Economy, World

Under-employment, not unemployment, is India’s big problem

What would you say about the NYAY scheme of the government?

If the Congress really believed its moral argument, we would not be where we are today. From 1950 onwards, if the Congress had really followed proper pro-growth policies just like South Korea, Taiwan and China — all of which had about the same per capita income as us, we too would have had similar growth and our per capita incomes would be significantly higher and poverty as we define it today would simply not be there.

So, I think if one really is serious in believing in the moral argument, one has to also then answer for what was done in the first three to four decades.

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That is my mysterious kind of response but the most serious one is that we all wanted to help the poor, particularly when we are talking about the destitute, the bottom 20% of the population. Nobody in India or anywhere else would be against such policies.

Do you believe that 3% fiscal target that we keep talking about will completely go off the radar? Perhaps we will have to look at new sources of revenue like taxing the rich?

Well that is what they need to spell out. This is precisely what I am saying. Where is at least outline of the proposal on how you will do it. Remember they also said they will not cut any of the existing subsidies, they will not raise the taxes.

They said merit-based subsidies.

They have to say it. This is generality but the point is ultimately when the push comes to shove, which subsidies are they going to cut? How much additional resources will be generated?

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The devil is in the detail and the detail has not been provided?

I am not asking all micro details, barely some broad outlines because we are talking about Rs 3.6 trillion and one has to have some big ticket items on which to peg these kinds of resources.

Everybody keeps asking where are the jobs? Congress’s manifesto talks a lot about their plan with respect to jobs but the incumbent government says the jobs crisis is a big myth. How do you see things?

Well I have said this many times and I will repeat it that I do not think unemployment is India’s big problem, it is under-employment, because given the level of poverty, everybody has to do something

. You got to make your ends meet and you got to have two meals a day. So everybody works. In this sense, unemployment rate in India has always been low and that is the case but it is the under-employment. People are doing very low productivity jobs and that gives them relatively low wages, low living standards and therefore poverty. This is where we need jobs that pay good wages, meaning higher productivity jobs.

Economists across the world are questioning the credibility of Indian data. This has become a big talking point. You have been in India. You have seen how the government functions. Are people outside believing in the data that India is generating?

Look, I mean, all the international agencies including the World Bank, International Monetary Fund are using these data and they have not raised any doubts about the data. It is our own cynical economists who are raising these questions.

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You will say there is smoke without fire? It is all propaganda?

Yes, yes. It is so largely because Indian statistical agencies are very independent and I was inside the government for three years.

Source: Economic Times India

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