New Delhi. Former Reserve Bank of India (RBI) Governor Raghuram Rajan has said that with seven percent economic growth, India is not creating enough jobs. This can be gauged from the number of applicants for vacant posts in some states.
He suggested that the government needs to focus on promoting labour-intensive industries to generate employment.
Rajan further said that some Indians, especially at the higher levels, are in satisfactory condition and have higher incomes. But consumption growth in the lower half has still not recovered and has not reached pre-Covid levels.
“This is the unfortunate part… You would think that with seven per cent growth, we would create a lot of jobs,” he told PTI. “But if you look at our manufacturing growth, it is more capital intensive.” Rajan was asked whether the Indian economy, which is growing at seven percent, is generating enough employment. He said that capital-intensive industries are growing more rapidly, but this is not the case with labour-intensive industries.
The former RBI Governor said, “Everything is not going well at the lower level. I think there is a dire need for jobs. And you can see it. “Forget the official figures.” “You can see this in the number of applications for government jobs, which are very high,” said Rajan, a finance professor at the US-based Chicago Booth. He said that the Indian economy will grow at the rate of six-seven percent in the medium term. Rajan welcomed the ‘apprenticeship’ schemes announced by the Finance Minister in this year’s Budget, but added that we have to look at them very closely, see what works, and expand what works further. Will have to do.”
Finance Minister Nirmala Sitharaman had announced in the Budget for FY 2024-25 that the government will launch three employment-related schemes based on enrollment in the Employees’ Provident Fund Organization (EPFO). Citing the example of Vietnam and Bangladesh which are doing well in labour-intensive industries like textiles and leather, Rajan said, “We need to look at this (labour-intensive industry) very, very carefully, we will come out of it Can’t stay.” Asked why the private sector was still lagging behind in capital expenditure, Rajan said it was a bit of a mystery.
“When you look at the capital utilization (of the private sector), it is around 75 per cent…It seems that the demand has not reached the point where they feel that this kind of investment needs to be made,” he said. Rajan said that the important thing is that India has a short time of 15 years to take advantage of the demographic dividend and it should not lose this opportunity. On the interest rate cut by the US central bank Federal Reserve, Rajan said, “The Federal Reserve has cut the interest rate by 0.50 percent. This has given the central banks the scope to proceed in the manner they deem appropriate.
Responding to a question on rationalization of Goods and Services Tax (GST) rates, Rajan said that after a policy has been in place for a long time, it is useful to ask what its experience has been and ‘should we change the policy’? There needs to be a change.” He said, “I will try to appoint an expert committee to consider it, as the Finance Commission does. “I will take the opinion of various stakeholders including the states and come up with something that meets the needs of the country.” Currently there are four slabs in GST 5, 12, 18 and 28 percent. The new taxation system was implemented in 2017.
Responding to a question on the ongoing debate on ‘subsidizing’ the northern and eastern states by the economically and socially better-off southern and western states, Rajan said the Finance Commission has always been concerned about the fair allocation of taxes between the Center and the states. Has been about. He said, “If India grows together, then in fact, it prevents such conflicts… There is an issue of equity, which is that the states which are growing faster also generally prosper in the process.” Have been. “And this is what is happening in the case of western and southern states.” Rajan said western and southern states feel they are being punished in two ways – first, they will have to give more of their revenue to help states that are left behind. Rajan said, “Also, on the political front, if the delimitation process happens then they may lose seats because, you know, states with more population will get more seats.”