How to get people to buy more?

India's GDP growth rate fell to 5.8% in the last quarter of the last financial year, ending on 31 March and unemployment rate rose to 6.1%, said the National Statistical Office (NSO). What is particularly alarming is that the labour force participation rate (LFPR), which is the proportion of people employed or actively looking for work, was just 36.9%. It was 55.5% for men and a paltry 17.5% for women. It is not just that there is a dearth of jobs for women, it is that large numbers of women have lost their jobs, especially in the agriculture sector. The Centre for Monitoring Indian Economy (CMIE) puts the LFPR for women at 10.7% between May and August 2018. A survey by the National Sample Survey Office (NSSO) suggested that the total number of employed men dropped to 286 million in 2017-18. The male workforce had increased from 219 million in 1993-94 to 304 million in 2011-12. Nobel Prize winning economist Arthur Lewis "showed how in economies such as India and China, which have an 'infinite supply of labor', there tends to be a two-sector economy -- the capitalist sector and the subsistence sector" and that "wages will only rise when the demand for labour exceeds the supply of labour in the subsistence sector", wrote P Chakravarty. "The harsh and simple reality of India's job situation is that we are not creating as many jobs as we need to." One reason for this is that the Indian population grew at twice the rate of China, said a UN report, which means more young people joining the labor force. But, whereas China has become "The world's factory", growth in the manufacturing sector in India is slowing down. In the last five years "India's growth was 'too much" driven by domestic demand, which resulted in double digit growth of imports, and four to five percent growth in exports", said a World Bank economist. Unfortunately, consumer demand is falling across the whole range, from cars to toothpaste. Market leader Maruti saw a 25% decline in volume of car sales in May. In an effort to stimulate rural spending the government announced handouts of Rs 6,000 per year to 145 million farmers and pension of Rs 3,000 per month for 50 million farmers and 30 million traders. The government also plans to spend Rs 100 trillion on infrastructure over the next 5 years. But, with domestic consumption dropping indirect tax collection is going to be lower than necessary. "In the near term, continued fiscal consolidation is needed to bring down India's elevated public debt," urged the International Monetary Fund (IMF). Which means cut spending. "This should be supported by strengthening GST compliance and further reducing subsidies." The government just announced a jump in subsidies and GST collections cannot increase if people stop buying. To spend more the government needs to collect more taxes but it cannot if people buy less. And, it cannot force people to buy more. Winning the elections may have been the easy part.