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A government job with its benefits and safety net is an aspiration for most Indians. Any perceived rollback in such employment opportunities is bound to fuel anxiety.

What is surprising about the protests is that the government appears to be surprised that there should be any protest. To appreciate the anguish underlying these protests we must look to the importance of government protests service in the lives of individuals.

Despite the widespread belief that multinational employers shape private sector salaries only a select few manage to get these high-paying jobs. For most private-sector employees wages are far lower than for their brothers and sisters fortunate enough to get a job in government. Data from the Periodic Labour Force Survey (PLFS) of 2019-20 document these differences.

 The PLFS provides data on salaried monthly income for employees and self-employment income for individuals working on family farms and businesses. In round figures based on my calculations from these data for men ages 15-59 monthly government salaries are about 128000 wages in private companies are about 17000 and monthly self-employment earnings are ₹6000. The public sector advantage is even starker for individuals without a college education. Among men with Class 10-12 education government employees earn 125000 per month more than double the salary of 12000 in private companies.

The benefits of public sector employment are not limited to higher salaries. These jobs come with many benefits that are not available in the private sector particularly for individuals without higher education. Among government sector employees with Class 10-12 education 72% are eligible to receive PF (provident fund) or a pension while 47% receive gratuity often in addition to a pension. In contrast among employees in a private firm 53% are eligible to receive PF or a pension and 26% receive gratuity. Those working for private employers have even lower claims to any benefits.

Security of employment

Most importantly government employees can look forward to a relatively secure position even during emergencies like the COVID-19 pandemic. A survey of the Delhi NCR region in June 2020 by the National Data Innovation Centre at NCAER shows that during the first sudden lockdown during COVID-19 56% of private sector employees experienced income loss compared to 21% of government employees.

When coupled with predictable salary revisions and an increase in dearness allowance it is not surprising that being employed by the government has emerged as the pinnacle of ambition for young Indians. The India Human Development Survey of 2011-12 conducted by NCAER and the University of Maryland shows that most parents and young people fervently hope for a government position. When asked about the jobs they would like to see in their teenage children’s future two-thirds of the respondents said they preferred government jobs.

Herein lies the challenge faced by the Agnipath scheme. It offers many benefits to the nation allowing India to draw on its demographic dividend and keep its armed forces consistently enriched by young fit and technologically savvy jawans. It offers well-paid jobs and training for individual recruits allowing them to leave the service with a capital of ₹11 lakh at the end of the four-year contract. Moreover there is an opportunity for one-fourth of the Agniveers to be absorbed by the armed forces as regular recruits.

Following the protests the government has offered various other incentives including priority employment in defence-related public sector undertakings and Central Armed Police Forces.

Anxieties over Agnipath

However this scheme also withholds the dream of lifelong security where a 40-year-old after 20 years of service is completed can expect to draw a pension for the remainder of his natural life. This security has become even more precious after implementing the “One Rank One Pension” scheme which will allow this pension to grow over time.

The strident demand for regular employment in the armed forces echoes other youth movements India has seen over the past two decades. The requests for reservations among Jats Patels and Gujjars are also rooted in worries over the employment situation and perceived benefits of a “ sarkari naukri” (government job). Although employment generation remains on the national agenda government employees’ disproportionate benefits compared to their brothers and sisters in the private sector have received little attention. Most government employees belong to Class C and Class D categories and most military personnel belong to lower ranks. The options in the private sector are limited for this category of employees and they have the most to gain from a government position.

It seems likely that the Agniveer protests and other protests of this kind (for example protests for reservations) would become even more strident if inflation continues to rise and government salaries keep pace with the inflation with continuous adjustment in DA (dearness allowance) while the private sector incomes languish. Recent newspaper reports about the likelihood that the DA arrears from the past 18 months will be paid in July will add to the current protests’ tensions. Until government salaries are on par with private-sector salaries government jobs including jobs in the military will remain the lodestar and competition for these jobs will be fierce.

Role of government as employer

The present protests highlight the need to reflect on the role of government as an employer and examine the underlying philosophy governing the social contract between the State government employees and society at large. Two contradictory philosophies add to the tension. The first viewpoint argues that the State as the first employer of the nation is supposed to set the standards for fair wages and decent working conditions. The second viewpoint suggests that government workers are public servants whose salaries depend on direct and indirect taxes paid by the rest of the nation’s workers. Hence privileging their working conditions over those of their equally qualified brothers and sisters is not justified.

Our public policy has seesawed between these two principles. At Independence the nation made a conscious choice to dismantle the privileges enjoyed by the colonial civil servants refusing to let the Indian Administrative Services enjoy the perks and privileges available to the elite recruits in the Raj-era Indian Civil Services (ICS). However successive Pay Commissions have moved in the opposite direction by increasing the salaries and benefits of the government workers including the armed forces. Therein lies the root of our present dilemma.

