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Govindraj Ethiraj, financial journalist talks to Bornali Bhandari, Professor at the National Council of Applied Economic Research.

[04:21] Why are gig workers, including food delivery staff, graduate degree holders? What does this say about their mobility and the relative power of the degree?

The NCAER a few weeks ago released a survey titled Socio Economic Impact Assessment of Food Delivery Platform Workers.

The report has some interesting findings.

What struck me for example was that almost 40 percent of Tier 2 city food delivery platform workers were college graduates, some 44 per cent of workers were the sole wage earners in their families, 21 percent were primary wage earners and 33 per cent were secondary wage earners.

Almost 70 per cent of workers were non-migrant, and were working in their own hometowns. 45 percent of workers lived in their own homes; this figure was as high as 70.7 percent for Tier 3 cities.

The study was built out of a telephone survey of 924 food delivery platform workers from one food delivery company spread across 28 cities with representation from all city types.

The majority of workers were below the age of 35. The average age of a food delivery worker was 29.1 (median was 28) and 99.9 percent of food delivery platform workers were not surprisingly men.

There are many more findings in this report which could be useful to understand what role the gig economy is presently playing as a jobs buffer to India’s youth. In big cities as well as in smaller towns

For example, gig jobs do confer a sense of independence and the easy entry and exit from the job, unlike the interview process in a regular job, is a big plus point.

The larger question of course is how could this evolve.

Remember the gig economy itself is not what it was or promised to be or funding has dried up and many companies in the space have wound down or shut shop, demonstrating the inherent lack of business case for these companies to exist.

I reached out to the lead author of this report, Bornali Bhandari, Professor at the National Council of Applied Economic Research or NCAER who studies, among other things, the impact of globalisation on development and analysing skills from an education, employability and employment or 3E perspective.

Nivedita V talks to Bornali Bhandari, Professor at NCAER about the gig economy, highlighting differences between part-time and full-time workers, as well as workers in different cities.

In this State of the Economy podcast, Nivedita discusses the world of gig workers and the challenges they face in obtaining social security. Joined by Professor Bornali Bhandari from the National Council of Applied Economic Research, the discussion sheds light on the complexities of defining and understanding platform workers in India. Professor Bandari unveils the unique characteristics of platform work in the Indian context, emphasizing the role of online labor intermediation in differentiating platform workers from traditional laborers.

The episode also talks about the recent report published by NCAER, which provides crucial insights into the gig economy. It explores how gig workers in India differ from those in developed countries and the implications for social security policies. The conversation highlights the transformation from trust-based to transactional contracts and the evolving concept of formality in the gig economy.

Professor Bhandari discusses the distinctions between active, inactive, part-time, and full-time platform workers, revealing their motivations and backgrounds. The study uncovers the reasons behind workers joining the gig economy and how their tenure affects their perspectives on this evolving employment landscape.

The lasting legacy of the G20 summit would be its attempt to mainstream a gender-responsive perspective.

The just concluded G20 summit in India and its reiteration of gender empowerment through the implementation of the UN’s Sustainable Development Goals (SDGs) provides an apposite backdrop for examining the pace and progress of this empowerment in the host country, India. The ‘G20 2023 Action Plan to Accelerate Progress on the SDGs’, released at the Varanasi Development Ministerial Meeting on 12 June 2023, stated, “…The G20 commits to promote collective, concrete and transformative actions on digital transformation; gender equality and empowerment of women…Further, the G20 should take actions to enhance gender equality and bridge the gender gap… and ensure the full, equal, meaningful and effective participation and leadership of women in decision making at all levels.”

The overall 2023 G20 Action Plan further accords primacy to the gender agenda and imparts digital financial literacy to all women and girls. Prime Minister Narendra Modi emphasised the need for ‘women-led development’ when India took over the G20 presidency.

Let us rewind a bit to the Digital Economy Ministerial Meeting at the G20 meet in Salta, Argentina, in 2018. The highlight of this meeting was the presentation of the report by the Organisation for Economic Cooperation and Development (OECD) on “Bridging the Digital Gender Divide: Include, Upskill, Innovate”. This report stressed the need for digitisation strategies to enhance women’s skills and narrow down the gender gap, to fuel economic growth and well-being in all the G20 countries. The answer is not too encouraging. A recent UNICEF report reveals that a whopping 90 per cent of the jobs globally today have a digital component but most of them are captured by men, especially in developing countries, where only 41 per cent of women have access to the Internet vis-à-vis 53 per cent of men. The G20’s focus on bridging the gender digital divide, and the advent of Women20, the G20’s platform for prioritising gender equity, therefore, could not have come at a more opportune time for the host country, especially with its aspiration to become a $1 trillion digital economy by 2025. India is, in fact, already leading the international digital revolution, reportedly accounting for 40 per cent of the global digital space since the onset of the COVID-19 pandemic. The 49 billion digital transactions that took place in India in 2022 were largely driven by frontline workers using tablets and smartphones to feed data into management information systems and for the virtual implementation of public welfare schemes like the Janani Suraksha Yojana and Jan Dhan Yojana.

