Why there is little to cheer about economy

Many of the economies around the world are in an unstable situation. It is feared that   continued recession in Europe and other parts of the world would be felt around the world. India can’t completely insulate its economy from the crisis in other economies because the integration of its economy with the rest of the world because of liberalisation and globalisation. Therefore, the reports that growth rate of the country may be below the anticipated level is not surprising. Nevertheless it has to be borne in mind that the impact of world economic crisis is not severe in our country compared to European nations. That is not to sate that we can be complacent. However, we have to move cautiously with neo-liberal economic reform. That is, there is a strong   case for India to abandon neo-liberal policies and for continuing an interventionist policy, which would insulate the country to a larger extent from external shocks.  It has to be noted that for the common people, who form the bulk of the population, growth rates have no meaning or any relevance because they are seldom benefited by higher growth rates. It is a fact that a greater proportion of the benefits of higher growth goes to only the upper strata of the society Moreover corruption and black money are the serious scourges facing India, which are acting as a road block to ensure inclusive growth and development of the country. Corruption and black money are also the root cause of growing inequality and deprivation. Huge amount has been appropriated from the people of India by exploiting and betraying them through corruption and money laundering. If this huge amount of black money and property comes back to India, the entire foreign debt can be liquidated. And after paying the entire foreign debt, India will have huge resources to invest in development programmes and welfare measures. Dependence on FDI can be substantially reduced. If corruption is controlled, generation of black money can be controlled to a large extent. Of course, for significant dent on corruption and black money there should be change in the mind set of politicians, bureaucrats and the public. The government has to take determined efforts to root out corruption and black money, besides taking steps to  reinvigorating the economy.

NDTV, Profit, September 13,2013.

Food Security Act

With the assent given by President of India, Pranab Mukherjee, on Thursday, 12the September 2013, the Food Security Bill has become a law of the land and thereby enforceable.The Bill aims to provide subsidised food grains to around 67 percent of India's 1.25 billion people. As per the provisions of the bill,beneficiaries would get rice at Rs.3/kg,wheat at Rs 2/kg, and coarse grains at Rs 1/kg. These rates would be valid for three years. Every pregnant woman and lactating mother would get free meal during pregnancy till six months after child birth. They will also get a maternity benefit of Rs.6,000 in installments. Children up to 14 years would get free meals. In case of non-supply of food grains, states will have to pay food security allowance to beneficiaries. The Bill was passed with rejecting more than 300 amendments in Lok Sabha on 26 August 2013 and Rajya Sabha on September 2, 2013.
The common opinion is that while the Food Security Bill will be a great boon to the beneficiaries, it would be a big burden on the economy. The Food Security Bill is indeed recognition of the fact that even after more than 6 decades of planned economic development a vast majority of the people are unable to meet their daily minimum food requirements. Although the country has achieved remarkable growth in output and income, a greater proportion of the benefits of economic development have gone to a small section of the population. In fact, it is the outcome of growing inequality in the distribution of income and wealth due particularly to the pro-rich policies pursued by the government in the name of economic reforms ( i.e. liberalisation and globalisation) especially since 1991 A vast majority of the people are unable to buy enough food grains and other essential requirement due to lack of income. These people are unable to earn adequate income for their sustenance due to their inability to get gainful employment opportunities with enough income. That is, we have not been able to provide gainful employment opportunities to millions of people. Had we been able to provide gainful employment opportunities to all the job seekers, the question of food security would not have arisen. Economic development has no meaning except in terms of better employment and higher wages. Moreover, no individual will desire to live on charity either by the government or by private organisations/individuals. Everyone wants to lead an honourable life with better employment and higher wages. 

Provision of food security is only a stop-gap arrangement. In the long run the country cannot afford to supply food grains to a vast majority of the people at subsidised rates or free of cost. It is not improper or impossible for the Government to raise nearly Rs.1.2 lakh crore rupees needed for ensuring food security under the Food Security Act (2013). The claim that fall the passing of the Food Security Bill will accentuate fall in the value of Indian rupee against American dollar or depress market sentiments is unfounded. But diversion of such a vast amount for unproductive investment in ensuring food supply to individuals is a definitely a burden on the economy year after year. In the long run the investment in ensuring food security may be productive in terms of better health of the people. But in the short run it is a great burden on the economy. The diversion of such a huge amount will entitle dearth of funds for other sectors such as infrastructure, education, health and housing, which will lead to further deterioration in these spheres.
Hindustan Times, September 13, 2013.

