‘Young India has a Virat Kohli mentality that…,’ says ex-RBI Governor Raghuram Rajan

Speaking at an event former RBI Governor and noted economist Raghuram Rajan said it is important to address unemployment and look at the significance of job creation for the economy

Livemint, Written By Jocelyn Fernandes
Updated17 Apr 2024
'We’ve got many more years of hard work to do to ensure the hype is real,' Former RBI governor Raghuram Rajan on economy
’We’ve got many more years of hard work to do to ensure the hype is real,’ Former RBI governor Raghuram Rajan on economy(PTI)

India is not fully benefiting from its wide demographic, economist and former Reserve Bank of India (RBI) Raghuram Rajan said, adding that it is important for the country to enhance its human capital and skillsets, PTI reported.

Speaking at a conference titled "Making India an Advanced Economy by 2047: What Will it Take" at George Washington University in the United States, Rajan expressed concern over India's current growth rate.

"I think we are in the midst of it (demographic dividend), but the problem is we are not reaping the benefits," he stated.

Job Creation An Important Aspect

Rajan underscored the significance of job creation and the need to address the issue of unemployment. "... That's why I said 6 percent growth. If you think that's about what we are right now, take away the fluff in the GDP numbers. That 6 percent is in the midst of a demographic dividend," he added.

"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,” the former RBI governor said.

The economist also advocated for apprenticeship initiatives to improve job prospects for the youth, adding that it is important to enhance people's capabilities and transform the nature of available jobs.

“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. 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,” Rajan said.

Investment Priority, Manufacturing Focus

Critically, Rajan questioned India's prioritisation of investments, particularly in sectors such as chip manufacturing, stating, "Think about these chip factories. So many billions going to subsidise chip manufacturing."

He also addressed the decline in job-intensive sectors such as leather, emphasising the need to identify and rectify underlying issues contributing to the job crisis.

“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.

Innovation Going Abroad

Regarding innovation and entrepreneurship, Rajan said there is a trend of Indian innovators seeking opportunities abroad due to challenges in accessing markets domestically.

Addressing the audience, he remarked, "We need to ask what is it that forces them to go outside of India to set up rather than stay inside India?"

He also had words of praise for them: "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."

Rajan also commended the ambition of young Indian entrepreneurs, likening it to the determination of cricket star Virat Kohli, stating, "There is a young India that has a Virat Kohli mentality. I'm second to none in the world."

Challenges India Faces

Rajan also spoke about the challenges facing India, such as high unemployment rates, low labour force participation, and the mismatch between job skills and available opportunities. He pointed out instances of highly educated individuals applying for low-skilled positions, illustrating the urgency of addressing India's employment crisis.

“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 ,. 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 said.

(With inputs from PTI) 

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HomeEconomy‘Young India has a Virat Kohli mentality that…,’ says ex-RBI Governor Raghuram Rajan

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