Former RBI governor Raghuram Rajan stated on Tuesday that India is not benefiting from democracy and that greater attention needs to be paid to developing human capital and skill sets.
“I believe the democratic dividend is upon us, but the issue is that we are not enjoying its fruits,” Rajan stated during a conference held at George Washington University on “Making India an Advanced Economy by 2047: What Will It Take?”
“For this reason, I mentioned 6% growth. Remove the extraneous data from the GDP figures if you believe that represents where we are at the moment. There is a demographic dividend going on for those six percent. It is a significant drop from where Korea and China were when they began to enjoy the demographic dividend. And for that reason, I think it is excessively complicit of us to say this is fantastic. The former governor of the Reserve Bank of India stated, “This is not because we are losing the demographic dividend because we are not giving those guys jobs.”
And that raises the question of how to go about generating those jobs. The solution, in my opinion, lies in both improving the skills of the people we already have and altering the types of jobs that are available; we must work on both fronts.
It is worthwhile to work on the apprenticeship concept that the Congress included in its manifesto. In addition to emphasizing the need for job creation, Rajan stated, “I think there is 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.”
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Rajan took issue with India investing billions of dollars in the production of chips. “Consider these semiconductor factories. “So many billions are going to subsidise chip manufacturing,” he said, noting the dire state of several employment-intensive industries like leather.
“In those areas, we are losing ground. It makes sense why our job crisis is worse. In the last ten years, the employment issue has not arisen. Throughout the past few decades, it has grown. But if you neglect the areas that 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.
In response to a query, Rajan stated that many Indian innovators are now relocating to Silicon Valley or Singapore in order to establish themselves because they can more easily access the final markets there. “We must inquire as to what compels them to establish themselves outside of India rather than within it. Speaking with some of these entrepreneurs and witnessing their desire to make a difference in the world—many of whom are growing dissatisfied in India—is truly touching, he added.
“They genuinely wish to grow on a worldwide scale. I believe there is a younger generation in India that thinks like Virat Kohli. I am the best in the world,” declared Rajan.
Earlier in his speech, Rajan stated that India faces issues whether one chooses to focus on manufacturing, services, or agricultural construction.
“And I do not need to explain this; it is so well known. Unemployment rates are high—hidden unemployment is much higher—labor force participation is low—particularly for women, it is extremely low—and the proportion of jobs in agriculture and other related sectors is rising. Naturally, the result of all of this is a large number of highly educated individuals seeking government jobs and unemployment. Doctorates seeking positions as railway peons,” he remarked.
“While all of this is going on,. Even with a large labor pool that is unemployed, manufacturing’s capital intensity is continuously rising, according to Rajan.
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