Jobs Exports and the Trade Pacts Links

Context: India needs to shed its exaggerated fears of trade agreements to create new jobs.

Issues challenging Indian Economy:

• Unprecedented Recession: India’s economy contracted by 23.9% in the first quarter of 2020-­21, and it is the first time in its independent history.
• Loss of Employment: Unemploy­ment had recently reached a 45­ year high, and more than two crore people lost their jobs during the lockdown.
• Low wages: Rise in manual work pays the lowest daily wage as provided under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.
  • MGNREGA employs 11 crore people, i.e. 20 times more than the total number of persons employed by all the companies listed on the stock exchange.
• Export Pessimism: Merchandise goods exports declined from $314 billion in 2013­14 to $313 billion in 2018-19. (due to demonetization and Goods and Service Tax).
• Rising protectionism: due to a foreign trade policy with higher tariffs, non-­tariff barriers, quantitative limits, the return of licensing, border country restrictions and the appreciating value of the rupee.
  • Issues with Free Trade Agreements (FTAs): FTA provisions were misused by countries to increase disputes and drag India to international arbitration in relation to investment and tax policies.

Way Forward:

• Focus on comparatively advantageous labour-intensive sectors: such as apparel, leather goods, value-added agriculture as these are job-creating sectors depend on domestic and export market.
• Encourage and incentivize exports:
  • For E.g. exports were the most significant factor that drove the Indian econo­my in the ‘boom years’ of 2003­-2012; India was the third fastest-growing exporter with 12% annual growth.
  • Merchandise exports can create jobs in warehousing, transport, stevedoring, container stations, shipping, ship handling, ports and export financing.
• Negotiate bilateral and multilateral FTAs: since to be able to export goods, India must import raw materials or equipment or technology from other countries in the supply chain.

Conclusion: India must shed the policy of full protectionism/ export pessimism and autarky for reviving its economic growth by increasing FTAs, exports and thereby employment.