08 Nov 2017 19:12 IST

Demonetisation: unorganised sector hit hardest

A year after, the economy is still limping back to normalcy and job creation has slowed

Kumaran (name changed) is my landlady’s man Friday. He is constantly by her side and even though she is currently in the US with her children, Kumaran manages her work here.

He is otherwise into construction, and even built the landlady’s new home in Chennai’s outskirts. Till a year ago, Kumaran was doing quite well. He drove a popular hatchback, employed many people, including six directly under him. And he and his wife had just become parents, second time over.

But then, on November 8, 2016, Prime Minister Narendra Modi announced the demonetisation move.

Kumaran didn’t feel its effects immediately. I didn’t see him for a month. But sometime in December, I met him and Kumaran looked worried. He asked if I could get a job for his wife. “She has done BA in English, sir. And writes well,” he said. I promised that I would try.

In less than a month of the demonetisation announcement, Kumaran’s construction work had come to a halt. His clients put a stop to the ongoing projects; he had to let all his men, except one, go; he started taking his two-wheeler instead of the car. By March 2017, Kumaran was running short of money and took up a night job as a manager at a hotel. He did it for two months.

A year later, the worst seems to be over for Kumaran. Construction contracts have started trickling in again. But things aren’t the same. He is yet to take back all his men.

Job crisis

Even after a year of the ban on high-denomination notes, debates and arguments continue on the success or failure — as one sees it — of the dramatic move by the NDA Government. But one thing that is inarguable is its impact on jobs.

According to data released by the Centre for Monitoring Indian Economy, 1.5 million jobs were lost in the first four months of 2017. A study by The Indian Express examined the numbers of 121 of the BSE 500 companies, whose data for three years were available — these companies showed a net decline of nearly 15,000 jobs.

Worst hit sector

Demonetisation worsened the conditions in India’s job sector. Job creation had been slowing down since 2010. As this comprehensive report by my colleagues shows, the slide has only quickened in the last three years.

From 4 lakh jobs that were added in 2014, when the NDA Government was sworn in, only about 70,000 jobs were created in the first nine months of the 2016 financial year. This, at a time when 13 million people join the workforce in India every year.

For a Government that had promised to create 10 million jobs a year, this is a critical failure.

The note ban had a crippling effect on the job market because its impact was felt largely by India’s unorganised sector, which mostly deals in cash. It is said that nearly 80 per cent of India’s workforce gets its salary from this sector. With no prior warning, the blow was deadly. Also, poor infrastructure meant that many could not quickly shift to the digital system.

Did the Government act in haste? It could have waited for the economy to be in a better financial health before performing this ‘surgery’. As we all know, any operation on a weak body makes the recovery that much more painful and slower.