Youth economic insecurity shapes Indian politics: report
Amid slowing growth and unemployment concerns, India’s politics will increasingly be shaped by the economic insecurity of its vast youth population, the Economist Intelligence Unit said in a research note on Friday. The issue of unemployment and underemployment
Posted by on Friday November 22nd, 2019
Amid slowing growth and unemployment concerns, India’s politics will increasingly be shaped by the economic insecurity of its vast youth population, the Economist Intelligence Unit said in a research note on Friday.
The issue of unemployment and underemployment has been a hot topic in Indian politics and slowing economic growth has translated into weak employment figures.
“Although Prime Minister NarendraModi successfully won re-election from the BharatiyaJanata Party earlier this year on a platform of strong leadership and a focus on social and security issues, politics will increasingly be shaped by economic insecurity of India’s vast youth population,” the research note notes. by the Economist Intelligence Unit (EIU).
Citing data from the Indian Economic Monitoring Centre, the EIU said that in October 2019 the unemployment rate hit a three-year high of 8.5%, down from 7.2% in September.
Although the country is expected to enjoy a favorable “demographic dividend” over the coming decades, the rate of job creation is lagging behind the growth rate of the labor force, he said.
The World Bank estimated in 2018 that India needed to create around 8.1 million jobs a year to maintain its employment rate.
“However, official employment data is patchy, given the difficulties of measuring employment in the large informal sector and the political sensitivity attached to the figure,” the note said.
According to the EIU, the government’s short-term stimulus efforts have been “inadequate” given the scale of the job creation problem and “structural reform rather than short-term stimulus is needed to address the country’s job creation problem”.
Historically, voting in India has been driven by traditional caste factors rather than government performance.
“Having now delivered most of the questions on the Hindu nationalist agenda that was popular with his supporters, Modi will likely face a challenge to retain his popularity as voters grow increasingly disappointed with the lack of progress on the economic front,” the EIU noted.
He cited the revocation of Jammu and Kashmir’s special constitutional status and the recent Supreme Court decision calling for the construction of a Hindu temple on disputed land in Ayodhya, Uttar Pradesh.
According to the EIU, the BJP is expected to win a simple majority in the RajyaSabha by 2021, potentially allowing the government to pass more controversial bills aimed at overhauling the labor market.
“However, its ability to lobby against strong unions, which oppose the relaxation of labor law in favor of corporations, will be limited. Unions had already expressed their strong opposition to the proposed changes to the labor law, in particular of the industrial relations code”, he noted.
The strong political influence wielded by trade unions means that Indian labor markets are likely to remain highly regulated compared to other countries.
“In the long run, insufficient progress in addressing India’s labor market issues will keep the political field ripe for enterprising politicians operating on a platform of job creation,” he noted.