Former Reserve Bank of India (RBI) governor Raghuram Rajan has said that India is not creating enough jobs which can be seen by its growth of just 7 per cent.
“That means focussing on what is really distorted in our current approach and try and remove those distortions in order to enhance the job creating prospects of that sector. Not by the old strategy of reserving job intensive sectors and giving them additional sops, but how do we actually enhance sectors and make them create more jobs,” Rajan said.
Rajan then cited an example of job shortage by stating that 25 million people applied for 90,000 railway jobs.
“That makes it 250 persons per job and these are not highly-priced jobs. These are actually low level jobs. So, it does suggest enormous demand for jobs,” Rajan said.
Rajan also expressed his concern over the large trade deficit.
“On the fiscal, if you add the Centre and the states’ deficits we see no improvement over the last five years. In terms of the public sector borrowings, it still is as big as it was and that is a source of concern. Especially as state budgets are going increasingly out of balance,” Rajan said.
“We see the trade deficit is large, even taking out the effect of oil. We do know oil price fluctuations change the trade deficit considerably, but even taking that out we haven’t done as much as we need to do on exports,” he added.
Rajan also said that loan waiver is not a solution as it restricts investment.
“After all there is only a subset of farmers who get those loans and so it often goes to the best connected rather than the most poorly off. And second, it obviously creates enormous problems for the fiscal of the state once those waivers are done. And unfortunately, it inhibits investment down the line,” he said.