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India Not Reaping Benefits of Demographic Dividend: Raghuram Rajan

Rajan said, “India has a problem. And this is so well known, I don't need to elaborate. Unemployment numbers are high, disguised unemployment is even higher.”
Raghuram Rajan. Photo: The Wire

New Delhi: Renowned economist and former Reserve Bank of India governor Raghuram Rajan on April 16 (Tuesday). at a conference on Making India an Advanced Economy by 2047: What Will it Take? at the George Washington University in the US, said that India is not reaping the benefits of its democratic dividend, underlining that there is need to focus on improving human capital and enhancing their capabilities and skill sets.

“I think we are in the midst of it (democratic dividend), but the problem is we are not reaping the benefits, Rajan is cited as saying in Business Standard.

He went on to say, “That’s why I said 6 per cent growth. If you think that’s about what we are right now, take away the fluff in the GDP numbers. That 6 per cent is in the midst of a demographic dividend. It is much below where China and Korea were when they reaped their demographic dividend. And that’s why I’m saying we are being overly complicit when we say this is great. This is not because we are losing the demographic dividend because we are not giving those guys jobs.”

He commended the inclusion of the proposal of apprenticeship, which the Congress has in its manifesto. “I think there’s a lot that needs to be done to make it effective, but we need many more students to at least be capable of doing a good job.”

He went on, “And that leads us to the question, how do we create those jobs? The answer to my mind is partly enhancing the capabilities of the people we have, partly changing the nature of the jobs that are available and we need to work on both fronts.”

Rajan was critical of India’s basic approach now, for example, of spending billions of dollars on chip manufacturing. “Think about these chip factories. So many billions going to subsidise chip manufacturing, he said, adding that a number of job intensive areas like leather are not doing good.”

He asserted that, “We are going down in those areas. No wonder we have more of a job problem. The job problem was not created in the last 10 years. It’s been growing over the last few decades. But if you neglect the areas which are more intensive, I’m not saying we need to now offer subsidised subsidies to leather examples, but figure out what’s going wrong there and try and rectify that.” He said that there also needs to be a firm focus on job creation.

Responding to a question, Rajan said a lot of Indian innovators now are going to Singapore or to Silicon Valley to set up because they find access to the final markets much easier there. “We need to ask what is it that forces them to go outside of India to set up rather than stay inside India? But what is really heart-warming is talking to some of these entrepreneurs and seeing their desire to change the world and increasingly many of them are not happy staying in India,” he said.

“They want to actually expand more globally. I think there is a young India that has a Virat Kohli mentality. I’m second to none in the world,” Rajan said.

In his presentation at the conference, Rajan said regardless of whether one looks at the services sector, manufacturing, agriculture or construction, “India has a problem. And this is so well known, I don’t need to elaborate. Unemployment numbers are high, disguised unemployment is even higher, labour force participation is low, female labour force participation is really alarmingly low the share of agriculture and jobs is increasing in recent times. Of course all this is exhibited in highly educated unemployment and massive numbers of people applying for government jobs. PhDs applying for jobs as peons in railways.”

“Even as this is happening. Even as we have a massive labour which is unemployed, we have the capital intensity of manufacturing steadily going up,” Rajan added, expressing concern at how it was set to worsen in future.

India’s dire (un)employment scenario, long queues for government jobs

The Economic Times has an interview with Rajan, where he has said that “India’s dire employment scenario visible in long queues for government jobs.”

He said it remains a pressing and central concern.

Rajan said that the recent whitepaper released by the Modi government, skips the word ‘unemployment’ entirely. “Search the document! The point is, we need to pay attention to this issue, it is serious,” he said. Rajan said “Huge numbers of people are applying to government jobs because private sector jobs are not being created.”

The Economic Times writes that prior to being elected in 2014, Prime Minister Modi had promised one crore jobs to India’s youth if his party was voted to power.

A Lokniti-CSDS pre-poll survey for Elections 2024 out last week found that nearly two thirds of those surveyed (62%), with the highest among urban voters (65%), across localities expressed that getting jobs had become more difficult. It was the top concern amongst those surveyed, across categories of location or social identity. Only 12% said getting jobs had become easier.

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