INDIA-KLEMS DATABASE (Syllabus: GS Paper 3 – Economy)

Context: Prime Minister of India, based on the India-KLEMS database, claimed that India created “eight crore new jobs in the last three to four years”.

India-KLEMS Database

• KLEMS Framework: KLEMS stands for Capital (K), Labour (L), Energy (E), Material (M), and Services (S).
• About: This project started in 2009 as an academic exercise financed by the Reserve Bank of India (RBI).
• From: 2022, the RBI began hosting the India-KLEMS database
• Purpose: The framework is used to measure industry-level "total factor productivity" (TFP), which mainstream economists consider as a measure of input efficiency in producing output.
• Objective: The KLEMS framework is not to produce employment data; employment figures are merely inputs into the database’s modelling framework.
• Data Collection: The RBI does not directly collect data on any inputs, including employment. Instead, it sources data from official sources like the Central Statistics Office, Census of India, Annual Survey of Industries, and Periodic Labour Force Surveys (PLFS).

The method in India-KLEMS

• Borrowed Data: India-KLEMS uses employment data from the Periodic Labour Force Survey (PLFS), focusing on the Worker Population Ratio (WPR) rather than the absolute number of workers.
• Estimation Method: To estimate the number of workers, the WPR is multiplied by the total population, but this leads to challenges as there is no official population figure for India post-2011.
• Adopted Method: India-KLEMS used population estimates from the Economic Survey (ES) 2021-22 for 2017-18, 2018-19, and 2019-20, which assumed population growth rates were the same as between 2001 and 2011.
• Calculation: The WPRs were multiplied by these ES-projected populations to estimate the number of workers for the respective years.
• Different Source: For 2020-21 to 2023-24, India-KLEMS used population projections from the Ministry of Health & Family Welfare (MoHFW), based on demographic models including fertility and mortality rates.