It is key for India to send a signal to the world that we are a country where it is indeed easier to do business
CII expects the economy to recover and sees 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14
When Narendra Damodardas Modi took office on May 26, 2014, the nation that had long grappled with rising inflation, corruption and an ineffective government sighed in relief as their prayers were finally heard. A billion people’s hopes and faith linger on the one man to take India to the superpower status that it should have – will the Bharatiya Janata Party whose 2014 election manifesto talked about governance and development deliver the promises they made? From developing 100 new cities to ensuring a conducive, enabling environment for doing business, the BJP manifesto had it all.
Top 10 HR Highlights of the BJP Manifesto 2014
- Build 100 new cities and develop 100 most backward districts of the country
- Set up a National Optical-Fibre Network up to the village level; and Wi-Fi zones in public areas
- Strategically develop labour-intensive sectors like textile, infrastructure, housing and tourism
- Strengthen the traditional employment bases of agriculture and allied industries, and retail through modernization
- Transform employment exchanges into career centres
- Set up dedicated Women ITIs, Women wings in other it is
- Setting up the National Youth Advisory Council and launching a programme, ’Youth for Development’
- Nation-wide ’district level incubation and accelerator programme’ for encouraging innovation and entrepreneurship
- Ensure a conducive, enabling environment for doing business in India
- Reviewing and reviving MSME sector and enabling it with better access to formal credit and technology for modernization
The nation has given BJP the mandate – the party scored 282 seats on its own while the NDA alliance has 336 seats in the Lower House of the Parliament, the Lok Sabha – it needs to get going with the reforms and challenges. Industry experts are hopeful that from here on the situation will just improve for the better.
The job outlook for India has improved considerably since it became apparent that the Modi-led NDA alliance was coming to power. The Manpower Employment Outlook Survey – India for the second quarter of 2014, which interviewed 5,302 employers, pegs the employment outlook at 45 per cent. The survey interviewed in the country and is an improvement over the Q1 results where the outlook was pegged at 29 per cent. Another survey by Randstad Workmonitor, which was released in December 2013, showed that 84 per cent of the respondents expected the economic situation to improve. “Corporate India believes that 2014 will be a vital year for the growth of the Indian economy. The expectations are high for accelerated execution of reforms that leads to more jobs,” said Moorthy K Uppaluri, CEO, Randstad India & Sri Lanka.
In the March 2014 Cover Story (Is 2014 the year of turnaround?), People Matters had predicted that hiring would definitely increase in the second half of 2014. Many companies, especially those in sectors that were sensitive to the changes in government policies, had put their hiring plans on hold as the nine-stage election process was underway from April 7 until May 12. The results of the election were declared on May 16.
At this moment, the country is in a state of euphoria and it will be a while before the government actually settles down to start working. However, Modi has set the ball rolling by asking bureaucrats not to go on leave and submit a report card of the successes and failures of the previous UPA regime.
It is key for India to send a signal to the world that we are a country where it is indeed easier to do business. Kamal Karanth, MD, Kelly Services India, said, “We hope that the new government will create opportunities in sectors that need attention. Manufacturing sector will take some time to reform and add jobs in the short run. More banking licences, friendlier retail FDI, infrastructure project investments, power sector reforms will mean creating employment across the value chain in the shorter run and that will benefit multiple sectors. Implementing GST will be one big move along with the long due labour reforms.”
CII expects the economy to recover and sees 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14. “Manufacturing shall definitely be a key focus for the new government. To put poverty in India in the museum it belongs, we have to take out labour from our farms and move them to our factories. Besides manufacturing, infrastructure, banking, healthcare, tourism is likely to fare well,” said Rituparna Chakraborty, President, Indian Staffing Federation.
The major reforms to look out for are privatization of PSUs and labour reforms, including introduction of Fixed Term Employment for industry to hire manpower for short-term assignments. “India’s labour markets have been stuck for the last 20 years with 12 per cent manufacturing employment, 50 per cent self-employment, 90 per cent informal employment and 50 per cent agricultural employment. India has not only had jobless growth, but, 100 per cent of the net job creation since 1991 has taken place in the informal sector,” Chakraborty added.
