In the shadows of the shiny headlights of big numbers, important details often get overlooked. At the recently concluded “Global Investment Summit” in Bengaluru, Karnataka’s BJP government crowed about “record deals” worth Rs 10 lakh crore being made over the three days. Indeed, it was a staggering headline number, and it got big headlines, too!
The government also boasted that this investment would create approximately 3.5 lakh jobs, which seemed like a large number and suggested that the government was heroically addressing the most pressing issue facing Karnataka and indeed India today—that of employment.
But let’s look at this more closely. How big are 3.5 lakh jobs in relation to Rs 10 lakh crore of investment? If you do the math, you’ll see that it amounts to nearly Rs 3 crore in investment for one job! Common sense will tell us that that is a very high cost for additional employment. Clearly, these big deals were for capital-intensive projects to extract or use the resources and spaces of the state and generate profits for investors, with very little contribution to the people who live here and who are looking for a livelihood.
One might argue that some of this investment is in infrastructure, like renewable energy, which builds the resources of the state. While that is laudable, Karnataka is currently a power-surplus state with low capacity utilisation. This kind of investment substitutes existing capability instead of enhancing it and adds to the burden of the people and the state, who have to bear the capital costs of these investments. It does not help to make Indian industry more competitive; on the contrary, it makes it more cost-inefficient.
Why do such lopsided policies happen? Firstly, because this government is more interested in immediate headlines than a real strategy for sustainable growth. Attracting large investments of almost any kind, for almost any purpose, works for them because it sounds “big.” Second, it is much easier to cosy up to large capitalists and industrialists in large summits and exchange the state’s precious resources for expensive investment.
On the other side, addressing the serious crisis of employment, with a strategy that may start “small” and become “big” later is hard work. That is so because of the many painstaking parts involved, like skill-building, creating seamless linkages, providing effective safety nets, and negotiating favourable terms of trade. Small is beautiful, but small can also be messy and time-consuming, and it doesn’t grab headlines. That’s not something this double-engine BJP government, in Karnataka or at the Centre, may be interested in.
But is there an alternative? In a 2018 article, noted economist Arvind Panagariya suggested that a Rs 3 crore investment in an industry like apparel could create about 200 jobs (i.e., 200 times the one job that is being created out of the Global Investment Summit deals)! The reason is simple: industries like apparel are more employment-intensive than capital-intensive. Making them successful and competitive creates hubs of great employment opportunity, lifting the lives of millions of people from near-poverty and providing them with the dignity of a job.
We just have to look over our shoulder at our neighbouring country, Bangladesh, to see what a success their garment export sector has been. From almost nowhere 25 years ago, Bangladesh exports about $42 billion worth of garments, about two-and-a-half times that of India; that means about two-and-a-half times the employment as millions of jobs are created. They focused on trade agreements, supply-chain linkages, and making things easy for small and medium businesses. They provided a platform for small industrialists and energetic workers to get a better life, rather than for big capitalists to become the world’s richest (as India has).
Karnataka has the base for a garment industry, just as it does for a toy industry. If it focused the same effort on how to transform these and similar sectors to make them globally competitive, it would yield amazing results in terms of exports, value addition, and, more importantly, employment. With the growing reluctance of developed countries to rely on China, especially after Covid, the timing could not be better. But it requires political will to shrug away from the ease of snuggling up with crony capitalists and do the hard work of leading transformations in mass sectors. It requires the sensitivity to not be dazzled by the “lakhs of crores of rupees” making grand headlines, but rather to understand the criticality of creating jobs and livelihoods.
Karnataka, like India, needs an employment solution, not a hefty investment package. From the dizzy heights of Global Investment “Summits”, let’s come down to ground reality and get the hard work done to make that solution happen.
(The writer is Secretary for Bengaluru, Aam Aadmi Party)