Former RBI Governor Raghuram Rajan says India needs to expand at 8–8.5% to provide enough employment

 Former RBI Governor Raghuram Rajan says India needs to expand at 8–8.5% to provide enough employment

According to HSBC, the country will only be able to tackle two thirds of the employment issue with growth of 7.5 percent, meaning that 70 million new jobs would need to be created over the next ten years. As he runs for reelection in 2019 to a third term as prime minister, Prime Minister Narendra Modi is also concerned about the high rate of unemployment.

In comparison to other nations, economic growth of 6 to 6.5 percent is robust; nonetheless, Rajan said that "relative to our need for jobs, It seems it's still somewhat slow because our country has a lot of young people who need to be employed."

India's economy is growing steadily, but former Reserve Bank of India Governor Raghuram Rajan said that in order to provide enough employment for the most populated country in the world, the economy must develop at a rate of more than 8% annually.

"Considering the demands of the populace and the need for employment, we ought to be aiming for 8 to 8.5 percent," Rajan said by video conference on November 10 at a Beijing event. "While our economy is growing at a robust rate of 6 to 6.5 percent when compared to other nations, I believe that it is still moving slowly in terms of the number of young people who need jobs."

Even while India's economic growth has outperformed that of other large nations, the nation isn't producing enough employment to accommodate the millions of new workers who enter the labor market each year. The Centre for Monitoring Indian Economy, a research institute located in Mumbai, reports that the total jobless rate reached its highest point in almost two years in October, at 10.05 percent.

According to HSBC, the country will only be able to tackle two thirds of the employment issue with growth of 7.5 percent, meaning that 70 million new jobs would need to be created over the next ten years. As he runs for reelection in 2019 to a third term as prime minister, Prime Minister Narendra Modi is also concerned about the high rate of unemployment. As part of his pledge to deliver one million government employment by the end of this year, officials in his administration have been attempting to address the issue and bolster their reputations by sending job appointment letters.

According to Rajan, in order for the country to compete with other productive manufacturing countries like China and Vietnam, its labor force has to be trained. He mentioned the production of iPhone components and added, "You're seeing some signs of that happening. India is trying to move up the value chain." However, he believes that India still has "a long way to go, to actually manufacturing full cell phones."

Throughout the lecture, Rajan also said the following:

"In terms of India's growth, we are currently recuperating from the pandemic and have finally witnessed some consistent growth."

Growth is being driven by increased government investment on infrastructure, balance sheet cleaning, and demand from the upper middle class. India is still far behind China in terms of innovation in chip manufacture.

The likelihood that the US economy would slow down too much is more than 50%, making a gentle landing very unlikely.