Satyameva Jayate

One response of the government to the post demonetisation jobs challenge was that there was no problem with jobs per se, but the problem was with lack of reliable data on jobs. Thanks to the enterprising young journalist, Somesh Jha, now we know that the problem was not with lack of data but with the government systematically suppressing the release of data available with it. It blocked the release of the Labour Bureau report for 2016-17 and the NSSO report for 2017-18.

Managing a narrative that is evidently different from reality in a large democratic country like India with a media that still has spine is a challenging task. What began by ignoring CMIE ("there is no reliable data"), had to shift to actively rubbishing CMIE data and promoting dubious use of data as jobs data (EPFO and Mudra), to then suppressing its own data. Now, the efforts to control the narrative have moved to the next stage of hijacking the independence of the official statistical machinery.

I have no doubt that the data published in Business Standard are indeed NSSO estimates. NITI Aayog Vice-chairman and its CEO in their desperate damage-control press conference did not say that these are not NSSO numbers. They said that these were draft and not finalised. This is an acknowledgement that the data are indeed those of the NSSO's PLFS survey. Once a survey is conducted and the estimates generated by a professional body like NSSO and approved by an independent body like the National Statistics Commission in this case, how can the government change the estimates except by tampering with the record level data or tampering with a professionally approved methodology. If they do any of these or anything worse, they will take India to ridiculous levels of absurdity just to manage the narrative.

Perhaps, it would be much simpler to face the truth -- a truth that CMIE has persistently shown and a truth that Somesh Jha and Business Standard have recently unveiled.

The truth is that post demonetisation, labour force participation rate has fallen sharply and unemployment has risen.

A fall in the LFPR was the most devastating impact of demonetisation. People did not just lose jobs after demonetisation, youngsters even stopped looking for them because there were not many on offer.

Somesh reveals that the drop in LFPR according to the NSSO was from 55.9 per cent in 2011-12 to 49.8 per cent in 2017-18 -- a drop of six percentage points in the rate in a six year period. 

NSSO uses a July-June period. For the same period, according to CMIE's CPHS, the participation rate fell from an average of 45.1 per cent in 2016-17 to 43.3 per cent in 2017-18 -- a drop of 1.9 percentage points in the one year of demonetisation.

The difference in levels between CPHS and NSSO estimates is principally because the two consider different reference periods. NSSO's estimates are based on what is called the Usual Status that takes into account a person's status during a 365-day period while CPHS takes into consideration a person's status on the day of the survey. The Usual Status is too liberal in classifying a person as employed and is not the most suitable to decipher short-term shocks like demonetisation. It also suffers from potentially poor recall. CPHS is better suited to measure short-term impact and does not suffer from recall problems.

In spite of the NSSO's survey being liberal in classifying a person as employed, it shows a sharp increase in unemployment. According to the NSSO, the unemployment rate using the liberal Usual Status measure was 6.1 per cent in 2017-18. According to CPHS, the unemployment rate was lower at just 5 per cent. The difference is because of the greater fall in the labour participation seen in the CPHS.

The dramatisation of this being the highest in 45 years is not as important as is the recognition of the fact that we have a problem on hand. Fighting the truth is a losing battle.

The government needs to at least heed its own statistical agencies, engage the best labour economists in the country and even globally to address this problem of lack of jobs rather than manage the narrative through bizarre mechanics and laboured press conferences.

If the NSSO, Labour Bureau, CMIE's CPHS, CapEx and Prowess databases -- all indicate that the investment and employment scenario in the country has worsened in the recent past, then challenging these results by juxtaposing them against the 7 per cent GDP growth can only lead to one outcome -- it's time to put those GDP growth numbers under the microscope.