Greg Randolph and Sabina Dewan
This piece was originally published by U.S. News and World Report.
Elections in India drew to a close on Friday, fulfilling predictions that Narendra Modi of the Hindu nationalist Bharatiya Janata Party, or BJP, will be the next prime minister of the world’s largest democracy. What’s more is that Modi’s party alone will claim a parliamentary majority, the first to be held by a single party in 30 years.
Modi campaigned on the promise of job creation and economic development, with the backdrop of India’s flagging growth, corruption scandals and frustrated youth population. But measuring his success based on gross domestic product and the quantity of jobs alone would be misguided. The real challenge for Modi – who critics call sectarian and divisive – lies in ensuring inclusive growth that reduces inequality and generates high-quality jobs for all, including minorities and marginalized populations.
To be sure, number of jobs is alone a major issue. Even when the economy was growing at the rapid rate of 8 percent, it added only 400,000 new jobs each year from 2005-2010, dismal for a labor force of almost 500 million and with about 10 million new entrants per year.
Yet focusing only on quantity of jobs will not put the country on a sustainable path of economic growth. The Modi government must create high-quality jobs – jobs complete with rights and prospects for economic mobility – and ensure that marginalized groups can access them. Only in this way will the country realize its “demographic dividend” and reduce the systemic social and economic inequalities that have contributed to the slowdown in growth.
With high-quality job creation as the goal, some “Modi Manifesto” policies need a rethink.
Modi promises a major investment in infrastructure, building on his reputation for upgrading infrastructure in Gujarat, the state where he has served as chief minister since 2001. This, he argues, will create many new jobs. Infrastructure investments create direct employment in the short run, but in the long run India needs to create more than temporary construction jobs; it needs to generate jobs in high-value-added sectors that spur domestic consumption.
Labor law reform was another of his campaign promises, and indeed, some of the country’s labor regulations are rigid and archaic. But Modi must balance healthy labor market flexibility with worker protections strong enough to prevent exploitation. India needs better, not just looser, regulation. And potential investors look not only at laws, but the consistency of their enforcement; only a combination of legal reform and better compliance will create a reliable investment climate.
The new government will also inherit an ambitious but poorly executed program for skill development – aimed at training India’s workers for 21st century jobs. Improving the policy means addressing huge inefficiencies, updating weak curriculum, and strengthening metrics for success. Beyond this, the program must foster equality of opportunity by targeting groups underrepresented in the formal sector, like women, youth, and religious and caste minorities.
Modi’s campaign attempted to transform his image from a leader of Hindu nationalists, criticized for complicity in one of India’s most brutal episodes of religious violence, to a leader for all of India. Now rhetoric must translate into policy. Inclusivity must be the cornerstone for Modi’s economic agenda. The jobs he creates must be good jobs, and they must be for all.