The red flags, however, cannot be ignored. The Ministry of Health and Family Welfare, for the first time, collected data on Internet usage and mobile phone ownership in various States in the National Family Health Survey-5 (NFHS-5), conducted during 2019-21. The NFHS-5 found that only one in three women in India had ever used the Internet as compared to more than half the men. The India Human Development Survey (IHDS), a panel study conducted by the National Council of Applied Economic Research (NCAER) in collaboration with the University of Maryland, in its second round in 2011-12, also found that at ten years of age, only 20 per cent of girls use mobile phones vis-à-vis 27 per cent of boys. This gap keeps widening dramatically through adolescence and adulthood. Another 2021 study by an IHDS user, Chen Jingjing, showed an association between mobile phone ownership and higher female empowerment as well as greater women’s involvement in decision-making.

So, what are the takeaways from the gender agenda of the G20? Its focus on ushering in digital transformation and Sustainable Development through Gender Equality and Empowerment of Women needs to be mainstreamed across the cities and towns of the country, to ensure that nobody is left behind in the digital revolution. Meanwhile, small pockets of gender assertion offer limitless hope. A CSR initiative implemented by L&T Finance Holdings Limited in 2019-20, called the ‘Digital Sakhi project’, reached out to more than 4.75 lakh community members through door-to-door dissemination of financial literacy modules. But one of the major achievements of the project is being manifested at the grassroots level, in the villages of Madhya Pradesh, for instance, where the local ‘Digital Sakhis’ are actively countering digital discrimination by educating women to use smartphones in their daily lives.

Thus, when the official G20 summit in India is done and dusted, what would hopefully remain as one of its lasting legacies would be its attempt to mainstream a gender-responsive perspective and policy focus to bridge the gender digital divide across all the G20 demographies and geographies.

(The writer is head of publications and senior editor at NCAER. Views are personal)

However, WTO’s tariff moratorium on digital transmission must continue for the countries of the Global South, such as India, to become major players.

The crucial role of digital technologies was brought out during the Covid period. So to tap their full potential is one of G20’s primary agendas.

Micro, Small and Medium Enterprises’ (MSME) adoption of digital technologies is critical for their competitiveness. MSMEs contribute about 30 per cent to the GDP.

The Jaipur Call for Action made by Commerce Minister Piyush Goyal underlined the need to strengthen the access to trade databases and information by the MSMEs, using the Global Trade Helpdesk at the International Trade Centre, Geneva.

Addressing the B20 Summit India 2023, Prime Minister Narendra Modi said that India has become the face of digital revolution in the era of Industry 4.0 where MSMEs will play a pivotal role. In this context, free flow of cross border digital transmissions is vital for the MSMEs’ sustained growth.

On the pace and scale of digital transformations, India has stolen a march over advanced economies, both domestically and in terms of exports.

An UNCTAD 2018 report indicated that India had exported $89 billion in 2016-17 in digitally delivered services segment. The OECD found that India’s share of global estimated digital trade exports grew by roughly 400 per cent — from 1 per cent in 1995 to nearly 4 per cent in 2018.

With the number of internet subscribers in India now projected to touch 800 million by end-2023, small businesses have also begun incorporating digital services into their operations. Examples of common B2B services imports include e-commerce platforms, social media for marketing and communication, and digital payment applications, among others.

On the import side, Indian MSMEs have also begun to integrate digital services inputs, such as smartphone-based marketing and communications services, into their business operations. Typical goals include expanding market reach and deepening their connection with customers.

Duty moratorium
In 1998 the World Trade Organisation adopted a Declaration on global electronic commerce, which included a two-year moratorium on custom duties on cross-border electronic transmissions.

Since then, the moratorium (or duty cap) has been renewed every two years. New Delhi had raised a number of concerns before the WTO’s 12th Ministerial Conference (MC) in June 2022, being apprehensive of notional tariff revenue loss. However, it can be argued that the moratorium has actually benefited India’s services exports and imports.

WTO members have allowed the moratorium to continue with the present moratorium lasting till March 31, 2024, which is up for debate in the next MC in 2024.

If the moratorium ceases to exist, however, the resulting disruptions would impact a wide range of routine cross-border data transmissions, which range from transfers of semiconductor design information to R&D, software-as-a-service, and digitised music, movies, books and entertainment.

In addition, allowing a range of new tariffs to be levied on digital services would distort supply chains and stunt MSME growth.

A recent study by Institute of Governance, Policies and Politics concludes that cross-border digital transmissions will benefit MSMEs. A 1 per cent rise in imported digital services production inputs by MSMEs results in a 0.4-0.8 per cent rise in MSME employment, 0.1-0.2 per cent rise in MSME value addition and a 0.04-0.08 per cent rise in value-addition per employee (labour productivity).

Given the clear benefits of using digital tools, any action, such as a duty hike, that makes it more difficult for MSMEs to access imports of such services would appear counterproductive. New barriers to digital services will increase costs, hinder efficiency and undermine the growth of small business.

Policy impact
This empirical and stakeholder-interviews-based research has relevant implications for policy: in short, measures that would render it difficult to import digital services would have a negative impact on India’s MSME sector.