How the markets reacted and what they expect
When the final votes were counted, the markets reacted with joy and investor sentiment was high. The Bombay Stock Exchange’s Sensex crossed a high of 25,000 points, setting new records. Joyous investors cashed in on the mood and hit the lifetime high of 25,375.63 before settling the day at 24,121.74. The National Stock Exchange’s Nifty was not too far behind. It crossed the 7,500-mark and hit an all-time high of 7,563.50 before closing at 7,203. Trading on the stock markets has continued to remain high and they remain optimistic about the future.
Industry bodies across the spectrum joined in the chorus of victory. Not only do they expect to work in close coordination with the NDA government, but also pay urgent attention to issues like land acquisition, labour reforms and the new Companies Act. CII expects the economy to recover and sees 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14. If economic reforms continue, then GDP growth rate could be propelled to 8 per cent level in three years. FICCI expects 8 per cent growth by 2017 and had drawn a roadmap on the key areas that the new government should focus on. Additionally, software body NASSCOM is hoping that the government would catalyse a technology-led transformation in the country and lead to the development of a digital economy.
CII Director General Chandrajit Banerjee said, “With a decisive mandate, the new government could take the tough decisions that are urgently needed to revive economic growth. The first priority is to get the cleared projects operational. This is the quickest way to revive investment demand. From the point of view of sending a very clear message to the investor community at large, we shall also expect the government to give urgent attention to issues arising out of the land acquisition act and the New Companies Act. A strong reform package is needed at this stage to generate the 150 million new jobs that India needs over the next 10 years. Industry expects a fresh view and innovative new ideas to come up as the new government takes over.”
FICCI President Sidharth Birla added, “It is amply clear that the country, especially the youth, wants development and good governance. FICCI hopes this mandate will help the leadership restore much needed investor confidence, attract higher investments and generate employment, especially in the manufacturing sector. Mission-mode actions and bold decisions are most likely to deliver tangible outcomes over the past 6-24 months.
In a press release, FICCI released a wishlist of actions from the new government. The main points of the wishlist are: 1) Mitigate food inflation 2) Manage revenue and expenditure 3) Strengthen legal and judicial infrastructure 4) End tax adventurism 5) Accelerate infrastructure development 6) Fast track project investments 7) Labor reforms, review of Land Acquisition Act 8) Improve governance.
“The Indian IT-BPM sector is a key driver for India’s exports and employment and has demonstrated robust performance over the past two decades. The recent emergence of a rapidly growing ecosystem for innovation driven by young, tech savvy entrepreneurs is a powerful new complement to the existing global reach of the industry. These strengths should be used strategically to achieve many of the critical national goals for the country. We look forward to working with the new Government to build policies and programs that enable the industry to play its destined role globally as well as in the development of the country and while doing so, enable the industry to grow to its full potential and contribute even more,” said NASSCOM President R. Chandrashekhar said in a press release.
Jobs – What is the outlook?
India has a strong consumption led economy model, hence faster decisions and clear course on economic policies is important to propel growth.
Kelly Services said the overall job sentiment is very positive and we are hopeful that it will have a good impact on the hiring industry. “We look forward to new jobs being created among various sectors in India. We can expect 5-10 million jobs to be created in the next few years, however this largely depends on the bold steps the new government is willing to take,” Karanth said and added that the manufacturing sector will see a boost apart from IT/ITeS, Telecom, healthcare, banking and tourism.
According to Joseph Devasia, Managing Partner, Antal International Network, the timing of the elections which coincide with the time when most corporates allot their hiring budgets is a plus point for the job market. “There’s definitely going to be a positive high in the hiring trend, most importantly since we will have a more stable political scenario in the country. If the Gujarat model of development is rightly used, the country may see a good rise in growth and an increase in the liquidity cycle which in turn will help sectors like airlines, FMCG, financial services, manufacturing, infrastructure giving a boost to the job market,” Devasia said. Sectors such as manufacturing, mining, airlines and insurance, which have not seen much positivity in the last few years will definitely be affected positively by the changes, he added.
