Employment and economic growth dynamics in Odisha, India

Abstract

As the current phenomenon of “jobless growth” has gripped the Indian labor market, the subnational literature on how states have fared on employment generation in the post‐liberalization period has been sparse. We examine the changing trends in employment and income among different sectors and subsectors of the economy of Odisha, an eastern Indian state, over the period 2011–2012 to 2017–2018 which is coincident to the Naveen Patnaik government which has been in power since March 2000 to date. Adopting the World Bank's Job Generation and Growth Decompositions tool (JoGGs) inspired by Shapley (1953. Contributions to the theory of games. Princeton University Press) decomposition method, we decompose growth across different sectors of its economy and examine how the per capita income growth is linked to changes in employment, output per worker, and population structure at the aggregate level and by sectors. We find there is a sharp decline in employment growth rate in the agriculture sector, a moderate growth in the mining sector, and a high growth only in the construction and a few service subsectors in Odisha. There has been significant output growth across industrial and service sectors and low growth in the agriculture‐sector. Low employment creation in the agriculture sector and negative employment growth in manufacturing sector have had implications for seasonal migration and rural agrarian distress in the state. The dismal overall trend in the employment growth makes it imperative on the part of the government to undertake serious policy interventions in Odisha.