Montek for policy to raise employment levels

Planning Commission Deputy Chairman Montek Singh Ahluwalia today said policies should focus on generating demand for labour and increasing productivity.

He blamed earlier policies for "discriminating" against labour-intensive sectors, which led to "significant deceleration" in employment.

"Too many of the policies that were followed earlier actually discriminated against small-scale production and also against labour-intensive production," he said, delivering the keynote address at the UN-Planning Commission workshop on employment challenge in South Asia.

"A lot of changes in policies are required, which will affect the ability of the economy to generate employment and increase productivity," he said.

Ahluwalia expressed apprehension about the benefits of employment schemes of the government and said any number of employment programmes would not directly benefit more than 5 million of the 400 million labour force of the country.

"It is very important to recognise that employment programmes have an important supportive role to play in the economic system by providing low-end employment to provide minimum economic security," he said.

The government was committed to bring in a legislation to guarantee employment, he added.

Emphasising the need for greater investments in quality labour, Ahluwalia said besides focusing on minimum primary education, the thrust should also be on imparting secondary education.

He highlighted the need for a complete revamp of industrial training facilities through public-private partnership so that the curriculum was designed according to market demands.

Regarding the increasing labour force, Ahluwalia said migration to urban areas was no solution, they have to be absorbed in non-agricultural employment in the rural areas.

Public investments in rural infrastructure, manufacturing sector and modernisation of agriculture would help address the issue, he added.

He stressed on diversifying from grain-based agricultural activity to horticulture, livestock, fruits and vegetables.

"Such a diversification would require a slew of reforms and policy changes," he said, adding the commission was looking at ways to remove constraints on rural producers and what economic reforms were needed to enable agricultural diversification during the mid term appraisal of the Tenth Plan.

He noted that agro processing was one sector which remained highly "unexploited". Citing statistics, he said only two per cent of the country's agri produce was processed as against 30 per cent in most other countries.

He called for creation of an economic environment to create linkages between corporates and farmers to encourage corporate farming.

"There is no reason why corporates cannot engage in contract farming...They cannot get in touch with groups of agriculturists and provide them with contractual basis for reorienting their production, providing them with seeds and technologies to produce the kind of crop appropriate for agro processing," he said.