New Delhi: The wide spread economic gloom in the country has led to job creation at Indian companies hitting a three-year low.
According to an ET Intelligence Group analysis of close to 250 companies belonging to the S&P BSE 500 index that have declared jobs data consistently over the past five years, employment growth slowed to 3.5 per cent in FY13 from 5.7 per cent in the year before and 6.4 per cent in FY11.
In total, the 250 companies recruited only 1.23 lakh people in FY 13, as compared to 1.91 lakh in FY12 and 2.02 lakh in FY11.
The decline in hiring in FY13 was most predominant in automobiles, capital goods, tyres, shipping, paper, construction, power generation and retail. The manufacturing sector was the worst hit with various projects being stuck because various approvals have not been received.
A percentage point increase in GDP growth leads to the creation of nearly 7.5 lakh jobs, according to Balaji Ethirajan, managing director and chief executive officer at human resource firm Randstand India.
"Thus the drop in GDP (growth) from 9.53% in FY11 to 4.99% in FY13 implies that almost 30 lakh jobs have not kicked off in the economy during this period," Ethirajan says.
After being one of Asia's best performing economies over the last decade, the country is struggling to retain its place among top global investment destinations. Rising inflation, a slowing pace of industrial activity and a wide trade deficit have hit hard the country's economy, but the situation is not as bad as some considers it to be.
Economic forecast suggest that India's full-year economic growth for 2012/13 (April/March) was about 5 per cent, its worst in a decade, and a far cry from the 9 per cent annual expansion that the UPA government has been boasting of.
With a growing working-age population, India's economy could grow at about 7% on average over the next decade if the government implements policies to boost productivity, Morgan Stanley has said.
According to Morgan Stanley, approval and clear investments at a faster clip could ensure that progress on delayed projects gathers pace.
At present the country needs billions of dollars of investment in key areas such as infrastructure, energy, healthcare, education and industrial development to speed up its economic expansion, but many projects are facing delays because of a lack of environmental clearance, delays in land acquisitions or regulatory hurdles.