Tariffs on digital imports may have some impact on the MSMEs by raising their costs. It must be noted that Indian digital service providers have risen to the challenge posed by their foreign counterparts and have even emerged as leading exporters. Training and education on adoption of digital tools can further benefit the MSMEs.

Therefore, any changes to the status quo on in the WTO moratorium would affect the stability and predictability in the digital sectors across the world, which has enabled their growth. Indian digital and other service exporters and importers will face uncertainty if this moratorium is scrapped.

To help Indian small businesses expand and reach new customers, policymakers should implement policies that make it easier — not harder and more costly — to access digital services inputs, including those from abroad.

Acting on External Affairs Minister S Jaishankar’s pitch at B20 Summit for a “more diversified and more democratic” re-globalisation, the moratorium will help in the emergence of Global South countries as producers.

Mathur is Associate Fellow, NCAER. Badri Narayanan Gopalakrishnan is a Fellow and Former Head, Trade and Commerce, NITI Aayog. Views expressed are personal.

In the recent Jackson Hole Conference, the Central Bank governors of the US, Europe, and Japan reaffirmed their commitment to inflation targets of 2 percent. They resolved to continue raising the policy rates and keeping them “higher for longer”, in pursuit of this target.

The subtext of their speeches contained important nuances. First, inflation rates may remain above targets for months, or even years, to come. Second, monetary policy may not be as effective during the last stretch of their war on inflation, as it was at higher levels of inflation. Third, global shifts (attributed to an aging population, economic fragmentation, climate transitions, and sticky fiscal positions) will likely elevate the level of structural inflation.

These messages hold relevant implications for inflation management in India.

Inflation Target: Higher level, narrower band?

India’s headline inflation has averaged 5 percent since the adoption of inflation targeting (IT) in 2016. It has remained within the mandated band of 2 to 6 percent, barring two years, 2020-21 and 2022-23, when it exceeded 6 percent amidst external shocks. However, achieving the inflation target of 4 percent has remained elusive.

Since 2016-17, core inflation rate has averaged 5.3 percent a year. While food inflation has averaged a more modest 4.7 percent annually, but it has been three times as volatile as the core inflation.

In view of this record and the prognosis for inflation globally, India may consider revising its inflation target as well as the band.

Most of the large emerging markets economies target inflation at 3-4 percent, with bands of 1-1.5 percent around them: Brazil’s inflation target is 3.25 percent, with a band of 1.5 percent; Indonesia’s inflation target is 3 percent, with a band of 1 percent; Mexico’s target is 3 percent, with a band of 1 percent; and South Africa targets a range 3-6 percent, with no targeted level. These countries, having attained their previous targets, have successively lowered their targeted level of inflation and tightened their bands over time.

In comparison to the other emerging markets, India has not revised its IT framework since its inception seven years ago, continuing to maintain the inflation target of 4 percent and a wider band of 2 percent.

This is despite the fact that it has not been able to achieve a 4 percent headline inflation rate during six of the eight years; and its core inflation has far exceeded 4 percent for the majority of these years.

The credibility of its IT would likely enhance it if moves its target rate of inflation upward, and simultaneously makes the band narrower in order to commit more credibly to the new target.

For example, in due course it could increase the inflation target to 4.5 percent, situated within a narrower band of 3.5-5.5 percent. Other similar alternatives would be worthy of consideration too.

An obsolete Consumer Price Index (CPI) basket needs periodic revisions

A revision in India’s obsolete CPI basket will help deliver the mandate of monetary policy better.

While countries such as Brazil, Mexico, South Africa, and Turkey typically assign weights of 17-25 percent to “Food and Beverages”, and advanced economies assign weights of 7-10 percent to it, India assigns a much higher weight of 46 percent.

Other countries revise their baskets at regular intervals of 1-5 years, but India has not revised the basket since 2001. This is despite the fact that in the interregnum per capita income has tripled and the shares of both agriculture and food in GDP have halved from their earlier levels. With the extent of such transformation, its current weight of food in consumption is likely only 30-35 percent.

The prevalent large weight of volatile food prices in CPI leads to volatility in the headline inflation. It makes the discourse on monetary policy noisy, leading to calls or temptations for actions despite the fact that monetary policy is a blunt instrument for tackling food inflation.

With the updated weights, say a 30 percent weight of food and a concomitantly higher weight of the core in the inflation basket, India’s headline inflation would become more stable, bringing predictability to its monetary policy.

Towards a nimbler framework

A nimble and flexible IT will remain the framework of choice for most countries, including India, in foreseeable future. Anticipated higher structural inflation would be best served by a resolute monetary policy implemented collaboratively with fiscal, regulatory, and trade measures.

A fast-growing economy such as India ought to update its policy frameworks and institutions on an ongoing basis. A sensible way to do so would be to commit to the revisions in the IT framework, and the CPI basket every 5 years.  The Reserve Bank of India ought to be entrusted with both these tasks.

Such revisions would make the conduct of monetary policy both credible and relevant in a fast-evolving world.