Introduction

The unemployment rate in India rose to 7.2 percent in February 2019, the highest since
September 2016, and also up from 5.9 percent in February 2018, according to the latest data
compiled by the Centre for Monitoring Indian Economy (CMIE). 1. The total number of
employed persons in February 2019 is estimated at 400 million against 406 million in the year-
ago period and 407.5 million employed in February 2017. 2. The labour participation rate fell
from 43.2% in January 2019 to 42.7% in February 2019.

India has the second largest road network in the world. Ministry of Road Transport and
Highways (MoRTH) is planning to develop around 60,000 km of roads in the next five years at
about 40km/ day. Road construction and award trends in recent years also give optimism of
achieving such high targets. Focus continues to be on Bharatmala Pariyojana, with added stress
on multimodal integration, road safety, increasing use of Information Technology (IT)
applications, augmentation of existing funding sources and emphasis on green initiatives. Also,
enhanced passenger facilities and logistics efficiency are major considerations.

Public Private Partnership (PPP) is the need of the hour. With reference to PPPs, roads and
highways has a long history. The journey started toward the beginning of the millennium with
road asset development and operation models like Build Operate Transfer (BOT) (Toll) and BOT
(Annuity) and attracted high participation. This gradually waned post 2012 due to various issues
including aggressive bidding and over-leveraged balance sheet of developers, shortcomings in
project preparation activities and land acquisition issues. The Hybrid Annuity Model(HAM) was
introduced to reinvigorate PPP participation in the road sector after interest in BOT projects
waned. It focused on proper allocation of risk among partners. Further, operational asset
monetisation models have gained prominence recently with the advent of the Toll-Operate-
Transfer (TOT) .

Measurement of Unemployment:
There are three measures or estimates of unemployment. These are developed by National Sample
Survey Organisation (NSSO). They are:

1. Usual Status Unemployment: Also known as open unemployment or chronic unemployment. This
measure estimates the number of persons who remained unemployed for a major part of the year. This
measure gives the lowest estimates of unemployment. This concept used to determine the usual activity
status of a person as employed or unemployed or outside the labour force. The persons covered may be
classified into those working or available for work in their principal activity sector and subsidiary sector.

2. Weekly Status Unemployment: The estimate measures unemployment with respect to one week. A
person is said to be unemployed if he is not able to work even for an hour during the survey period. In
other words according to this estimate a person is said to be employed for the week even if he/she is
employed only for a day during that week.

3. Current Daily Status Unemployment: It considers the activity status of a person for each day of the
preceding seven days. The reference period here is a day. If a person did not find work on a day or some
days during the survey week, he/she is regarded as unemployed. Normally if a person works for four
hours or more during a day, he or she is considered as employed for the whole day. The daily status
unemployment is considered to be a comprehensive measure of unemployment.

Do creating better roads mean creating better jobs?

It estimates the employment elasticity - the effect of a 1 per cent increase in cost savings
associated with infrastructure improvement on percentage change in employment - and
concludes that depending on the region, better infrastructure can indeed boost employment. For
instance, the study estimates that for firms in 'services region', with every 10 per cent increase in
cost saving due to improvement or provisioning of roads, 5.6 per cent more jobs can be created.
The study surveyed 2,500 enterprises across 18 districts in India. The 18 districts were further
bucketed into three regions - agro-allied region, industry region and services region - based on
shared economic characteristics.

Investment in infrastructure gives rise to three types of jobs, the study states. There are direct
jobs, indirect ones, as well as induced jobs. "Direct jobs refer to those created for the purpose of
building infrastructure. During the process of infrastructure provision, industries with linkages to
this activity (such as industries supplying raw material) see a rise in demand, and therefore,
increase in the number of jobs. This is the indirect effect of infrastructure on job creation," it
says.  "Ultimately, growth in these industries leads to an increase in the incomes and
consumption of those employed there, which boosts other industries and services. Furthermore,
new businesses could come up because of this spending, leading to further job creation. Existing
businesses benefit from the provision of infrastructure in various ways such as reduced transport
costs due to improved transport connectivity or increased productivity due to reliable access to
power and water. This gives rise to induced employment effects. This study is primarily
concerned with estimating the employment effect," the authors explain. Infrastructure, in the
scope of this study, is not just about roads. It is about all modes of transport, electricity, water
supply, wastewater treatment, telecommunications, post and courier services.

"61 per cent of the firms in the agro-allied region stated that roads were a problem. The second
most common problem, cited by 33 per cent of firms, was electricity. Around 28 per cent of
agro-allied firms identified water supply as an issue. The leading infrastructure issue for
industrial firms was roads, with 84 per cent of them identifying it as an impediment. The second
most cited problem was wastewater and effluent treatment (33 per cent), followed closely by
water supply (32 per cent). The most cited infrastructure problem for services firms was roads
(64.5 per cent), followed by electricity (33 per cent) and water supply (23 per cent)," the survey
found.
Causes of unemployment in roads and highways sector
Despite facing criticism for failing to arrest the declining household consumption over the past
few years, the Union Budget 2022-23 made it clear that the Centre has yet again decided to stick
to its strategy of building roads, highways and gas pipelines to propel growth. While this is
possibly being done with the hope that it will create low-end jobs and push consumption in the
lower income group, will the strategy yield results this year?

Former finance secretary Subhash Chandra Garg is not exactly in the optimists’ camp. He says
that roads and highways do not create the requisite jobs that India needs in its economy.
“Building roads and railways lines is a slow process of providing jobs and income support to
poor people in the economy. Today, roads are built with high-end technology, and a large part of
the money invested in highways goes in deploying heavy machines, not labour,” Garg explains. 

Garg states that in 2019, the National Highways Authority of India (NHAI) spent about Rs 25
crore per kilometre of road construction. In that entire expenditure, the wage component
accounted for just Rs 2 crore. This is why the theory of direct income transfer to the poor is
much better than building roads if the purpose is to create jobs, Garg has explained a part of this
calculation in his recently published book The $10 Trillion Dream.

Between April 2014 and November 2021, the total length of national highways in the country
increased by 54 per cent— from about 91,287 kilometres in 2014 to 1,40,937 kilometres in
November 2021.

However, one would believe that great roads lead to an increase sales in the automobile sector.
Contrary to the assumption, the next immediate economic activity in the form of auto sales has
stagnated. Industry bodies estimate the total vehicle production in 2021 till December at
2,40,67,787 units, which is less than one per cent growth from the number of units produced in
2015-16, which stood at 2,40,16,599. Two-wheeler sales data—a more important indicator of
social mobility since it is a barometer for income in the lower middle-class families in rural and
urban areas—for April-December 2021 stated that just 10 million units were sold, showing that
this demand is at a decadal low in the country. 

The decreased spending on automobiles tallies with the overall consumption levels in the
country. The latest government estimates peg private final consumption expenditure—the
expenditure incurred on final consumption of goods and services by the resident households and
non-profit institutions serving households—for 2021-22 at Rs 80.81 lakh crore, down from the
2019-20 level of Rs 83.22 lakh crore. From FY15 to FY22, India’s private consumption has
grown at a compounded rate of five per cent, whereas it grew at 6.33 per cent from FY12 to
FY15, suggesting a clear drop in the consumption pattern, especially during two years of
pandemic. The auto spending and the household spending figures do not suggest that there is any
immediate gain in demand on account of heavy spending on highways.
Various statistics to show challenges with unemployment in India according to
CMIE