Chidambaram Says Slower Growth Won't Lead to Job Cuts in India
By Subramaniam Sharma
Oct. 31 (Bloomberg) -- A slower pace of growth in India amid the global financial crisis won't lead to a loss of jobs in Asia's third-biggest economy, Finance Minister Palaniappan Chidambaram said.
``An economy growing at say 7 percent, the lowest estimate made so far, is a job-creating economy, not a job-destroying economy,'' Chidambaram said at a news conference in New Delhi today. ``Don't please confuse a slow pace of job creation with job destruction.''
Chidambaram's comments came after The Associated Chambers of Commerce and Industry of India, an industry grouping, said this week that companies in seven industries will fire one- fourth of their employees in the next 10 days. The central bank last week lowered the growth forecast to between 7.5 percent and 8 percent in the year to March 31, compared with a 9 percent pace in the previous year.
Prime Minister Manmohan Singh had on Oct. 20 asked the nation to prepare for a ``temporary slowdown'' of the world's second-fastest-growing major economy.
Companies in seven key industries including steelmakers, cement makers, financial and brokerage service providers, construction, real estate, aviation and information technology support service providers may cut as many as a fourth of their workforce in the next 10 days, New Delhi-based Assocham said on Oct. 29.
Slower Inflation
``Inflation is no longer an issue; what is more important is creation of jobs, which will come with increased acceleration in manufacturing,'' it said. India's inflation rate fell to 10.68 percent in the week to Oct. 18, the government yesterday, the first time it's dropped below 11 percent since May.
The association sought a cut in interest rates by 3 percentage points and further reduction in the amount of reserves banks need to keep aside to ease the credit crunch.
Earlier this month, Jet Airways (India) Ltd., the country's largest domestic airline, canceled a plan to fire as many as 1,900 employees. The company on Oct. 15 fired 800 workers and said it would eliminate 1,100 more jobs. It aborted the plan two days later after the sacked employees held protests on the streets and politicians criticized the move.
DLF Ltd., the nation's biggest real-estate developer, on Oct. 23 denied a report in the Economic Times newspaper that it planned to cut jobs.
Companies in India don't have the option to fire people because of the prevalent labor laws, the Federation of Indian Chambers of Commerce and Industry, or Ficci, another industry grouping, said in an e-mailed statement yesterday.
``The critical question is not how many jobs would be lost, but rather how the growth momentum could be maintained to generate gainful employment for the additional 12 million people who would be joining the workforce annually,'' the federation said. ``Feedback gathered by Ficci shows it is fresh hiring that has gone into a slowdown mode and therefore steps must be taken to revive growth.''
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