Finance Commission chairman and former vice-chairman of the NITI Aayog, Arvind Panagariya stated that, "unemployment," is not a problem for India but "under-employment" is.
Panagariya was optimistic that the country's job problem would be resolved within the next 10 years.
"Unemployment is really not India's problem in my view. Our problem is underemployment, so productivity is low. So the job that can be done by one person often gets done by two people or maybe three people. And that is where I think, the real challenge of jobs is creating well-paid high-productivity jobs," he remarked at a Summit in the Capital.
In the economic lingo, India is a labour-abundant and capital-scarce country, he stated, "What we have done is to put much of the capital in very selective sectors, which are in any case very capital intensive."
"We got the situation where much of the capital is working with very few workers. And then you have a host of workers in agriculture in micro and small enterprises where the capital is hardly present. So then you got a lot of workers working with very little capital. And when that is the case, it translates into low productivity," Panagariya said.
The country still needs to fix labour and trade laws, he said, adding that, "compared to other countries, protection level is higher that needs to come down."
"During (Atal Bihari) Vajpayee's Prime Ministership labour laws were tabled. Subsequently, no government showed the courage. With the Modi Government, the laws have been passed. It is now the states that have to write the rules and regulations to implement the laws," he stated.
Talking about reforms, he said, "Implementation of labour laws, privatization of public sector enterprises and banks are some of the important reforms that need to be brought about."
He said that since 1991 economic reforms "we have had upside down but the trend has been towards liberalization. If we take away COVID years, we have grown about 8.8 per cent in real dollars for the past 20 years, which we could not imagine in the 1980s."
"The conditions are perfectly there for India to take the world by storm. India is now the only economy, which is growing strongly," he added. On the country's demographic dividend, Panagariya said, "The population is large and the population is young. The size of the population will help us. We don't have that kind of dependency ratio as China has.
