1. 114 | BW | BUSINESSWORLD | 1June2015
Tushar Dhingra
CREATING
JOBS A KEY
CHALLENGE
ONEYEAROFMODI
PhotographbyRiteshSharma

2. 1June2015 | BW | BUSINESSWORLD | 115
ARENDRA MODI’S election cam-
paign whipped up an optimism
that overwhelmed the nation like
never before. PM’s pro-job pitch
and vision of inclusive growth
convincedglobalanalyticalagen-
cies that he can create 69 million
jobsby2020.
A forward-looking govern-
ment, influx of foreign invest-
ments and improved consumer
sentiment cheered up the Indian job market in the July-
December 2014 period. But will the Modi magic create
more jobs?
India has a working-age population of 750 million,
which is expected to increase by 230 million by 2030; so
jobcreationisIndia’sgreatestlong-termchallenge.Indian
companiesrecordedanaveragehiringgrowthof10-12per
cent in 2014, while salary hikes stood at about 8-10 per
cent. With the economy showing signs of an upturn, we
believe hiring should only get better in 2015.
SowhatallhasNarendraModireallydone?
TheBullCase:Thegovernmentisput-
ting strong emphasis on job creation,
whichisevidentfromthemeasurespro-
posedintheUnionBudget.
In the manufacturing sector, it is
promoting labour-intensive work.
WitharenewedimpetustotheNation-
alSkillDevelopmentCorporation,itis
aimingtoachievethetargetofskilling
and up-skilling 150 million people by 2022.
The government’s Make in India programme presents
a huge opportunity for job creation. It can boost economic
growth as it opens up 25 sectors of the Indian economy to
foreigninvestment.
The government has also offered sops to small and me-
diumsizeenterprises(SMEs).Budgetallocationtostartups
willencourageentrepreneursintierIIandtierIIIcitieswho
cancreateover3lakhjobsby2020.
TheNDAgovernmenthasalsolaidaroadmapforgrowth
of real estate through allocation of funds in the Budget for
100smartcities.Whilesmartcitieswillboosttheeconomy,
theexpansionofurbanhubsandmodernisationofmid-sized
citieswillprovidejobopportunitiestoyouth.
Recently, the government has also taken initiatives to
further open up the much guarded defence sector by rais-
ing foreign direct investment (FDI) from 26 per cent to
49 per cent.
The Bear Case: The Make in India campaign is a great
initiative, but there is need to address the lingering prob-
lems such as lack of infrastructure, bureaucracy and legal
and policy framework. For the success of such initiatives
what’s requiredismoresubstantivepolicyreforms.India’s
highly anticipated national budget, released in February,
dampened the spirit of foreign investors. Investors had
hopedforsomethingthatwouldsignalafriendlierbusiness
environment,butdidn’tseeanyhugechanges.
Also,thereisaneedformoreflexiblelabourlawsinIndia.
Existing lawsaremakingbusinesscumbersomewithoutof-
feringgreatersecuritytolabour.Indiahasanabundanceof
informallabour,andhereliestheopportunitytoturnthem
intoskilledonestoenhancegrowth.
Outlook:A lot needs to be ‘un-done’ before new initiatives
takeshape.
Thequestioniswhetherstepshavebeentakenintheright
directionandiftheywillhelpoureconomygrow?Theanswer
isyes.Theprogressisslow,butinthedirectionofgrowth.
Renewableenergy,bigdataanalytics,insurance,microfi-
nance,healthcareandpaymentsolutionswillseesubstantial
boost in hiring across levels due to positive policy changes.
Inaddition,theemphasisofthegovernmentonthemanu-
facturingsectorisexpectedtocreate100millionjobsinthe
nexttenyears.Thee-commercesector,whichhasgrownby
leapsandbounds,hascreateddirectandindirectjobswhile
fuellingSME’sgrowthandattractingalotofmomandpop
outfits.Thissectorisgoingtobeonastronggrowthtrajec-
toryforyearstocome.
AccordingtoIndianStaffingFederation,theapexbodyof
staffingindustryinIndia,thejobgrowthislikelytotouch12
percent,whilesalariescangrowby12-15percentin2015.In
2014,hiringhasmovedupbyasharp10percentandislikely
togrowmeaningfullyin2015.
In the long term, the bulls have a stronger case for India
asthenationislikelytobecomeanincreasinglyimportant
source of labour for global corporations. It has the best
demographics, a strong domestic market and a credible
legalsystemcanmakeitslightlymorebalancedthanother
emerging countries. As long as the government remains
committed to converting announcements to favourable
outcomes,wecertainlywillhaveachedin.
IN THE LONG RUN, INDIA IS
LIKELY TO BECOME AN
IMPORTANT SOURCE OF LABOUR
FOR GLOBAL CORPORATIONS
Theauthorispartner-Consumer,RealEstate&Retail,atDHRInternational
N