Abusaleh Shariff, 08 May 2006
New Delhi: May 8 2006: Since the mid-1980s the pace of economic growth has improved for the better from 4% or lower in the previous period to above 6% during the 1990s and slightly higher in ’00s. Much of the expanded growth during the past one and half decade has arisen from a robust performance in the services sector, followed to a limited extent in industry and manufacturing, and lastly in agriculture.
Thus, the relative ‘balance of power’ has tilted in favour of the labour force employed in the services sector. This sector employs about 28% of the labour force and contributes about 55% to total GDP, the average per capita value added in some services have been recorded at higher than Rs 600,000 per annum.
The service sector broadly constitutes (a) traditional services like trade and artisanships; and (b) modern technology-aided services such as information technology, education and health, hotel, restaurants and tourism, banking, finance and so on.
While the labour force employed in the former is mostly illiterate and belongs to marginalised communities such as the dalits, OBCs and Muslims; practically the entire labour force employed in the modern sector is educated, urban-oriented and with a substantial share of upper caste Hindus (UCH).
Only 8% of the entire labour force, however, is employed in ‘modern types of services’, which contribute 25% of all GDP. Thus, this share of the labour force contributes about three time its own share to GDP.
This is the most efficient segment of the labour force in India and absorbs not only highly educated but also technically superior professionals across India. As expected, this segment of the labour force absorbs 16% of all UC Hindus, 6% of OBCs and Muslims each, and 5% of SCs/STs.
These shares as a proportion to the sectoral labour force are 44% of UCHs contributing 54% of all modern-sector GDP value-added. Followed by OBCs with 24% labour and 21% of modern sector GDP; SCs/STs with 17% of labour force and 12% GDP; and Muslims, 8% of the labour force, but only 5% of GDP.
The respective shares of labour and GDP in traditional services are 25:37 for UCH; 30:32 for OBCs; 22:14 for SCs/STs and 17:9 for Muslims respectively. The respective efficiency quotients in modern services are 1.2 for UCHs, 0.9 for OBCs, 0.7 for SCs/STs and 0.6 for Muslims.
At the overall level of the economy too, the UCHs contribute 39% of GDP with only 23% labour share. OBCs’ share of GDP and of labour is just about the same at 33% and 34%. But in the case of SCs/STs and Muslims, these percentages are 13:29 and 6:10 respectively. The efficiency quotient for the economy as a whole works out to 1.7 for UCHs, 1.0 for OBCs, 0.5 for SCs/STs and 0.6 for Muslims.
The above analysis highlights the following: The UCHs have been the driving force of economic growth thus far and their efficiency quotient has been considerably high for the economy as a whole. While UCHs are still front-runners in the efficiency quotient tables for modern services, the differentials compared with others is considerably low.
This provides us with strong signals on how to get India’s GDP sustained at say 7-8%, or increase it to 10-12% per annum. The OBCs, SCs/STs and even Muslims will contribute substantially at higher levels of efficiency, if provided with modern technical education and the opportunities to participate in modern service and even industrial activities.
The very small proportions of higher-level qualified professionals amongst the dalits, Muslims and OBCs must be enhanced through public action. How should the share of SCs/STs, Muslims and OBCs be increased in various sectors of the economy?
Firstly, these communities must be encouraged to improve their participation and continuation in mass education at the elementary, matriculate and graduate levels.
This can be done through a combination of affirmative actions favouring these communities and providing schools and colleges near their living spaces; changing appropriately the provider (teacher) profile especially at lower levels of education; and offering incentives to girls and the poorest of the poor.
At higher and technical levels of education, the current system of reservations must be extended in such a way that entry into such education is made somewhat easy, but without compromising the levels of achievement needed to secure such education.
No country in the world has developed using only the first and second rank holders! Although they are a cause of pride, what is needed is an improvement in the efficiency quotient and there is strong evidence that this is not entirely the domain of the upper castes. The question of reservation, however, has to be understood differently for education (higher, technical and specialised) and employment. In case of education, reservation only allows somewhat guided entry into the institution, but the index person has to meet all the benchmarks fixed to come out successfully.
Thus, while one can expect rather lower success rates among those who have been admitted on quotas, the system does not lower the benchmark standards set. One can achieve this type of reservation by enhancing the number of admissions and expanding the concomitant hardware, software and infrastructure.
So far as employment is concerned, reservations favoring SCs/STs, Muslims and OBCs will help in finding an adequate number of teachers, professors, doctors, engineers and scientists, who wish to stay in the country and may even be willing to spread out across the hinterland of the vast country that is India.
(The author is head, human development programme, at National Council of Applied Economic Research (NCAER). He is also member secretary in the PM’s High Level Committee).
Source: Economic Times