Fifth reservoir to cater to Chennai's water needs

Chief Minister Dr.J. Jayalalithaa is a visionary leader with profound concern for the welfare of the people. Because of the various steps initiated by her the Chennai city is able to solve the drinking water supply of Chennai City to a large extent. Chennai is mostly dependent on the ground water supply. Chennai's drinking water is supplied with reservoirs/lakes in Poondi, Sholavaram, Veeranam, Red Hills and Chembarambakkam. The Veeranam Water Supply Project was implemented by Chief Minister Dr.J. Jayalalithaa as additional source of water to Chennai City. The Project was commissioned in the year 2004 to supply 180 MLD of water to Chennai City by drawing water from Veeranam Lake. This lake receives water from Cauvery River system through Kollidam, Lower Anicut and Vadavar Canal besides rainwater from its own catchment area. The Veeranam scheme enabled the City to tide over acute water shortage in the city on many a times. In order to further augment the growing need for water to the city, the  need meet the drinking water requirements of Chennai, Chief minister has  laid the foundation stone for the Rs 330 crore project involving linking of two lakes in Kannankottai and Thervoykandigai villages in neighbouring Thiruvallur.  A total of 1000 mcft (one tmcft) of water could be stored in this reservoir by filling it up twice a year. The reservoir will be used to store water received from the Krishna river in Andhra Pradesh under an agreement with that state besides the rainwater received during monsoon seasons This schme will go a long way to augment the supply of drinking water to the city and its suburbs. Still  there is a wide gap between the demand and supply of water in the Chennai Metropolitan Area (CMA). But there is wide scope for augmenting the water requirements of CMA by rejuvenating the numerous lakes and ponds in this region. In fact, this region has the distinction of having the largest number of a network of lakes, ponds and estuaries in Tamilnadu. As urbanisation proceeded, many of the lakes and tanks have been destroyed to pave way for human settlement. And only a few lakes and tanks are remaining in the area Chennai City covering the city corporation limits. But reports show that these remaining lakes and ponds are being encroached upon by real estate developers and small communities. The public works department as well as local bodies have been mute spectators to the pernicious practice of encroachment of such as lakes and tanks and other water bodies. The suburban areas of CMA are estimated to have more than 3000 lakes and ponds. Although many of these  lakes and tanks are not important for agricultural requirements because of the decline farming activates due to urbanisation,  their preservation and  restoration are vital for meeting the rapidly growing demand for water in the city for domestic, industrial, commercial and other requirements. But it is saddening to note that most of these lakes and tanks are in danger of ruin due to encroachment by real estate tycoons with political patronage and official connivance. Corruption and bribery are the root causes of such mindless ruin of water bodies. The concerned officials are silent spectators of encroachment and spoil of water bodies  for they are able to fill their pockets with the illegal gratification received from the encroachers. It is gratifying to note that the government has at last woken up and plans are afoot to protect and restore the tanks and lakes   situated in the CMA. Agriculture still continues to be an important source of livelihoods in many areas of CMA. Therefore, the protection and maintenance of the lakes and tanks are important for sustain the livelihood of the remaining farmers. Moreover, the population of Chennai City and its suburbs are going to witness enormous growth of population. It is estimated that the population of Chennai City is expected to reach the 10 million mark by 2021.  So the preservation of these lakes and ponds is quite essential for meeting the demand for water for different purposes for the growing population. Moreover, restoration of the water bodies is essential to improve the local ecology and public spaces.  The plan to involve local people in the restoration projects is a good idea. The Chennai Rivers Restoration Trust, which is entrusted with the restoration of lakes and ponds, should be strengthened with more staff and adequate funds. The government should prepare a master plan to restore and preserve all water bodies in CMA as well as in rest of the state.
The Times of India, September 13, 2013.