What is going to see a drastic hit is probably the hiring numbers for the retail sector as BJP is opposed to FDI in retail sector. BJP had opposed multi-brand retail right from November 24, 2011, when the Cabinet approve the proposal for the first time. Modi had said, “I don’t know what the PM is doing. Small businessmen will be forced to down their shutters now.” India had allowed FDI in multi-brand retail in 2012 with stiff riders. However, any reversal in the FDI policy will send a negative signal to the investors and impact hiring as well.
It is imperative for the government to revive manufacturing and Infrastructure sectors as they are expected to create 30-40 million jobs over the next decade, said Randstad’s Uppaluri. Other sectors like healthcare, IT and BFSI are expected to continue to create large numbers of jobs on the back of economic growth. “This will have a cascading effect on other sectors and lead to job creation, which is critical for the existing workforce and the 12 million people added to the workforce every year. In order to sustain growth over a long period of time, it’s important to address the widening skill gaps of the potential workforce,” he added.
One of the agendas on the new government’s manifesto is the revamp of apprenticeship and there is anticipation of some positive change. India has just 3 lakh apprentices as against 3 million in Germany, 10 million in Japan and 20 million in China. “Corporate India can expect a greater acceptance of the need for contract labour at a policy level to keep them globally competitive. One can expect individual states having a larger say around applicable labour laws to attract investments and create jobs,” said Chakraborty adding that any change in labour laws will be at least 24 months away.
Adding another dimension to the argument, Uppaluri said that India does not have any flexi staffing industry specific laws, leading to ambiguous interpretation of current labour laws that are relevant. “The roles of the primary employer, staffing agency and benefits to temporary workforce are not clear. The government needs to bring in this clarity and work towards recognizing staffing as an industry,” he added.
Karanth feels that India’s labour laws are one the most complicated in the world with more than 40 laws existing. The need of the hour is to simplify the process as many laws are irrelevant, rigid and were crafted decades ago, he added.
In conclusion, the Modi government has a lot of work on its hands. It should get cracking as soon as possible and not just focus on job creation but also skilling and employability of people.
“India Inc is looking for employment generation and security. Cyclical emergency has been abetted by low corporate confidence on account of low economic growth, high inflation, regulatory and policy uncertainty. Clearly the expectation from India Inc is to address these issues to create an environment which enables investments and job creation. Flexi staffing companies who are perennial to the growth of the economy support the cyclical hiring trends for India Inc. The expectation of the people is to leap where the growth in job creation will support the growth of the economy at large,” the ISF President said.
Though the core sectors of manufacturing and infrastructure will need immediate attention on the labour front, what needs to be seen is the government setting the right agenda and we will indeed know if BJP is the party with a difference.
Did you know?
Tiff with CII
In March 2003, CII apologized to Narendra Modi over its alleged anti-Gujarat tirade. CII Director General Tarun Das flew in to Gandhinagar to personally apologize on behalf of the industry body after a wide cross-section of the Gujarat industry lashed out for CII’s over emphasis on the law and order situation in the state. In a February 6 meeting earlier that year, Rahul Bajaj and Jamshhyd Godrej were highly critical of Modi. In order to register their protest, Modi and two of his ministers stayed away from a CII event.
Modi’s leadership skills were up for display even when he was a teenager and he was the undisputed leader of the boy’s gang. On display was his domineering temper and anger. His younger brother Prahlad Modi told BBC News that he believes India needs Modi’s get going attitude to turn around its slowing economy. “Narendra-bhai told me that the lines on his palms foretold that he will be a ‘big man’ one day,” Shyamal Das told BBC. “He said to me: ‘I will always travel on wheels’.” However, Prahlad Modi has little expectations from his brother, who is the Prime Minister of India. “I wish he would help the next generation of our family. But I am sure he won’t,” he says. “He won’t even offer tea to someone without a reason - especially his family.”