead picture). But is this true? Are so many jobs being created or is it just that companies are shifting those they had employed informally to the formal sector to reduce profits? Is this post-GST data released by the EPFO believable as a standalone data or should it be compared with data in similar periods in the past? Clearly, more detailed study is needed to establish if new jobs were added or there was just a shift of those employed informally to the formal sector.

The Economic Times (ET) has unraveled the mystery in an excellent editorial. It so transpires that businesses in the formal sector were underreporting employee heads and outlays on salaries and wages. But ever since GST came into force, businesses find that artificial and common ways of reducing profits shown in the balance sheet have vanished. Hence they are bringing more and more workers on the rolls. This is a very plausible theory to explain the mystery.

Another big issue is that generation of the so-called black money has also diminished. Previously, businesses used to take purchase bills of sundry items from the market to reduce profits. The amount paid by cheque to the biller was returned in cash, after deducting the agreed “commission.” After GST, it is becoming increasingly difficult for big businesses to procure false bills. This has dried up their source of generating unaccounted cash.

As the ET has explained, this is a boon for workers as they will now be formally employed and enjoy all the benefits of the social security system in place, like minimum wages, fixed working hours, holidays, PF and ESI. It will also benefit trade unions and NGOs monitoring Indian exporters for fair labour practices. This is one more happy spin-off of GST that will benefit the economy.

read the ET editorial here