Unsold Housing Units in Cities

Recently, particularly during the past decade there has been an unreasonably high spurt in the value of land in the cities/towns and in the suburban areas. Vast tract of agricultural land have been acquired by unscrupulous persons. But majority of the transactions for buying land has been mainly through illegal means such as tax evasion, corruption, embezzlement, money laundering, mis-invoicing, smuggling, profiteering, capitation fees, etc. Many such transactions are benamies in nature and spirit. In addition to investment of black money derived through corruption and other above said illegal means, vast tracts of land belonging to the poor farmers were forcefully taken by land sharks with political support and bureaucratic patronage. All and sundry have entered the reality sector and as a result there has been spurt in construction activities, both commercial and housing. So many big structures have been built in around the city without proper estimate of requirements. As a result many commercial buildings remain unoccupied. But it does not have much impact on the investors because most of the projects are undertaken with black money, mainly money gained from corruption, embezzlement, money laundering, mis-invoicing, smuggling, profiteering, capitation fees, etc. So also so many housing projects have been taken up all over the city and in the suburban areas without assessing the real demand for shelter. Because of the enormous increase in the price of dwelling units, buying a house/flat has become unaffordable for most of the aspirants. Earlier when the government agencies provided houses/flats and plots at affordable cost with adequate infrastructural facilities. The troubles and tribulations of acquiring a housing unit was less and the pain involved in repaying the loans were also less. Now the cost of housing has skyrocketed and people are by and large scared. The withdrawal of the government from provision of housing facilities to the people at affordable cost has created a vacuum, which led to the emergence of the private builders and spring up of housing colonies without adequate facilities like road, sewerage and drainage facilities, besides supply of potable drinking water. Acquisition of a house is a craving for every household. Now it has become a dream. And those who are somehow able to acquire a house are only notional owners of such dwellings. A substantial part of the cost of such dwelling units (nowadays only flats) is raised through bank loans. On the average 80% of the cost of a flat is raised as loan; the repayment period of such loans range up to 30 years. By the time the loan is paid up the dwelling unit becomes obsolete and in many cases unusable. In the case of flats the owner will not be in a position to reconstruct or dispose the property on his own.

Ultra High Net Worth Women

It is not a matter for joy that India has over 1,250 ultra high net worth women (UHNW) — those with net assets worth $30 million or above – with a combined fortune of $95 billion. While the number of women with high net worth has gone up and their net worth has gone up, nearly 30 million Indian women have witnessed decline in their net worth due to various reasons including inflation. Reports show that inequality in the country ha widened over the years. A greater part of the increase in output and income has gone to a small section of the population. The rich have become richer and the poor have become poorer.This has led to wealth being overly concentrated in a few hands, making the society unstable: “The problem is that, when a society's wealth becomes overly concentrated in a few hands, that society becomes increasingly unstable. Extreme poverty sits outside in the cold while extravagant wealth dances and drinks cocktails in a penthouse on the top floor. The flow is unsustainable, and it is the flow of wealth, like blood through veins, which keeps a society alive. This is why every economic system has developed some system for redistributing wealth - small groups use reciprocity, slightly larger groups use complex rituals and centralized priesthoods, even larger groups use governments and taxation. The point is to siphon wealth from those who have a lot of it and give it to those who have little, thus maintaining the flow of wealth and a degree of equality within the population.” A number of studies, based on the National Sample Survey (NSS) estimates of household consumption expenditure, have been conducted in the past decade or so to examine the trends in inequality in India.. Generally the studies point a rise inequality in India during the past two decades. Several others have also pointed out that though the richer sections of the population benefited in the post-liberalization period, there has been a stagnation of incomes for the majority in all the states, with the bottom rung of the population severely negatively affected by this process. Nonetheless inequality is bound to rise further because the opportunities opened up by liberalisation and globalisation have benefited only a small section of the population belonging to upper-middle and the richer sections, besides persons with political patronage and bureaucratic benefaction.

Current Account Deficit

Current Account Deficit

           The recent fall in the value of Indian rupee against American dollar is a matter of serious concern. The rupeehas depreciated by about 40% in the past two years. The Indian rupee has lost 20% of its value against the US dollar this year (2013) and stood at 67 at the end of August 2013. The rupee, which was valued at around 55 to a US dollar in January 2013, now trades lower at 64. A fall in the value of rupee makes imports of everything from oil to coal and chemicals costlier, and comes as foreign capital inflows into India are drying up and the government is trying to cap the gaping current account deficit.

           This sharp depreciation witnessed in the value of Indian rupee against dollar is attributed mainly to current account deficit (CAD). India's current account deficit -- which is the difference between the total imports and exports of goods and services, as also inward and outward money transfers – shot up more than 10 times in five years. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). The balance of trade is typically the most important part of the current account. And a current account surplus is usually associated with trade surplus. However, for the few countries with substantial overseas assets or liabilities, net factor payments may be significant. A deficit then means that the country is importing more goods and services than it is exporting—although the current account also includes net income (such as interest and dividends) and transfers from abroad (such as foreign aid), which are usually a small fraction of the total.

