One crore job cuts likely this fiscal
4 Feb 2009, 0533 hrs IST, TNN

Ahead of general elections, massive job cuts in labour-intensive industries are giving UPA government the heebie-jeebies. Exports for January have nosedived by 22% and projections indicate that upto one crore persons could lose jobs in the current fiscal ending March.

The export sector data flowing in has increased pressure on the government which has been trying to spur domestic demand to offset decline in overseas orders ever since the global economic slowdown kicked in around September last year. Based on order books, industry inputs predicted a crore of job losses, an estimate that has worried the government.

Aware that the economy might become an election issue, Congress’s draft manifesto has promised greater employment and populist schemes. If the bad news of the economy gets worse, these claims will sound less than convincing.

Ficci found that faced with a slump and piled up inventories, industries like textiles, garments, chemicals and gems and jewellery had cut production by 10-50%. The commerce ministry, through surveys carried out by its own field officials recently, found over one lakh people had already lost jobs upto January 15 in just the 400 units examined.

The one crore figure has been compiled by Federation of Indian Export Organisations (FIEO) which says it has carried out an intensive survey.

Ajai Sahai, director general of FIEO, told TOI that textile, garments and handicraft sectors were the worse affected. “Together they are set to lose more than 4 million jobs by April 2009,” he added. Other sectors that could lose anywhere between 5 and 10 lakh jobs each include gems and jewellery, chemicals and engineering and auto component sectors.

The government seems quite aware of the export sector’s woes. “In view of contracting global demand, we have to focus on domestic demand by primarily stimulating growth in rural areas and highly labour intensive sectors,” foreign minister Pranab Mukherjee, who also holds the finance portfolio, had said on Monday after reviewing the economy and quality of credit delivery.

Finance secretary Arun Ramanathan told TOI that government would at this point concentrate on implementing the stimulus packages announced earlier and ensuring that the job losses are compensated with new ones. “There is no problem of finances. There is enough money to fund companies’ working capital as well as future projects,” Ramanathan said.

The cabinet secretary has also held meetings to review the stimulus rollout while urging states to ramp up public spending. Against the initial export target of $200 billion, government is hopeful of touching $170 billion by the end of this fiscal.