How much Capital to
create One job ?
------------------------------------------------
Some ONE MILLION ( ten lakh )
youngsters enter the job market , EACH MONTH
How much CAPITAL ( fixed + working )
would be required to give jobs to all of them ?
Following are my guesses to create just ONE JOB in :
·
Pan Beedi shop ( self-employed )………….Rs 1 lakh
·
Tiny grocery shop ( owner operated )…. Rs 3 lakh
·
Barber shop …………………………………………..Rs 5 lakh
·
Pharmacy shop……………………………………… Rs 10 lakh
·
Auto Repair Garage………………………………. Rs 20 lakh
·
Small Factory ( 50 people )……………….. Rs 50
lakh
·
Medium Factory ( 100 people )……………. Rs 75 lakh
·
Large light engineering factory………………Rs 100 lakh ( Rs 1
cr )
{
Just proposed SAMSUNG factory in UP will invest Rs 5,000 cr and , at full
capacity , employ 5,000 people }
·
Machine Tool Manufacturing factory…………………. Rs 2
crore
·
Heavy Engineering factory ( Pressure Vessels )…. Rs 5 crore
Service Industry ( based on IT /
internet )…………. Rs 50 lakh
It is not difficult to see WHY jobs are
not getting created , despite the fact that we have a huge DOMESTIC MARKET to
serve 1.3 BILLION people !
It would require a huge amount of
CAPITAL to create jobs for 12 million people, each year
On top of that , labour costs ( in
organized sector ) are rising very rapidly , prompting the businessmen /
industrialists to resort to “ mechanization / automation “
A report in Times of India ( 09 June ) , titled ,
“ India Inc deploys more capital than
labour “ ,
provides following information ( source / Annual
Survey of Industries / CSO ) :
·
Employment Growth ( 1980-2015 )………………. 1.9 % per annum
·
Capital Growth – CAGR ( 1980-2015 )…………… 14 %
·
No
of Employees / factory :
# Early 1980s…………… 80
# 2014-15……………….. 60
·
Total
Capital Employed / Factory :
# Early 1980s………….. Rs 5 lakh
# 2014 – 15……………. Rs 10 Crore
·
Unit
of Labour :
# Early 1980s………… Rs 10,000 per year
# 2014 – 15 ………… Rs 157,000 per year
·
In
2009 – 10 :
# Cost of a Unit of Labour……………. Rs 1.47 lakh
# Cost of a Unit of Capital………….. Rs 1.32 lakh
·
In
2014 -15 :
# Cost of a Unit of Labour………….. Rs 2.54 lakh
# Cost of a Unit of
Capital…………… Rs 1.46 lakh
Since businesses / industries in large
organized sector have to get ever more “ Competitive “ with arrival of Foreign
Companies in India , it is not surprising that they are resorting to more and
more “ mechanization / automation “ , given the above-mentioned scenario
That means less and less job opportunities
! More and more unemployment !
IS THERE A WAY OUT ?
May be , if we set aside some “ holy cow
“ beliefs and make India , a “ Low Cost Economy “
Policy Makers may want to consider following
suggestions :
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It is still not too
late !
22 June 2017
www.hemenparekh.in
/ blogs
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