A dividend or a curse?

In 2015, 1.1 million students will graduate and expect decent jobs with meaningful work and respectable salaries but the government has already admitted that its vaunted growth has been jobless. With growth falling where are the jobs going to come from? Scope of getting jobs abroad are also dismal with the global economy slowing down while cloud computing and increasing automation increase productivity without concomitant increase in job opportunities. Livemint, 26 April. Google is apparently planning to spend $10 million over 5 years to nurture 10,000 new businesses which maybe encouraging but the US is planning changes to its visa laws to force Indian software companies to employ natives rather than take Indians to work in the US. In India new project announcements have declined by a massive 92% from its peak in March 2009. It declined by 75% to Rs 662 billion in the last financial year in all industries. Livemint, 7 April. Manufacturing, which is most labor intensive, declined by 87%. This is partly because of a realisation on the part of the Congress that unlimited spending to bribe voters to win elections leads to increasing inflation, leading to lower consumer demand, falling growth rate and increasing fiscal and Current Account deficits which has already resulted in a cut in credit rating to BBB-,  which is one notch above junk status. Ever since the Congress grabbed power at the center wasteful government spending has been ballooning leading to ever increasing borrowing. Between 2001 and 2005 the government borrowed between a high of Rs 976 billion in 2002-2003 and Rs 542 billion in 2004-2005. In 2005-2006 it was Rs 1 trillion, in 2008-2009 it was Rs 2.1 trillion, in 2009-2010 it was Rs 3.65 trillion and in 2012-2013 it was Rs 4.67 trillion. This year it is expected to be Rs 4.84 trillion. Livemint, 6 May. The government has been borrowing at 7.8-10.01% which is high for sovereign debt. In Europe bond yields of 7% or above are considered to be untenable and forced countries such as Ireland and Greece to ask for bailouts. The Congress is now torn between a necessity to control spending to ward off a rating downgrade before general elections next year, which will lead to a rout, and the intense desire to spend vast sums to bribe voters with suicidal social schemes. Thus it has resorted to vicious bullying of the Reserve Bank to lower interest rates to lower its borrowing costs even though the Consumer Price Index is above 10% and is expected to come down only to 9.2% this year. Like poor people borrow at exorbitant rates of interest from money lenders the government is enticing Foreign Institutional Investors by reducing withholding tax from 20 to 5% and by paying Non Resident Indians 9% interest on NRE accounts. The only solution is population control. Or else the demographic dividend will turn out to be an enormous curse.