India: Raghuram Rajan cautions jobless growth

  • To those taking heart from Raghuram Rajan’s recent comment in Raipur that the Indian economy is not only on track but also running at a fast pace, the former RBI governor has added a rider.
  • “A lot of this growth is jobless growth,” Rajan said in an interview with NDTV. “Jobs are essentially Task One for the economy. We don’t need everybody to be a software programmer or consultant but we need decent jobs.”
  • Rajan, has, in the past, cautioned that India is failing its young by not building capacities to educate them, forcing them to go abroad for courses such as medicine.
  • He has also said that India should focus on services instead of blindly following the China model of manufacturing-led growth.
  • These services, such as that of good doctors, can then be sold abroad. In his interview to NDTV, Rajan said India’s growth figure is better compared to other nations. However, he pointed out that the country still needs more growth due to its vast population.
  • He said there are no shortcuts to creating jobs for everyone in India. “We have to increase the skill base and education of our people,” he said. “If we can create the skill base, the jobs will come.”
  • Rajan warned India is less of a liberal democracy now than it was 10 years ago – and that can have consequences.
  • Tracing the economic troubles of neighbouring Sri Lanka, he said part of the island nation’s problems lie in the troubled history of minorities and their place in what once was “quite a successful middle-income economy”.
  • “Sri Lanka certainly had a large minority – the Tamils. And when they had a problem of jobless growth, politicians found it particularly easy to deflect some of the attention to the problem of minorities and made a bogeyman out of the minorities… essentially creating the strife that resulted in civil war,” he said.
  • Talking of the parallel in India, he said while India is “some distance away from that, it is something we should start worrying about given the kind of fuel that is being fed to this fire by some politicians”.
  • Asked how communal strife can affect economic climate, Rajan said, “People worry. First, they think of the consequences down the line… The other thing they think about is ‘Do I really want to do business with a country which mistreats its minorities?'”
  • Citing the example of China, Mr Rajan said the Asian giant had a lot of “pushback” from the US and Europe on the question of Uyghurs.
  • “There are sanctions on goods that are produced there. There are also increasing motions by shareholders saying they want to stop doing business in these areas,” he said.
  • Rajan said that the current BJP-led government has a view that only those who constantly clap are right as it does nothing wrong.
  • “Every government does wrong,” he said. “I have criticised the UPA [United Progressive Alliance] government when I was not part of the establishment and I have worked with the previous NDA [National Democratic Alliance] government.”
  • Rajan added that he has no reason to be partial and some criticism is warranted. On 31 Jul 22, the BJP had referred to Rajan as a critic, who was acknowledging the strength of Prime Minister Narendra Modi’s policies, the Hindustan Times reported.

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