As the government debates future salary adjustments for government workers and whether to set up the 8th Pay Commission the Agnipath protests combined with a host of other protests for reservations suggest a need to develop a more holistic perspective on government employment.

(Sonalde Desai is Professor and Centre Director NCAER National Data Innovation Centre and Professor of Sociology University of Maryland. Views are personal.)

It is widely believed there is an unevenness in the way rating agencies treat the countries in the Euro zone versus elsewhere. A better governance structure and operating framework are needed to ensure that in situations when EMs are grappling with capital flow reversals for no fault of theirs they are not slapped with a rating downgrade as well.

Often decried as being ineffective and irrelevant G20 received a lease of life during the 2008-09 global financial crisis and the Covid-19 pandemic in 2020. During the decade between these two crises global trade and financial flows have undergone a significant evolution. While trade has slowed down conspicuously capital flows have become larger and more volatile than before. These developments have implications for G20 emerging countries.

After registering growth of about 10% a year during 2001-2012 global trade grew by only 1.5% a year during 2013-2018 and contracted by 1.5% in 2019. Despite the recent buoyancy in global trade it is unlikely to revert to the levels achieved in the era of hyper globalisation. International trade adds nearly 1-2 percentage points to India’s economic growth each year. Indeed global trade buoyancy can make the difference between an annual growth rate of 6% versus 7.5% for its economy.

It would be mutually beneficial for economies to expand the scope of trade to include not just goods and services but also the mobility of people. India is well-equipped to supply the kind of human capital the richer G20 countries need – medical personnel engineers programmers educationists accountants content creators etc. along with blue-collar workers. For India this will incentivise households to invest into exportable education and skills. It will help it overcome the slow pace of domestic job creation while encouraging more rapid transition of the labour force out of lower productive activities in agriculture and elsewhere.

 Unlike trade the unhindered flow of capital is a mixed blessing for emerging markets (EMs). All non-FDI forms of capital flows to EMs are fickle. They are driven by the conditions in source countries rather than by the demand or absorptive capacity in the host countries.

Large inflows of such capital create result in exchange rate appreciation asset price or general inflation and a widened current account deficit (CAD) in EMs. They face an even bigger challenge when capital retreats on its own accord due to the normalisation of policy by advanced economies. The reversals are abrupt and sharp. Even though the EMs don’t woo this ‘hot capital’ the onus rests on them to pick up the pieces after the storm has passed. Policy choices of the advanced G20 countries and the externalities they generate for other member countries must be reassessed.

Taper Tantra

During both aforementioned crises the advanced economies undertook an unprecedented monetary policy expansion increasing the size of their central bank balance sheets multifold. A significant chunk of this liquidity found its way into EMs. The first time around capital flows reversed was in 2013 during the ‘taper tantrum’ crisis. After the jitters created by the tapering episode the then Bank of Mexico governor Agustin Carstens and RBI governor Raghuram Rajan had voiced strong concerns about the spillover impacts of the capital flow cycles on their respective countries.

A positive outcome of those complaints was the adoption of better guidance from the US Federal Reserve Board. The Federal Reserve started cautioning the markets of its intent to withdraw liquidity much in advance to lower the element of ‘surprise’. However little else changed. Consequently the capital flow cycles have continued and even if forewarned about them EMs have continued to suffer disruptions caused by them.

Advanced Warning System

What more can the advanced economies do to forestall such disruptions? For one they ought to work on the quantum of policy easing and its withdrawal. At one level advanced economies can print ‘hard currencies’ at zero cost to them. Yet if they were to internalise the impact of their actions on the EMs the optimal level of policy intervention would be smaller than the one currently undertaken by them.

A related issue is the role that the exchange rates play in helping EMs navigate the capital flow cycles. EMs should be allowed to use the exchange rates as a stabilising mechanism without any fear of being declared ‘currency manipulators’. Advanced G20 countries should also develop financial safety nets such as swap lines for EMs. Through these they can offer timely liquidity in hard currency to EMs during reversal episodes.

 It has been widely believed there is an unevenness in the way credit rating agencies treat the countries in the Euro zone versus elsewhere. A better governance structure and operating framework are needed to ensure that in situations when EMs are grappling with capital flow reversals for no fault of theirs they are not slapped with a rating downgrade as well.

So four things can make G20 relevant for all its member countries. One facilitating greater trade integration through the exchange of goods services and human capital. Two the impact of G20 policies on EMs should be regularly evaluated and internalised resulting in a gentler cycle of monetary expansion and withdrawal. Alongside exchange rate adjustment should be accepted as a legitimate shock-absorber for EMs during the cycle.

Three provision of hard currency liquidity during the periods of reversals through swap agreements. Finally the need to discuss the role that credit rating agencies have been playing in perpetuating capital flow cycles and initiate reforms that would make their assessments fair for G20 EMs.

Poonam Gupta is Director General and Kavya Singh is Research Associate at NCAER. The views expressed are personal.