China has been the elephant in the room since Lehman Brothers folded up, triggering the last wave of global economic turmoil. It stood out as the biggest contributor to global growth in the past eight years. But now the bubble, long expected to burst due to a mammoth build up of debt, is popping the wrong way.
By Rahul Sharma
There is a very good reason why Narendra Modi speaks to India’s young and exhorts them to vote the current Congress-led government out. He understands the simmering discontent among the country’s massive young population that is out looking for jobs and not finding any unlike other politicians who still believe only in politics of dole, caste and religion.
The state of the young in India is dismal and the mood gray. A slowing economy and high cost of living have only added to their woes. Add to that the fact that business sentiment will continue to be poor for the next several months in the run up to the elections – and even after that if a sustainable government doesn’t come to power – and you see a horribly potent recipe for social unrest.
Modi knows that if the young – a brand new, vibrant constituency — start believing that he will get those jobs and the financial sustainability that would let them buy all the gadgets, goods, automobiles and apartments, they would come out in throngs and help him win next year’s general elections.
Given the state of India’s shrinking job market into which 12 million youth trundle in every year, Modi’s call resonates well not only in large urban centres, but also the smaller towns where aspirations and opportunities have made traditional roles redundant.
So how badly off is the situation?
If you believe a new Confederation of Indian Industries-Economic Times (CII-ET) survey of India’s young, it’s pretty nasty out there. Of its 1.2 billion people, 800 million are less than 35 years old – and they seem to be really upset with the way things are.
According to the survey, findings of which were published in The Economic Times, three out of four of them believe that the economy today is worse off than it was in the aftermath of the 2008 global financial crises. More than half say it is the worst time to look for jobs and nearly 60 percent have postponed buying a house, a car or having children. Worse, nearly 40 percent of the people polled in 28 cities said they won’t mind taking a pay cut if that improves their chances of holding on to a job.
It can’t get worse for the Congress; and it can’t be better for Modi and his Bharatiya Janata Party (BJP), which is still looking for that one issue that could change its fate and bring it out of its decade-long political wilderness.
“This is the most disturbing micro impact of the macro slowdown,” the newspaper quoted Rajya Sabha MP and entrepreneur Rajeev Chandrashekkhar as saying. According to him, educated Indians looking for their first or second jobs are hurting the most.
Thousands of engineering, medicine and businesses schools in India produce millions of graduates each year. But they hit a hard wall when they get into the job market. The impact is two pronged. Fewer jobs also mean there aren’t many takers for the seats in the graduate and post-graduate schools, many of which are beginning to shut down.
“The following set of numbers shows the young have read the grim job market right. Andhra Pradesh has over 700 engineering colleges and 350,000 seats – the highest in any Indian state. But just 200,000 seats were filled up this year. Why? Because just 20% of the class of 2013 have got jobs. When young Indians give up the chance of getting an engineering degree, you know there’s something very wrong,” the Economic Times wrote.
The other, bigger, impact is on the consumer, automobile and real estate markets, which are now losing their sheen as poor demand pulls the economy down. No wonder, the government is being forced to ask state-owned banks to offer cheaper loans for consumer goods and two-wheelers to boost demand in an otherwise depressing economy.
These are problems only politicians can address. There is a need for a fresh thinking and new policies that could create more jobs, both in the manufacturing and services sector. There is a need to lift business sentiment so that investments on hold can be channeled into infrastructure and other industries that would create jobs. These are issues that can’t be solved overnight, but if you have a large chunk of your population that is either unemployed or underemployed, you have a huge problem on hand.
If you believe Modi, then he probably understands the issues better than other politicians. The Congress doesn’t seem to have a solution, nor can it explain its lethargy in fixing the situation in the 10 years that it has ruled India. The grand old party is not even talking about jobs – at least not yet. A disgruntled youth is not good for politicians and the country. The leader who can show a way to the youth stuck in between a rock and hard place is likely to win the next election.
It is up to politicians and the next government to take the right steps.