IIM Calcutta Blog : Leading The Way

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Tackling Rural Employment

Posted by: Pratyush Prabhakar, Student, PGPEX, IIM Calcutta
Feb 26, 2016

On one side, we have the world’s youngest workforce and rich demographic dividend and on the other side we have people with higher education degrees applying for Government jobs requiring much less education. Not to forget the disguised employment in agriculture resulting in no marginal utility of additional labour employed and increased fragmentation of land holdings and agriculture revenue. Over reliance on Government jobs is no solution to this problem as Government alone cannot cater to the huge demand of jobs creation in the economy.

Nurturing and unleashing the entrepreneurial spirit in our rural population can go a long way in job creation and economic empowerment of a large population. We need to shift from a paradigm where we view our villages as cost centres where he have to spend money on various social sector schemes to enabling our villages to become the profit centres fueling our economic growth. The Government then can move from being job givers to key facilitator of job creation process.

Some ideas can serve dual purpose of job creation and having a positive impact on other aspects of economic prosperity

Decentralization of Energy Generation:

A brief look at data suggests strong positive correlation between Unemployment rate and proportion of population underserved by electricity. Decentralization of Governance has been a part of our policy regime. The time has come to also introduce Decentralization of Renewable Energy Generation which is nothing but generation of Off Grid energy. Off grid energy is generated through a standalone unit without the support of conventional power generation infrastructure. Solar units installed on rural household’s roofs can be a massive source of off grid energy in our country. This will give rise to a “Prosumer” concept in power sector. As the name suggests, a prosumer is someone who both produces and consumes. Thus each household after own consumption will generate a surplus of energy which can be distributed to other households or commercial establishments. The path is easier said than done, but some recent developments generate hope. Achieving socket parity i.e. equalization of the cost of solar power with the cost of grid power is one of the imperative for this concept to succeed. Recently, the price of solar power in India fell to an all time low of Rs. 4.34 a unit which a Finland based firm quoted to set up a 70-MW solar plant under NTPC. Government has set a target of 100 GW of solar energy generation by 2022 out of which 40 GW are to be through roof top off-grid projects. Every GW of off grid energy generated will generate consequent jobs along with increasing energy coverage in the country.

Bridging Information Asymmetry

In the knowledge economy of our times, information asymmetry is one of the biggest divide among our population. In the coming times, access to information will decide access to resources, economic prosperity and level of inequality in the society. The Digital India program of the Government aims to connect 2.5 Lakh villages and provide digital information as a utility to every citizen. It also aims to provide Government services digitally. The trickledown effect of digital resources will only happen when it is backed with strong digital education measures. A large population which is not digitally literate presents both a threat and an opportunity. We can make them digitally aware and generate large number of jobs by encouraging growth of Common Services Centres across the country. These centres can be set up and manned by what I call a Digi-preneur, a rural youth who is well trained in using internet services. The CSCs can provide services like online ticket booking, government services, exam results, weather information, prices of agriculture produces prevailing in local Mandis etc. These can generate number of jobs like STD/ISD booths used to generate in 1990s coinciding with the telecom boom. These CSCs will play a pivotal role in connecting more and more people to the digital infrastructure, make them digitally literate and bridge information asymmetry.

Shared Logistics Infrastructure:

The E-commerce industry in the country has seen a boom with companies attracting investors from world over and gaining huge valuations. Even though E-commerce industry has reached many small towns, still a large part of our population which is primarily rural is still untouched. However, with E-commerce portals expanding their product portfolio, they have a huge untapped market demand in the bottom of the pyramid population. Increasing access to digital services and digital literacy will further stimulate this demand. This demand will have to be backed with the supporting warehouse network enabling last mile connectivity. Hub and spoke model can be used to set up warehouses and connect it with a large territory, thus reducing fixed costs of the industry. When a person/vehicle delivers E-commerce goods to our homes, most of the times, they return empty handed. The same logistics network can be used to ensure reverse flow of agriculture produce, thus mitigating the issue of huge inefficiencies in traditional supply chain of agriculture produce. The warehouses can also be built and operated on a cost sharing basis, thus reducing the burden of rising real estate prices and other costs. The integration of E-commerce and agriculture supply chain will generate large number of jobs and remove inefficiencies in agriculture supply chain while adding to the bottom line of the E-commerce firms.

Along with these, ideas like grooming soil entrepreneurs, commercializing rural innovations and telemedicine centres can further spur entrepreneurship and job creation among the rural population.

Article By: Pratyush Prabhakar
Pratyush Prabhakar, Student, PGPEX, IIM Calcutta is also winner of Transfornation, a world youth innovation challenge for rural transformation

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