As India goes to polls for the Lok Sabha election 2019 beginning today, the biggest issue facing the Modi government on the economic front would be of ‘jobs’, said former RBI Governor and former IMF Chief Economist Raghuram Rajan. “Are there enough good jobs for millions of people coming into the workforce every year?,” Raghuram Rajan said in an interview to Bloomberg TV on Thursday.
Narendra Modi government has a mixed record on the economic front, Raghuram Rajan, Professor of Finance at Booth School, University of Chicago, said. While there have been some big reforms such as GST, Insolvency and Bankruptcy Code and Real Estate Regulation Act, the government has not done much on issues like labour flexibility, land acquisitions and others which are now becoming critical for India to grow faster, he added.
How to create more jobs?
Unemployment has become a major issue in India with various reports showing rise in unemployment despite. Centre for Monitoring Indian Economy has recorded job loss of 11 million people in 2018. Moreover, a leaked report of NSSO revealed that unemployment in India had hit a 45-year-high of 6.1 per cent in 2017-18.
The trend raises concern for an economy which will be in dire need of jobs, whose working age population is expected to grow to over a 100 crore people by 2050, as estimated by the Regional Human Development Report of the United Nations Development Programme (UNDP).
Raghuram Rajan during the interview suggested India to have a much bigger construction sector, adding that there are tonnes of houses, ports, airports and railway line to be built. However, for that the government needs to fix the problem of land acquisition by making it fair and easier, he said.
Further, in order to reap the benefits of demographic dividend, Raghuram Rajan suggested to get more people out of agriculture sector into jobs in manufacturing and service sector. For the people who are already out of it, there is a need for better jobs, he added.
Where are reforms in parties’ poll promises?
Regarding the ongoing election, Raghuram Rajan said that one would need to see how the new government pursues reforms after coming to power, since the major political parties have not offered very strong reform agenda in their poll promises.
“BJP is emphasising on their greater strength on the issues of national security relative to the opposition. This means that they have shifted from the economic reform agenda, which were their really strong points in the previous election,’’ Raghuram Rajan said. He advised people to look out for the policies pursued by the government post election, which will be reflective of their underlying philosophy.