Creating jobs should be first task for any government, says former RBI Governor Raghuram Rajan

Creating jobs should be the first priority for any government, former RBI Governor Raghuram Rajan said as India goes in for national elections next month.

Rajan was speaking at the launch his book The Third Pillar--How markets and the state leave the community behind.

“I would say that- one is start creating those jobs people want. Take care of the distress, but whatever measures you put, put them as a pathway for people to get those jobs rather than standing in the way of getting those jobs... We can talk about the economic reforms that are needed, but jobs are task one,” Rajan said on Tuesday.

The issue of unemployment in India has been one the key topic of debate ahead of the election. An National Sample Survey Office (NSSO) report suggested that unemployment rate touched a 45-year high of 6.1% in 2017-18.

While Rajan believed that the farm sector is under stress, further said that he personally believes that loan waiver is not an answer.

The government in the interim Budget in February announced a direct income transfer scheme of ₹6,000 per year for some farmers.

“I am not saying that distressed farmer cannot benefit from cash transfer, I do worry about waiving loans because it only targeted to those farmers who have taken loans from the system, not the poorer farmers who have loans from the money lenders or an agricultural worker who never got a loan in the first place. So I would rather have a better targeted system,” Rajan said.

He further said that loan waivers spoils credit culture as it is difficult to lend to these farmers once again.

“So they also suffer in credit down the line even though they may get some short-run benefit. So those are my objections,” he said.

Rajan is currently a professor at the University of Chicago Booth School of Business. Apart from being the 23rd Governor of Reserve Bank of India during September 2013-2016, he was also the Chief Economist at the International Monetary Fund (IMF).

The book presents a big picture framework for understanding how three key force--the economy, society and the state--interact, why things begin to break down, and how we can find our way back to a more secure and stable plane.