India is not effectively leveraging its democratic dividends, according to former RBI governor Raghuram Rajan, who spoke on Tuesday about the need to enhance human capital and skills.
“I think we are in the midst of it (democratic dividend), but the problem is we are not reaping the benefits,” Rajan stated during a conference at George Washington University titled “Making India an Advanced Economy by 2047: What Will it Take.”
“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 explained.
Rajan emphasized the importance of job creation and improving job quality, mentioning, “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.”
He also supported the idea of apprenticeships as proposed in the Congress party’s manifesto, asserting, “This idea of apprenticeship, which the Congress has in its manifesto is worth working on. 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,” adding that there should be a greater focus on job creation.
Rajan critiqued the massive spending on sectors like chip manufacturing, pointing out the neglect of job-intensive industries. “Think about these chip factories. So many billions going to subsidise chip manufacturing,” he commented, noting that sectors like leather are struggling. “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.
Addressing the brain drain, Rajan observed that many Indian innovators prefer relocating to places like Singapore or Silicon Valley for better market access. “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 heartwarming 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 remarked.
“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 concluded.
Throughout his presentation, Rajan underscored the various challenges plaguing the Indian labor market, from high unemployment rates and low labor force participation to the rising capital intensity of manufacturing, which is increasing even amid massive unemployment and a growing number of highly educated individuals competing for low-level jobs.
(With inputs from agencies)

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