          India's current account deficit, which stood at 4.9 per cent of the GDP in the year 2013, is reported to be the third highest in the world in absolute terms. More importantly, among the emerging economies, India stands right at the top. At $98 billion, India's current account deficit in absolute terms stood behind only the US ($473 billion) and the UK ($106 billion).Among emerging economies, India is followed by Brazil ($58 billion at 2.4 per cent of the GDP), Indonesia ($31 billion at 3.3 per cent) and South Africa ($24 billion at 6.4 per cent).In percentage terms, Mexico and France has the least current account deficit at 1 per cent and 1.3 per cent, respectively, while Lebanon, Ukraine and Morocco are right on top at 16.1 per cent, 7.9 per cent and 7 per cent. India has been struggling to control its                       current account deficit to finance this deficit.

           The Finance Minister Mr. P. Chidambaram recently said that that controlling the CAD was one of the measures in his 10-point prescription for reviving the economic sentiment and assured that the government will be fully able control the deficit. The government has increased duty on the import of gold and silver in a bid to contain the foreign exchange outflow, and also announced a slew of measures including easier overseas borrowing norms to fetch an additional $11 billion this fiscal to bring down its CAD. Provisional government data shows that India's trade deficit narrowed to $10.9 billion in August, due to rise in merchandise exports offering some respite for the troubled rupee. Merchandise exports rose 12.97 per cent in August to $26.14 billion from a year earlier. Imports fell 0.68 per cent year-on-year to $37.05 billion. The government is planning steps to curb imports of non-essential commodities and boost exports of iron ore. The new RBI Governor has also stated that necessary steps will be taken to bring about stability in the value of rupee and increase exports. 
          But only a sustained effort will bring about significant fall in CAD thereby stemming the fall in the value of Indian rupee. Among others the following are some of the measures to bring down CAD and to arrest and   reverse the fall in the value of rupee against dollar. Firstly, steps have to be taken to reduce the dependence on dollar by having trade arrangements with local currencies. Secondly, efforts should be made to raise the level and range of exports from the country which has remained sticky   during the past many years. Steps should be taken to stimulate export of engineering goods.  Thirdly, steps should be taken to reduce imports, particularly all non-essential items, particularly from China. Fourthly, the import of gold should be banned and purchase of gold by households shoud be discouraged. Fifthly, limit the import of oil and other petroleum products, which is possible only through discouraging the use of private transport and by encouraging the use of public transport. Sixthly, measures should be initiated to prevent the outflow of foreign capital. Seventh, steps should be taken to bring back the black money stashed in foreign countries by politicians and others. Eighthly, promote internal savings and thereby reduce dependence on foreign capital, including foreign direct investment. Ninthly, give up the obsession to liberalisation and globalisation. 

Corporate Sectror Debt Restructuring

Many of the economies around the world are in an unstable situation. It is feared that   continued recession in Europe and other parts of the world would be felt around the world. Global economic meltdown has affected almost all the countries of the world. India can’t completely insulate itself from the crisis because the integration of its economy with the rest of the world owing to liberalisation and globalisation. Even strongest of American, European and Japanese companies are facing severe crisis of liquidity and credit. Recession in the United States and European Union (EU) countries is a very bad news for country because of   many Indian companies has most outsourcing deals from the US and the EU Reports suggest that the growth rate has plummeted.  Moreover there has been a decline exports to US and other developed countries. There has been decline in the employment due to the recession in the West, mainly due to drop in the outsourcing. The textile, garment and handicraft industry are badly affected. According to the Federation of Indian Export Organisations (FIEO) survey around 4 million jobs have vanished during the past few years. There has also been a decline in the tourist inflow lately. The real estate has also a problem of tight liquidity situations, where the developers are finding it hard to raise finances. Further, the manufacturing sector has equally been hit hard by the economic slowdown. According to CII, one third of the manufacturing sub sectors out of the 96 monitored by it have reported a negative growth in production during April to December 2010 The industrial sector is worst affected and many corporates are relining under the impact of slide in growth rate. In order to keep the economic growth during the time of worst recession, Federal authorities in India have announced the stimulus packages to prop up the economic growth. One of the stimulus packages is restructuring of loan portfolios of industial units. According to Crisil the total loans to be restructured in India during the current   fiscal year will be around 3.25 trillion rupees ($58.41 billion) compared to their earlier estimate of 2 trillion rupees. The revision is mainly because of the financial stress faced by and infrastructure sector state power companies. Loans of 1.6 trillion rupees had been restructured in 2011-12. Corporate loan restructurings surged 156 percent to a record high last financial year. But in this process of restricting of loans only large corporate houses have got the maximum benefit. Reports show that banks are giving preferential treatment to the corporate sector in debt restructuring, and tend to ignore the retail, agriculture and small and medium enterprise (SME) sectors, which are also the victims of economic downturn. According to  K C Chakrabarty, Deputy Governor RBI ( Reserve Bank of India), “Data suggests that banks are biased while restructuring. Those who can lobby and those who can hire consultants are getting better deals,”  According to him, “Public sector banks have more retail, agriculture and SME book but it’s not reflected in the restructured book, while private sector banks have more corporate book, but the restructuring quantum is very less.” That is, the SMEs have not been benefitted out of the restructuring of loans. But crony capitalists have reaped enormous gains.

