Former Reserve Bank Governor Raghuram Rajan said that with an economic growth of 7 percent, India is not creating enough jobs as indicated by the number of applicants for vacant posts in some states, and suggested that the government should There is a need to focus on promoting labor intensive industries to produce. .

Rajan added that some Indians, especially those at the top, are comfortable and have higher incomes, but consumption growth at the bottom of the country still hasn’t returned to pre-pandemic levels. .

“This is the unfortunate part… You would think that with 7 per cent growth, we would be creating a lot of jobs. But if you look at our manufacturing growth, it is more capital intensive,” he told PTI. It is,” he told PTI.

Rajan was asked if the Indian economy, which is growing at 7 percent, is creating enough jobs.

According to him, industries that are capital intensive are growing rapidly, but labor intensive industries are not.

“It’s not going well at the grassroots level. I think jobs are desperately needed. And you can see that, forget the official statistics.

“You can see it in the number of applications for government jobs, which are huge,” said Rajan, a professor of finance at the US-based Chicago Booth.

He said that the Indian economy will grow at the rate of 6-7 percent in the medium term.

Welcoming the apprenticeship schemes announced by the finance minister in this year’s budget, Rajan said, “But we have to monitor it very closely, see what works and scale up what works. does.”

Finance Minister Nirmala Sitharaman had announced in the Union Budget for FY25 that the government would launch three employment-linked schemes based on enrollment in the Employees Provident Fund Organization (EPFO).

Citing the examples of Vietnam and Bangladesh, which are doing well in labor-intensive industries such as textiles and leather, he said, “We need to look at this (labor industry) very, very carefully.” , we cannot be left.” Asked why the private sector still lags behind as far as capital expenditure is concerned, Rajan said it is a bit of a mystery.

“When you look at (the private sector’s) capital utilization, it’s about 75 percent… It seems like the demand hasn’t kept up to the point where they feel they need to do all that kind of investment. ” gave an opinion

And more importantly, Rajan said, India has a short window of 15 years to take advantage of the demographic dividend and should not miss this opportunity.

Responding to a question about the benchmark interest rate cut by the US Federal Reserve, Rajan said, “The 50 basis points cut by the Fed has made them (central banks) move at that pace. has provided more scope for what they deem appropriate.” According to him, if the Fed had not cut rates, there would have been a sense that, oh, the Fed is keeping rates high, so ‘we have no room for moderation in our policies’.

“I think the Fed has probably created more room for others to lower interest rates, and in that sense, people will be looking at their policies,” he said.

To a question about rationalizing the Goods and Services Tax (GST) rates, Rajan said that after the policy has been in place for a long time, it is useful to ask what the experience has been and ‘should we change the policy? Needed’.

“I will try to appoint an expert committee to go into it, take feedback, just like the Finance Commission does, take feedback from various stakeholders, including states, and come out with something like this. which meets the needs of the country,” he said.

Currently, GST has a four-tier tax structure with slabs of 5, 12, 18, and 28 percent. The new tax system came into effect in 2017.

Responding to a question about the ongoing debate on ‘subsidy’ from the economically and socially better southern and western states to the northern and eastern states, Rajan said that the Finance Commission has always discussed the appropriate types of taxes between the Center and the states. has been about the distribution of

“If India grows together, (then) in fact, it prevents these kinds of conflicts… There is the issue of equity, which is that the states that are developing rapidly are also in the process, common What is happening in the case of western and southern states,” he said.

Rajan pointed out that western and southern states feel that they are penalized in two ways – one is that they have to hand over more of their revenue to states that are lagging behind.

“Also, on the political front, if delimitation happens (where Lok Sabha seats are allocated based on the results of the next census) they may lose seats, because, you know, overpopulation. States will get more seats,” Rajan said.

Noting that there must be some transfer from rich states to poor states, he said, “we need to bridge the gap”.

Rajan pointed out that poor states will not sit in isolation, they are going to buy more goods from rich states. “So there is some partial compensation for them (rich states)”, he said, adding that the demarcation could be done while respecting the concerns of different parts of the country.