Resident Senior Fellow, Vivek Dehejia, in this Livemint article, argues that the 'employment elasticity of economic growth' (EEEG)—which means the percentage increase in employment for a one per cent increase in growth of gross domestic product (GDP)—has been declining over time in India, and globally. According to the author, the jury is still out on whether Prime Minister Narendra Modi has been successful in his promise to boost job creation. Excerpts below:
"Panagariya is spot on that data on employment creation in India is woefully out of date. What is more, official data, coming from the National Sample Survey Office (NSSO), are—as the name of the organization implies—based on surveys, rather than on measured data, raising legitimate questions about the extent to which surveys match reality...
As for the claim of some half a million or more new jobs every year, the Ghosh-Ghosh analysis has been surgically dissected by former Congress minister Jairam Ramesh and my IDFC Institute co-author Praveen Chakravarty. The bottom line of their persuasive critique is that new registrations to the EPFO are just that, and one is riding a wing and a prayer if one believes that these also represent net new job creation. Far more plausible, given the data set and time period the study considers, is that the large bump in EPFO registrations represents, rather, the induced formalization impacts of, first, demonetisation and, then, of the goods and services tax (GST)..."
Read the full article here.