Assembly elections: Low growth, high unemployment in poll-bound states

Assembly elections: Low growth, high unemployment in poll-bound states

A L I ChouguleUpdated: Tuesday, January 25, 2022, 08:25 AM IST
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Representative Image | Pixabay

Several academic studies have found that there exists a strong link between key economic indicators like per capita income, unemployment and inflation and electoral outcomes, though economic performance is not the sole determinant of electoral outcomes in a complex and diverse country like India.

While inflation and joblessness usually feature among a medley of issues in election campaigns, they don’t make headlines. Instead, caste, religion and defections get more attention and are often the highlight of campaign rhetoric.

But economic matters do influence voting patterns. So, how have Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa performed on economic parameters like people’s income and unemployment? One common factor in the poll-bound states is high unemployment and lower growth rates in per capita income levels, though there is vast variance between these states, with Goa at the top and UP at the bottom.

Although UP’s overall economy is bigger than almost all the states in India, given that it is the most populous state in the country, in per capita terms it is the weakest among the five states that will go to polls between February 10 and March 7.

While the national average for per capita income in FY20, according to Express research based on the RBI data, is Rs 95,000, per capita incomes for Goa at Rs 3.04 lakh, Uttarakhand (Rs 1.59 lakh) and Punjab (Rs 1.19 lakh) are higher than the national average. But Manipur at Rs 54,000 and UP at Rs 45,000 are barely half of the national average. This clearly shows the difference between the level of poverty or economic well-being of people in each of the five states.

However, it is unlikely that the vast variance between net per capita income levels in different states will affect the electoral choices of voters in the five states. Instead, what will matter more is the growth rate in per capita income in the five years leading up to the elections. If one assumes that the economy and absolute level of per capita income will revert back to pre-Covid level by the end of FY22, data suggests that the growth rate in UP’s per capita net income will be just 1.8 per cent for the full five-year term between FY18 and FY22 under the leadership of Chief Minister Yogi Adiyanath, which will be lower than the national average of 2.7 per cent for the same period.

In contrast, during the previous government led by Chief Minister Akhilesh Yadav from FY13 to FY17, the annual growth rate in real per capita income was 5 per cent. In comparison, Uttarakhand, which has had three chief ministers in the last five years of the BJP rule, is likely to have a growth rate in per capita income at 2.8 per cent, a shade higher than the national average. The growth rate in net per capita income for the state during the Congress rule between FY13 and FY17 was 6.7 per cent, far above the national average.

In Punjab, the growth rate during the SADBJP alliance rule from FY13 to FY17 was 4.3 per cent; between FY18 and FY22, the Congress government under two chief ministers will end its five-year term with a growth rate of just 2.4 per cent. While for Manipur the deceleration in growth rate to 2.7 per cent is in sync with the national average, compared to the 3.5 per cent growth rate achieved during the Congress rule between FY13 and FY17, Goa is likely to end FY21 with a steep fall in per capita income. Before moving on to the unemployment rate in the five election-bound states based on CMIE data, it is important to mention here that the labour force participation rate (LFPR) in India has been falling over the past decade.

This is not because more jobs have been created but because fewer people belonging to the working age group have demanded jobs. For India, the LFPR is around 40 per cent, as compared to 60 to 70 per cent in comparable countries. This means that while in other countries 60 to 70 per cent demand a job, in India only 40 per cent look for a job.

Therefore, lower LFPR does not mean lower unemployment rate. Hence, to capture real joblessness in India, experts suggest that employment rate should be considered. According to Express research analysis, the 4.83 per cent unemployment rate in UP is misleading because it hides the steep fall in LFPR from 41.85 per cent in December 2016 to 34.45 per cent in December 2021. In December 2016, UP’s working age population was 14.95 crore and its total employed people number was 5.76 crore. In December 2021, its working population was 17.07 crore, but the total employed people in UP are only 5.59 crore.

This means the total number of people with jobs in UP has shrunk, which is best captured by the employment rate which has fallen from 38.5 per cent to below 33 per cent in five years.

The national average employment rate is 37.42 per cent, while unemployment rate stands at 7.32 per cent. In Uttarakhand too, the employment rate has fallen steeply, from 40.10 per cent to 30.43 per cent in five years, while its working age population has increased from 80.37 lakh to 91.41 lakh people in the same period. Punjab and Goa too, employ fewer people today than they did five years ago.

In December 2016, Punjab’s employment rate was 42.28 per cent, today it is 36.86 per cent, while its working age population has increased from 2.3 crore to 2.6 core. However, Goa has witnessed a steep rise in joblessness in the last five years: its employment rate has fallen from 49.31 per cent to 31.99 per cent in five years, while its working-age population has increased from 12.29 lakh to 13.13 lakh.

In other words, not only have growth rates and net per capita incomes fallen in the five states going to the polls, the employment rate too has fallen substantially, even though the working-age population has increased in all the five states. So, it remains to be seen how falling incomes and high employment will play out in each state election.

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