Two separate surveys – one by the Reserve Bank of India (RBI) and another by an industry body – have pointed out that the twin economic reforms, demonetisation and Goods and Services Tax (GST), led to job losses, apart from impacting the economy adversely in other ways.
RBI’s latest Consumer Confidence Survey, published on 5 December, indicates that the optimism on employment scenario and economy in general received a jolt right after demonetisation in November 2016, and is yet to recover since then.
On the other hand, a survey by the All India Manufacturers’ Organisation (AIMO) has revealed that the Trader, Micro, Small and Medium Enterprises (TMSME) segment has witnessed widespread job losses in the last four-and half years.
Growing Pessimism About Economy, Notes RBI
“The current situation index (CSI) declined further in November 2018 in a phase that commenced in November 2016, on the back of growing pessimism on the general economic situation and the employment scenario,” RBI observed in the Consumer Confidence Survey (CCS).
CSI is calculated on the basis of responses on the economic situation, income, spending, employment and the price level.
The survey shows that consumer confidence, which was peaking in November 2016, saw a sharp decline thereafter (see figure below), and has stayed stymied since.
As can be seen in the figure, the future expectations index (FEI) also moderated due to lower optimism on the employment scenario and household spending.
FEI maps the respondents’ expectation for the next one year.
Significantly, the respondents’ expectation on employment has worsened over the last one year.
The RBI survey suggests that in November 2018, expectation of 47.2 percent of the 5,326 respondents have worsened, as far as employment is concerned, as compared to 45.8 percent of the respondents, a year ago.
On the general economic situation front, 45.2 percent of the respondents feel that the scenario has deteriorated.
24 - 43% Job Loss: All India Manufacturers Organisation
In a separate survey, 34,000 respondents from the TMSME sector ( Traders , Micro, Small and Medium Enterprises) have reported job loss and decline in revenues in the last four-and half years. The survey notes demonetisation and the roll out of GST as the reasons behind it.
"The TMSME segments have had a negative impact with job loss of 43 percent in the trader segment, 32 percent in the micro segments , 35 percent in small segments and 24% loss in medium segments," AIMO has said in a release, detailing on the survey.
“The year 2015 – 16 saw a growth in all areas of business due to high sentiments andexpectations from the new leadership. It went down next year due to demonetisation and then again due to GST implementation”.AIMO release
AIMO also notes that as far as job loss is concerned, tailors, cobblers, barbers, plumbers, masons, electricians were the worst hit.
The survey further reveals that the number of companies making profit has come down. "If 100 companies in trader segment were making profit in 2014 –15 , now only 30 are making profits for the current year , in the micro scale industries the drop was to 47 , in the small scale industries it has dropped to 65 and in the medium scale industries segment it has dropped to 76,” the release stated.
The industry body has demanded for prompt clearance of dues from the government and relaxation in GST, to deal with the situation.
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