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India's economy is expected to create at least 16 lakh less payrolls in FY20, a State Bank of India report said on Monday.
According to an SBI Ecowrap report, India's economic growth is expected to expand at a slower rate of 5 per cent in FY20, which is "now having a visible impact" on payroll creation.
Quoting EPFO data, the report said that in FY19, India had created 89.7 lakh new payrolls, whereas in FY20, as per current projection, this number could be at least 15.8 lakh lower.
The EPFO data primarily covers low paid jobs as the salary is capped at Rs 15,000 per month, whereas Central government jobs, state government jobs and private jobs are not part of this ambit, as such data have moved to NPS beginning 2004.
"Interestingly, even in the NPS category, Central and state governments are supposed to create close to 39,000 jobs less in FY20 as per current trends. Hence, the number of new payroll created in FY20 could be at least 16 lakh lower than in FY19," the report said.
Further, the report found evidence of a decline in remittances by labourers to select states in India in the last one year.
"These migrants have been making significant financial contributions to their families in their places of origin. The remittance data show a decline in remittances in states like Assam, Bihar, Rajasthan, Odisha and Uttar Pradesh.
"It is possible that the delay in resolution cases under IBC may have prompted companies to downsize their contractual labourers," the report said.
Moreover, migrants make significant contributions to the national economy by providing human capital in sectors such as textiles, hospitality, construction, mining, brick-making and small industries, the report said.
Besides, the report's estimates showed that wage growth has witnessed significant moderation on yearly as well as sequential basis.
"This moderation in wages also implies important lessons that can be deciphered from policy setting," the report said.
In addition, the report cautioned policymakers that such slower productivity growth encourages over-borrowing by corporations and households, only to deleverage later.
"In turn, it represents a big risk to economies and fiscal systems. A similar logic applies to the social and political impact of low productivity growth," it said.