#2 No Jobs, Except in IT, and 3 Composers in 1 Film

Kotla Mubarakpur, New Delhi

India Needs Work

India is a 40% economy. 

Only 4 out of every 10 Indians find work. That means 840 million Indians are not doing work that is counted as economic activity. Of course, you need to allow for children, who should be in school, perhaps for the elderly. The international measure, the Labour Force Participation Rate (LFPR), is the percentage of those above 15 who are employed. In 2019, the International Labour Organisation (ILO) estimated our LFPR at 51.91%. Other research, from the Center for Monitoring the Indian Economy (CMIE) estimates a much lower percentage of working Indians, but even by the ILO numbers, Indian employment levels are way down the ladder, at 154 out of 180 nations. 

Nationalistic pride or shame apart, unemployment is a harsh state of being. It robs one of dignity and self-esteem. In a nation with very patchy safety nets, joblessness brings hunger, malnutrition and sickness in its wake. 

COVID made matters worse for those at the bottom of the pile. We all saw visuals of migrant labour defying bans to head home during the March 2020 lockdown. In his book, ‘1232 kms.’, which reads like a gritty adventure novel, Vinod Kapri followed a group of Bihar villagers who cycled home from Delhi, rather than become destitutes in its grotty suburbs. In the Kumaon village I now call home, a long abandoned tin shack got named ‘Maggi Point’ last year. Deepak and Lalit set up their snack shack when their employers, in Ghaziabad and Dehradun, shut their dhabas down last March. “We barely break even here, but it’s better than doing nothing.”

Going home is not an option for everyone. This morning, I walked to one of the scores of labour chowks that dot Delhi, where ragged men gather every morning in search of daily wages, earned by painting walls, fixing doors and windows, or moving furniture. By 9:30, they were beginning to give up hope of work for the day, and clustered around for a chat.  A motorcycle pulled up, and a knot formed around it. No deal was struck, and they returned.

“It’s been like this for 2 years: lockdown for COVID, lockdown for pollution… what about the poor man?” 

“Can’t you go back home?” I asked two friends from Aligarh district. 

“And spread the food even more thinly for the family?” 

I wonder how each of these people would respond to an employment survey. Deepak and Lalit, of ‘Maggi Point’, would probably say they’re working, but the truth is, they are severely under-employed. For most Indians, the definition of employment is very loose; even outside of agriculture, only 30% of employment is in the formal sector. The rest work largely without employment contracts of any kind. The design of our Periodic Labour Force Surveys (PLFS) makes room for the tenuous nature of work. Surveyors ask for your Usual Status (US). Then, they check your Current Working Status (CWS) - whether you have worked 1 hour  or more in the last 7 days. On average, there are 20 million Indians who are ‘usually employed’, but haven’t worked even 1 hour in the last week.

India’s rural employment guarantee scheme, the MNREGA, is a political response to the reality of unemployment. The Modi government pointed to this as the ‘povertarianism’ of the UPA, but the needle of job creation has not moved since 2014, and the budgetary demands on MNREGA keep rising. Despite the Make in India scheme, the share of manufacturing in Indian employment has slumped, to 11.2%. Though Demonetisation and GST are claimed to have ‘formalised’ the economy, this is not reflecting in formal job creation.    

When we set up home in the Nainital hills  25 years ago, there was an enthusiasm around schools. “Go to school, study hard, get a job”. A generation of those children has since passed into adulthood, and we see the kind of jobs they have got. A taxi-driver who has defaulted on his bank loan, and had his car repossessed; a waiter in a resort now on COVID furlough; a returned factory worker seeking daily wages in the holiday homes of the rich; a gardener in our neighbour’s home. Only one of the young men I knew as a child has found his way into the formal economy; he trained in hotel management with the Oberoi group, and is now deployed at Antilla, the Ambani residence in Mumbai.

If this sounds like a lament for India, it is. I don’t have any answers; there are no easy answers. I have one question though: It makes sense for the US to import goods from China, in effect exporting factory jobs to a country with much lower wages. But how did we end up doing the same thing, when our factory wages are less than one-third of China’s? This speaks for deep systemic inefficiencies, which logos and grand announcements do nothing to address. 