Deemed Universities

The educational set up in India is at cross roads. Education in no other country in the world is as much commercialised as in India. During the past two decades or so the central as well as state governments have slowly withdrawn from their responsibility to provide quality education to the people. For nearly four decades,  people with philanthropic  considerations entered the educational arena and set up Universities, Colleges, Professional Colleges, Technical Institutions, Schools, etc. with the motive to serve the society. But in the recent past a new type of educational institutions have come into existence, namely self- financing (unaided) educational institutions. Thousands of unaided / self-financing schools and colleges (in engineering, medicine, paramedical sciences, pharmaceutical sciences, and arts and sciences) as well as polytechnics and industrial training institutes have come into existence during this period primarily based on profit motive rather than service to the society. These institutions have been promoted by bureaucrats, politicians, capitalists, businessmen, politicians, religious heads, communal associations, money launderers, liquor barons, smugglers, profiteers, and other such individuals, who rarely cherish the idea to serve the society. Admittedly the growth of such institutions has led to the commercialisation of education.  These institution woefully lack infrastructural facilities and qualified teachers. While they collect huge amount as capitation fees and as tuition fees, the salary paid to the teachers (including fully qualified teachers) is often a pittance compared to those employed in government and aided educational institutions. These teachers are not only denied proper salary but also security of service and other benefits. As a result, a kind of informal system of employment has emerged in the field of education also.

Most disquieting aspect is the permission granted to so many Deemed Universities  in violation of the provisions of the UGC Act,  which involved large scale corruption by the UGC Chairman and other concerned officials, besides politicians. All and sundry institutions lacking infrastructure facilities and qualified staff have been granted Deemed University status, which enabled them to become law unto themselves and loot the people. Most of these Deemed Universities have stated all kind of courses, mostly without permission, and loot people.  Some of them have started "branches” without the permission of UGC. They employ all kind of methods to attract/woe students. In some cases they promise "sure pass" . They have deployed canvassing and commission agents. One University on the outskirts of Chennai in GST road  has been awarding pass mark/ high marks to students on payment of certain amount. It also receives payment for attendance. The UGC seems to  keep silent on all such malpractices! Why not abolish the Deemed Universities, which were created against law?

Manual Scavenging Bill

Manual scavenging still survives in parts of India without proper sewage systems. It is thought to be most prevalent in Gujarat, Madhya Pradesh, Uttar Pradesh,  and Rajasthan. Some municipalities in India still run public dry-toilets.  The manual removal of human    and animal excreta is done using brooms, small tin plates, and baskets carried on the head. The allocation of labour on the basis of caste is one of the fundamental tenets of the Hindu caste
system. Within this system, Dalits have been assigned tasks and  occupations which are deemed ritually polluting by other caste  communities - such as sweeping, disposal of dead animals and leather  work. By reason of their birth, Dalits are considered to be "polluted",  and the removal of human and animal waste by members of the "sweeper"  community is allocated to them and strictly enforced Due to the nature  of the job, many of the workers have related health problems. There are  about 3.5 lakh people who work as manual scavengers in India. It is  noteworthy that the Prohibition of Employment as Manual Scavengers and  their Rehabilitation Bill, was passed by Parliament on September 8, 2013 The Bill prescribes stringent punishment, including imprisonment up to five years. The Bill has a wider scope for higher penalties than what was provided under the 1993 Act. Offences under the Bill are cognisable and non-boilable and may be tried summarily. It has provisions for rehabilitation of manual scavengers and their family members as well. Under the new law, each occupier of an insanitary latrine is responsible for converting or demolishing it at his own cost. If he fails to do so, the local authority will convert the latrine and recover the cost from him. Each local authority, cantonment board and railway authority are responsible for surveying insanitary latrines within their jurisdiction. The new law includes    provisions for rehabilitation of manual scavengers and their family    members as well. This Bill has a wider scope for higher penalties than what was provided under the 1993 Act . The Bill seeks to prohibit employment of individuals as manual scavengers by prescribing  stringent punishment, including imprisonment up to five years, to those  employing such labour and also their rehabilitation. But mere passing of  the Bill is not going to solve the problem. Concrete steps have to be  taken to implement the Act. It is great that Supreme Court has  proposed to examine the provisions of the Act threadbare to see  whether it meets necessary requirements to wipe out the social stigma  attached to a section of society.
Decan Herald,  September 10, 2013

Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill

Street vendors are the most visible face of the urban informal economy. Street vending or hawking as an occupation has existed for hundreds of years and is considered as a basis of many cities’ historical and cultural heritage.1. In all civilizations, one reads accounts of traveling merchants who not only sold their goods in footpaths but also going from door to door in the nearby village. Street vendors are an integral component of urban economies around the world. They constitute an important segment of unorganised (informal) retail trade. As distributors of affordable goods and services, they provide consumers with convenient and accessible retail options and form a crucial element in the economic and social life of a city. They exist in large numbers in urban areas in the developing countries like India following rapid urbanisation. As the most visible segment of the urban informal economy, it is indisputable that there are thousands – and in some cases, tens or hundreds of thousands – of street vendors in the developing world. In India they are found in large number in all cities/ towns and even in villages all over the country. 2 Street vending or hawking serves as a source of employment and livelihood for millions of persons and their family members. That is, it acts as a cushion for the unemployed persons, besides those who are displaced form the agricultural and manufacturing and services sectors. Street vending or hawking is also a platform for survival for the small scale and cottage industries as well as home-based industries whose goods also hawkers sell; thus, contributing to the employment of hundreds of millions of workers in agriculture, trade, and small scale manufacture, cottage industries and home-based tiny enterprises. An important aspect of street vending is that a large number of women are found in it. , their presence is a significant factor in the growth of the unorganised retail sector in India. They are not concentrated in the big metropolitan cities like Mumbai, Delhi, Kolkata and Chennai alone. All big and small cities have them; they are found even in villages. Recently, there has been a tremendous increase in the number of street vendors in all parts of the country, in big as well as small cities alike. As a result street vendors or hawkers constitute one of the most visible segments of the India’s informal economy. Estimates show that almost 10 million persons are directly engaged in various forms of street vending or hawking in India and nearly 60 million people depend on them for their livelihood. The proliferation of street vending activities in India can be attributed to a wide range of factors which include amongst others, lack of adequate job opportunities in the formal sector. The neo-liberal policies pursued by the government after the introduction of liberalisation and globalisation led to jobless growth in the country. According to a recent report of the Institute of Applied Manpower Research (IAMR), employment in the country grew by just one million in the five-year period from 2004-05 to 2009-10, while economic growth over the same period averaged 8.7 percent.5 Moreover, it has to be borne in mind that in three of these five years, 2005-06, 2006-07 and 2007-08, the growth was 9.5 percent, 9.6 percent and 9.3 percent respectively ( the average rate of growth for these three years was 9.5%).The total workforce in the country increased from 457.8 million to 459.1 million, a rise of just 0.3% over this period. But the benefits of the high rates of growth have gone to only a small section of the population. While the rich have become richer, the poor people have been marginalised further. Moreover, the total number of jobless persons has gone up tremendously, creating an army of the jobless and disgruntled. As per the IAMR report, 12 million persons are added to the labor force, while able to generate only 200,000 jobs a year during 2004-05 to 2009-10. So, more and more persons are forced to seek jobs in informal sector activities. In fact street trading activities serve as the last resort for the unemployed people in urban and rural areas. They serve as a cushion to those who are pushed out of agriculture due to drought and other natural calamities. That is, lack of gainful employment coupled with poverty in rural areas push people out of their villages in search of better opportunities in the cities. Generally, these migrants do not possess the skills or the education to enable them to find better paid, secure jobs in the formal sector. Therefore, they have to settle for work in the informal sector, particularly as street traders. Street vending also serves as a cushion to those who are displaced from the manufacturing sector due to loss of their jobs because of retrenchment, closure, down-sizing or mergers in the industries.
Business Standard, September 8, 2013