Vivek's Commentary

T he recent Economic Survey addresses various aspects of the Indian economy, but there are three key employment concerns that warrant further discussion: the level and quality of employment, women's employment, and the impact of AI on labor laws and regulations. First, the reference period chosen for comparing employment improvements is the 2017-18 PLFS round, a time following demonetization, which significantly impacted the labor market. Using this period as a baseline might present an incomplete picture of employment trends. Comparing current statistics with the early 2000s, a period often referred to as the golden decade of the Indian economy, indicates that there is still progress to be made in terms of unemployment, labor force participation rate, and worker-to-population ratio. Source: Author uses NSSO’s Employment-Unemployment and PLFS surveys. Furthermore, while the survey discusses the expansion of the gig economy, driven by digital platforms, increased internet access,

The debate surrounding whether coalition or single-party governments are more conducive to economic growth is significant, particularly in a diverse country like India where regional interests and political diversity hold sway. Examining the performance of both types of governments through the lens of economic growth, as indicated by GDP and per capita GDP growth rates, provides valuable insights into their respective effectiveness. General Trends in Seat Share and Growth Rates:  The correlation between the seat share of the largest party in the Lok Sabha and economic growth rates reveals intriguing patterns. Notably, as the dominance of a single party increases, there tends to be a decline in both GDP and per capita GDP growth rates. This suggests that when power is concentrated in one party, economic growth may suffer. Conversely, optimal growth rates are observed when the largest party’s seat share falls within the range of 20% to 40%, typically associated with coalition governments

“Proportional representation is not suited to the form of government which this Constitution lays down….in the House where there is a Parliamentary system of government, you must necessarily have a party which is in majority and which is prepared to support the government. One of the disadvantages of proportional representation is the fragmentation of the legislature into a number of small groups. Proportional representation would not permit a stable government to remain in office, because Parliament would be so divided into so many small groups that every time anything happened which displeased certain groups in Parliament, they would, on that occasion, withdraw their support from the Government, with the result that the Government losing the support of certain groups and units, would fall to pieces. Our future government must do one thing, namely, it must maintain a stable government and maintain law and order.”  (Dr. B.R. Ambedkar in the Constituent Assembly Debate on 4th January 19

The economic performance of large states in India compared to China's provinces reveals a paradox in development and governance efficiency. While China's centralized governance system promotes economic growth in its larger regions, India's larger states encounter various obstacles that hinder their progress. Conversely, under India's decentralization, smaller states have experienced significant economic growth. However, the slower progress of India's larger states restricts the nation's overall economic growth. This suggests a need to understand the dynamics of two different governance systems: the performance of smaller states under a centralized system and that of larger states under a decentralized system. From the mobility graph, it is evident that large states in India are trailing behind China's largest province, while the smaller states in India are performing well. In fact, in the initial period, the smaller states of India have a higher average per