Raghuram Rajan: India Is Not Benefiting from Democratic Dividend
Former RBI governor Raghuram Rajan said on Tuesday that India is not benefiting from democracy and that more attention needs to be paid to developing human capital and skill sets. Speaking at a seminar on “Making India an Advanced Economy by 2047: What Will it Take” at George Washington University, Rajan said, “I think we are in the midst of it (the democratic dividend), but the problem is we are not reaping the benefits.”
That’s why my growth estimate was 6%. Remove the extraneous data from the GDP figures if you believe it represents where we are at the moment. There’s a demographic dividend going on for that six percent. It is a significant drop from where Korea and China were when they began to enjoy the demographic dividend. And for that reason, I think it’s excessively complicit of us to say this is fantastic. According to the previous governor of the RBI, this is not because we are losing the demographic dividend because we are not hiring those people. Which brings up the issue of how to generate those employment. The solution, in my opinion, lies in both improving the skills of the individuals we already have and altering the kind of employment that are accessible; we must work on both fronts.
It is worthwhile to focus on the apprenticeship concept that the Congress has included in its platform. Rajan said that although there is still much work to be done to make it successful, we need a lot more students to be able to do the job at least as well as possible. He also mentioned that employment creation has to be a priority. Rajan took issue with India investing billions of dollars in the production of chips. Consider these semiconductor manufacturing facilities. He said that billions of dollars are being used to subsidize the production of chips, noting that some industries that provide a lot of jobs, like leather, are struggling. We are sinking in certain regions. It makes sense why our employment crisis is worse. Not in the previous ten years has the employment issue arisen. Over the previous several decades, it has grown. However, if you ignore the more intense sectors, he said, attempt to discover out what’s wrong and try to fix it rather than advocating that we immediately provide subsidized subsidies to leather examples.
In response to a query, Rajan said that many Indian entrepreneurs are now relocating to Silicon Valley or Singapore in order to establish themselves since they can more easily reach the ultimate markets there. We must inquire as to what compels them to establish themselves abroad rather than staying in India. Speaking with some of these entrepreneurs and seeing their passion to make a difference in the world—many of whom are becoming dissatisfied in India—is quite touching, he said. In actuality, they want to grow more internationally. I believe there is a younger generation in India that thinks like Virat Kohli. Rajan said, ‘I’m the best in the world.
Earlier in his speech, Rajan said that India has issues whether one chooses to focus on manufacturing, services, or agricultural construction. And I don’t need to explain more since this is so widely known. The rate of unemployment is high, with concealed unemployment being considerably higher; female labor force participation is very low; and the proportion of jobs in agriculture and other sectors of the economy is rising. Naturally, the result of all of this is a large number of highly educated individuals seeking for government positions and unemployment. Doctorates seeking to work as railway peons, he remarked.
even while this is taking place. According to Rajan, despite the large number of jobless workers, manufacturing’s capital intensity is continuously rising.