Schemes like the MNREGA are only ointments for a gaping wound, and that ointment is being spread thinner and thinner. Daily MNREGA wages are lagging behind the minimum wage. In the poorest states of the country, Bihar and UP, families registered for the scheme get barely 10 days of employment a year.

The fact is, 4 out of 10 working people cannot sustain a nation at any level of prosperity. Employment is the machinery by which we produce goods and services that others want, and earn money to buy the goods and services we want. We need to find the gears by which to engage with each other in this vast machine. So far, we have failed. Spectacularly.

Our IT Exporters Rock

The one Indian sector in which employment has steadily grown is Information Technology. Between 2011 and 2021, Statista estimates that the number of Indians working in the Indian IT industry has grown from 2.5 to 4.5 million. During the last quarter, when Indian businesses were limping back to some sense of normalcy, the top 3 IT firms alone added 43,000 employees.

When Indian outsourcing began to take off in the 1990s, my investment adviser pointed me to Infosys. I took a small punt in 1999, but exited in the madness of the dotcom boom. When the dotcom bust happened, I felt smug, but the challenge is always in reversing positions, and I stayed out of IT stocks until 2003. Gradually, I figured that India’s role as an IT provider was here to stay, and since then, IT export firms have always been at the core of my portfolio. 

In the middle of the last decade, there was a broad feeling that the Indian IT industry had seen its best days, that we would become less relevant as the IT world became increasingly automated.

I was not convinced. Indian IT companies may not have moved up the ladder to develop global products, but in IT services, they are right up there. TCS and Infosys are among the Top 10 IT firms globally, and IBM employs more people in India than in the US. Cognizant, the world’s largest IT services company, has almost 50% of its employees in India. Indian IT has become what the management author Michael Porter calls a cluster, “influenced by local assets and the presence of like firms, institutions, and infrastructure that surround it.” This would include the IITs and other engineering colleges, the coaching colleges that prepare IIT aspirants, the linkages with Silicon Valley and Seattle.

These cluster advantages don’t fade away, so I retained my faith in the IT sector. The last 3 years have seen stellar returns. If your holding of IT stocks mapped the sector index, you would have made 147%. This beats the Nifty, with a return of 60%, the frothy midcaps, at 72%, or even the resurgent real estate sector, at 117%. Over the last year, both metals and real estate have out-performed IT stocks, but these sectors are cyclical by nature. If you can predict these cycles, and get out in time, that’s super, but I’ve always failed.

Today, financial markets are very uncertain, with over-priced assets, the impending withdrawal of central bank stimulus, and concerns about new COVID strains. I believe the IT sector will remain a relative haven. For Indian investors, IT stocks have an additional buffer, as global shocks tend to lower the value of the rupee, and buoy earnings of our software exporters. In my holding of Indian equities, IT stocks are increasingly the bulwark against a possible storm.

tick-tick…Boom!

I paid 330 dollars a pop to watch ‘Hamilton’, Lin-Manuel Miranda’s musical about American Founding Father, Alexander Hamilton. Our seats were way up, ‘Among the Gods’, and hip-hop is not my favourite genre of music, but from the moment the lights came up, I was hooked. “One performance I’d gladly see again”, my son remarked.

With a coloured cast playing the white leaders of the US, and the eclecticism of his music, Miranda broke the mold of the Broadway musical, saying it was “about America then, as told by America now”. Both critics and the box office were utterly charmed.

Last week, I saw Miranda’s first movie, ‘tick-tick…Boom!’, based on a musical by another writer who broke the mold, but never lived to see his first successful work performed, Jonathan Larson. Andrew Garfield’s portrayal of Jonathan is hugely empathetic, and Miranda melds musical with musical-within-a-musical, and little set-pieces that require you to suspend disbelief.

Miranda also tips a hat to Stephen Sondheim, the legendary Broadway composer who was a mentor to Jonathan Larson. Sondheim was the presiding deity of the Broadway musical, and he created work for over 6 decades. The two works I know well, ‘West Side Story’, and ‘Sunday in the Park With George’ were written 3 decades apart, in 1957 and 1984, but one of his musicals, ‘Road Show/Bounce’ opened as recently as 2008.

The morning after I watched ‘tick-tick…Boom!’, I learned that Stephen Sondheim had passed away, at 91.

“Peace and quiet, and open air. Wait for us, somewhere”

Stephen Sondheim