Belying the hopes from the government, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) shows there has been no improvement in manufacturing employment since the Modi government took charge.

The chart shows the employment sub-index of the manufacturing PMI since January 2014. A reading above 50 shows an expansion in employment from the previous month, while one below 50 denotes contraction. Note that in the current year, the employment sub-index has remained below 50 for six out of nine months. Last year, on the other hand, the employment sub-index remained above the crucial 50 level for the first six months.

According to the Markit report for September, “Weaker increases in new business inflows and a cautious approach to costs reportedly led Indian manufacturers to shed jobs in September. This followed a stagnation in employment levels in the prior month."

True, the contraction in employment levels has been marginal so far. But the fact remains that we need a huge amount of new manufacturing jobs to provide decent employment for the masses, if India’s demographic dividend is not to become a demographic nightmare.

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